Do You Understand What To Lookout For When Buying a Residential Stand?
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Do You Understand What To Lookout For When Buying a Residential Stand?
By Matseleng Mogodi
Founder and Principal at Snooks Estates
This article was originally published by Real Estate Investor Magazine.
What is a residential stand?
A residential stand is a stand that is zoned for building a home, usually Res 1.
Sometimes this stand can be zoned for occupancy by one family or multiple occupants when zoned as Res3. Sometimes individuals buy stands with an intention of building houses, only to find it’s zoned agricultural or other, and usually, some of these zonings were done due to the conditions of the soil, which may not be suitable for building homes.
What kind of value does buying a stand create for one looking to invest in property?
This is largely dependent on what stage the investor acquires the property. When bought earlier on in the initial phase of the development, there’s a possibility of acquiring the stand at a good price. However, most developments would normally sell the whole package with the house built. It’s becoming rare to find developers who are selling just individual stands.
What are some of the elements that one should look out for before purchasing a residential stand?
First and foremost the person or company you are purchasing from, verify whether it’s their stand, or whether the development is legit. If you are buying to build a home, check that the stand is zoned residential. Furthermore, If you are about to pay money, sacrifice a few rands to get more information about the developer or land, especially if they are selling just the stands, verify who are you paying the money to? Is it the person or the developer’s attorneys?
It is also important to know the soil conditions on the stand, so there must be a geotechnical report because this may also determine what needs to be done on the stand before building, sometimes this could be costly if engineers determine that the soil is not suitable for building certain types of homes/buildings.
Moreover, where you are not sure how the stands are or the sales people are vague, check whether there’s a township layout plan and whether it was completed or not also ask critical questions such as, is there a site development plan? Are there approvals in place for roads, stormwater, sewer, water, and electricity?
Finally, before stands are individually demarcated and sold, a general plan or proclamation of the area with the surveyor generals’ approval needs to have been done, and then the land surveyor’s certificate would be in place to verify the sizes and boundaries of each stand.
On the rise of criminal elements which infiltrate the selling of residential stands, such as bogus estate agents as well as property developers?
Even though people are desperate for homes, it’s important to ensure that you do not fall victim to unscrupulous sales agents. Make sure that where you are buying the land has a proper site plan, where stands are clearly labelled, and you can make out which stand is which. Sometimes these kinds of agents sell one stand to many people and collect money from individuals.
One of the biggest indications of a questionable deal is where a buyer is asked to pay money upfront, and the stands are extremely cheaper than the market-related prices.
Usually, these doggy salespeople would want buyers to pay as soon as possible, and pay into some account. Reputable developers would normally allow you to sign your Agreement of Sale, you get your loan, documents get sent to their attorneys, and you get called in to sign transfer papers, and usually, if it’s a bond, there’s no pressure, and if it’s cash, a commitment deposit would be payable.
The legal implications entailed before and after purchasing a residential stand
You build according to what the stand is zoned for. Sometimes people use a residential stand to run a business. The intention of having these land zoning is because there are other people who may be impacted by what you do on your purchased land. The municipal bylaws are applicable and you may be charged penalties for operating, for example, a business on a residential stand.
The municipality can also give consent for you to use your stand, zoned residential, for other purposes. Their processes may be cumbersome, and sometimes expensive, but it’s worth doing as you can operate without the headaches of having penalties charged for unlawful use of premises.
The role of government in ensuring regulation to work hand in hand with real estate practitioners?
I believe that, with all of the government’s beautiful policies, it’s important for the government to create an enabling environment, which can encourage land owners to do the right things. For example, if municipal offices that deal with these rights could be empowered to understand the value of providing efficient services to land owners, I’m almost certain that land owners would be willing to apply for the rights and do the necessary conversions, and even pay willingly the fees applicable. To add to this, it could be transparent how long each stage or application takes. Some of these can easily take 24 months, at which stage a person’s plans may have changed or they may have run out of money to service all the costs along the way.
The critical role played by residential in advancing urban areas such as townships in terms of housing and overall infrastructural development
I believe that if red tape and side deals could be eradicated, more and more consumers or rather land owners would be willing and ready to pay for services. In return, the municipalities would be able to collect what they need to collect, and contribute or allocate funds towards what’s planned and infrastructural development.
In conclusion, it is a bit of a quagmire, one awaits payment, and one awaits services without paying, but because of other underlying situations not to be mentioned, it becomes a stalemate. Services cannot be efficiently rendered when there’s no contribution from consumers, thus impacting many other departments’ processes and slowing progress for land conversions and approvals.
Author: Matseleng Mogodi