I picked up this blog post off Gum Tree and I thought it might make for some interesting debate:
Did you know that some unscrupulous and greedy estate agents asking for up to 25% and more on top of every months rent from you?
I just inquired about the monthly rent for a house in University Estate with “Estate Agent Jawitz” and was told it would cost R 7500/month.
I also phoned the other “estate agent” sign posted on the house which quoted me R 6000 per month. Never mind what the owner in fact is asking for the house. Its most likely R4500. When I told the Jawitz agent that another estate agent is offering it for R6000/month, the agent replied bluntly that their monthly rent of R7500 is been calculated due to the companies “commission structure” policy.
Can you believe it! This so called “Commission structure” forces you to fork out 25% commission on top of your monthly rent.
The rest of the blog post can be found here.... Would be interesting to hear what you have to say if you are currently renting your premises?
Saturday, November 22, 2008
Sunday, November 2, 2008
Commercial property
I know some people get a little grumpy when I talk about the negative South African property market but let's be honest - say what you want about the market, but there are some bad things happening.
And it doesn't seem to be limited to the residential space either.... I walked through two of my smaller local shopping centres today.
One has 15 shops and the other has 16.
I walked through them today and the smaller centre had two shops boarded up and the other had three that had closed.
That's a pretty significant percentage, and one can't help but feel that there is some further bad news that still needs to come into the economy...
And it doesn't seem to be limited to the residential space either.... I walked through two of my smaller local shopping centres today.
One has 15 shops and the other has 16.
I walked through them today and the smaller centre had two shops boarded up and the other had three that had closed.
That's a pretty significant percentage, and one can't help but feel that there is some further bad news that still needs to come into the economy...
Saturday, November 1, 2008
100 000 homeowners behind the curve
I've just picked up the Sunday Times paper this morning and read a story that says 100 000 people are more than 2 months in arrears on their bonds. They are saying that the majority of these bonds are in the middle income classes owning properties between R1m and R2m.
That's a phenomenal figure and its grown sharply from 55 000 4 months back and 75 000 2 months back.
Looks like there might be some quality deals for patient property investors in the next year or so??
That's a phenomenal figure and its grown sharply from 55 000 4 months back and 75 000 2 months back.
Looks like there might be some quality deals for patient property investors in the next year or so??
Tuesday, October 14, 2008
TAX INCENTIVE FOR EMPLOYERS WHO TRANSFER LOW-COST RESIDENTIAL UNITS TO EMPLOYEES
If there is one thing I have learnt about being 'investment smart' is to know some of the rules and regulations that apply to your specific investment. If you can pick up some tips and tricks about managing your investment and actually making a positive return on it.
Every now and then I get press releases mailed to me from David Warneke at Cameron & Prentice which I might post from time to time as a bit of resource for those looking to understand the property sector and pick up some tips and tricks.
TAX INCENTIVE FOR EMPLOYERS WHO TRANSFER LOW-COST RESIDENTIAL UNITS TO EMPLOYEES
Included in the draft Revenue Laws Amendment Bill is a provision (section
13sept) aimed at encouraging employers to transfer ownership in low-cost houses or apartments to employees. Tax Partner at Cameron & Prentice Chartered Accountant, David Warneke, explains, that while this provision may appear to be aimed predominantly at farmers, the wording of the provision certainly does not restrict it only to these taxpayers.
Currently, where an employer transfers a house or apartment to an employee, no tax incentives exist. In the Explanatory Memorandum accompanying the Bill, the shortage of housing in South Africa and government's plans to provide an environment conducive to home ownership are cited as reasons for the introduction of the incentive.
The benefits of this incentive are similar to those in another proposed incentive (section 13sex) for employers who build residential units for employees and do not transfer ownership to the employee. Therefore, whether or not the ownership in the housing is transferred to the employee, there will be an incentive for the building of residential housing for employees, as the employer will either be able to claim an allowance under this provision (section 13sept - where the ownership is transferred to the
employee) or under section 13sex (where the employer retains ownership).
In order to benefit in terms of section 13sept, the employer will have to sell the accommodation to the employee on interest-free loan account. The employer will then be able to deduct, for income tax purposes, an amount equal to 10% of the capital of the initial loan per annum over 10 years, or as long as the loan arrangement lasts. It is probably an oversight with the current wording of the provision that if the employer were to waive the indebtedness of the employee, no further deductions may be claimed. If the employee repays portion of the capital outstanding on the loan, a recoupment will arise in the employer's hands.
