The impact of the COVID-19 pandemic has been seen across all factors of life, from employment to the way we socialise. While it has been a difficult time, there have been various positive realisations regarding how we want the future to go. The need to prioritise communication with loved ones, cultivate hobbies and most importantly, having a home you love spending time in.
The financial implications of COVID-19 have led to the South African Reserve Bank (SARB) making changes to the interest rate, resulting in the lowest interest rate in almost 50 years. This has resulted in the relief of some economic burden on debtors, however proved to be unfruitful for many individuals that hold funds in interest affected accounts, leading to the consideration of other options to grow their money. In light of this, property investment has become the primary choice to take advantage of during this period.
The interest rate has also affected the way in which we borrow funds, giving you greater freedom on bond repayments and consideration into property you might have not thought possible before. “68% of Ooba’s home loan applications were for 100% bonds, with an approval rate of over 80%. New investors are now looking to breakout into the property market while seasoned investors are taking advantage of investment opportunity in strategic locations for higher rental yields,” shares Rhys Dyer, CEO of Ooba.
Lifestyle changes have been implemented with the surge of work-from-home programmes and an increase in online shopping, resulting in many individuals requiring bigger spaces or proximity to essential facilities. Boasting an ideal location, lifestyle and price-point, Ridge Town Central provides the ultimate property investment opportunity within the sought-after Umhlanga Ridge Town Centre area.
There are a range of factors to consider when purchasing property, which can be exciting and also quite a stressful time. In South Africa, you can purchase property as an individual, trust or company with various pros and cons. We take a look at these different variables so the next time you purchase property, you are aware of the different avenues you can choose from.
Individual purchase
As the most common method of purchase, buying as an individual, you are exempt from transfer duty if you purchase for under R1 million, as well as if you are purchasing within an off-plan development. When purchasing as an individual, in your personal capacity, you are likely to receive a 100% bond when applying for a home loan. You are not liable to pay Capital Gains Tax if you use this home as your primary residence. One of the disadvantages, however, comes in when you are unable to pay your bond and can run the risk of losing the property.
Property under a company
Another legal entity to purchase property in is a company. Within a private company, you are not liable to pay transfer duty if you are registered for VAT and using the premises for business operations that it is registered for. Private companies will be liable to pay a higher Capital Gains Tax and transfer duty.
Purchasing through a trust
If you opt to purchase in a trust, your property will be assigned to a person known as a trustee who handles the administration and dealings of the property. Purchasing a home in a trust results in the investment not being held in a personal capacity, therefore will not be liable for certain fees, like transfer or estate duty upon your death. The property is also separated from your personal estate and will be protected in the event of bankruptcy. When purchasing as a trust, you must be aware that there higher Capital Gains Tax costs you will incur, and as an individual you will not have full control over your property.
No matter which option you choose, its best to talk to your conveyancer to confirm that your choice is the right one for your needs. In the long run, you need to ensure you get the most out of your property. Ridge Town Central provides the ideal choice of studio, 1, 2 or 3-bedroom apartments, which can be purchased as your residential home or an investment.