no cause for panic over rates
26 March 2008

If you're thinking of selling your home because of the increased municipal rates and possible further hikes in the bond rate, don't panic because you may be jumping from the frying pan into the fire!   That's the advice from Russell Scorer, joint managing director of one of South Africa's leading real estate companies, MaxProp.

Scorer said he understood the temptation to bail out because of the rising costs attached to home ownership but warned the rental option probably offered little respite.

"You can be sure that landlords are going to up their rentals to cover their increased costs. So by renting you will be covering the owners' rates and bond cost rises. The costs of selling must also be considered. There's the estate agent's fees, entomologist and electrical clearance charges and other costs,'' said Scorer.

Scorer said if one wanted to get back into the market, further costs had to be met.

"The costs include conveyancing fees, transfer duties and expenses related to the bond. Also, don't forget that there is a possibility you won't be able to get the loan you want because of the stringent National Credit Act requirements."

He advised home owners to think about the cost and other implications before selling. According to Scorer, it was possible that the interest rate would increase by another 0.5 percent.

"I don't see this as too much of a problem when one considers that just four years ago the rate was 17 percent. The new National Credit Act had impacted significantly on would-be buyers' ability to obtain loans. We lost five deals in just one of our branches last month because of the Act's requirements. I think many people are ignorant of how the act works. For instance, you may have a credit card with a zero debit balance but it still impacts on your credit worthiness because when you are assessed the credit balance is taken into account."

Scorer said he thought the new municipal valuations in the Durban area had been reasonable. "At least 60 percent of the valuations that have been brought to my attention have been accurate but obviously there are those that may be challenged."

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