The following example is given in the Explanatory Memorandum:
Facts: An employer constructs a house for R100 000 with the allocable land having cost R20 000. In Year 1, the employer transfers ownership of the house to an employee for R120 000 on a non-interest bearing loan account provided by the employer. The loan is repayable over 20 years. The employer transfers ownership of the house subject to a condition that the employee remains in the employ of the employer for a minimum period of 5 years. The employee will be entitled to the market value of the house at the date of the potential return. In Year 2, the employee repays R20 000 of the loan provided by the employer in Year 2.
Result: In each of the Years 1 and 2, the employer is entitled to a deductible allowance of R12 000 on the loan provided to the employee.
However, the employer has a recoupment of 20 000 in Year 2 due to the repayment of the loan capital by the employee.
It is required that the residential unit must be a "low-income residential unit", which is defined as a building, the cost of which does not exceed R200 000 exclusive of the land and the bulk infrastructure, or an apartment, the cost of which does not exceed R250 000. In the draft Bill no mention is made of the cost of the land or bulk infrastructure in the context of the R250 000. However the Explanatory Memorandum and the Bill appear to be at odds. In the Explanatory Memorandum the R200 000 and the R250 000 are inclusive of the land but not the bulk infrastructure for section 13sept, while these amounts are exclusive of the land and the bulk infrastructure for the purposes of section 13sex. It remains to be seen whether the Bill will be amended.
A further requirement is that the employer may not charge a rental of more than 1% per month of the actual cost of the unit (as determined above).
Also, the low cost residential unit must be part of a residential establishment that consists of at least five residential units in the same geographical vicinity. It is further required that the disposal to the employee cannot be subject to any condition, other than two possibilities on termination of service by the employee. These are for the repurchase by the employer at market value at that time or repayment of the balance of the loan amount owing.
The provision would also apply where the taxpayer disposes of a residential unit to the employee of an employer that forms part of the same group of companies as the taxpayer, for example where the property is owned by a company within a group but the employer is another group company. In these circumstances the property-owning company would claim the tax deductions.
A number of gremlins have crept into the wording of the draft which one hopes will be corrected before the Bill is passed into law. It is also interesting that the terms "bulk infrastructure", "apartment" and "same geographical vicinity" are not defined. It is also doubtful, based on the current wording of the draft, whether the recoupment of the allowance would operate as envisaged in the example above.
Every now and then I get press releases mailed to me from David Warneke at Cameron & Prentice which I might post from time to time as a bit of resource for those looking to understand the property sector and pick up some tips and tricks.
TAX INCENTIVE FOR EMPLOYERS WHO TRANSFER LOW-COST RESIDENTIAL UNITS TO EMPLOYEES
Included in the draft Revenue Laws Amendment Bill is a provision (section
13sept) aimed at encouraging employers to transfer ownership in low-cost houses or apartments to employees. Tax Partner at Cameron & Prentice Chartered Accountant, David Warneke, explains, that while this provision may appear to be aimed predominantly at farmers, the wording of the provision certainly does not restrict it only to these taxpayers.
Currently, where an employer transfers a house or apartment to an employee, no tax incentives exist. In the Explanatory Memorandum accompanying the Bill, the shortage of housing in South Africa and government's plans to provide an environment conducive to home ownership are cited as reasons for the introduction of the incentive.
The benefits of this incentive are similar to those in another proposed incentive (section 13sex) for employers who build residential units for employees and do not transfer ownership to the employee. Therefore, whether or not the ownership in the housing is transferred to the employee, there will be an incentive for the building of residential housing for employees, as the employer will either be able to claim an allowance under this provision (section 13sept - where the ownership is transferred to the
employee) or under section 13sex (where the employer retains ownership).
In order to benefit in terms of section 13sept, the employer will have to sell the accommodation to the employee on interest-free loan account. The employer will then be able to deduct, for income tax purposes, an amount equal to 10% of the capital of the initial loan per annum over 10 years, or as long as the loan arrangement lasts. It is probably an oversight with the current wording of the provision that if the employer were to waive the indebtedness of the employee, no further deductions may be claimed. If the employee repays portion of the capital outstanding on the loan, a recoupment will arise in the employer's hands.
The following example is given in the Explanatory Memorandum:
Facts: An employer constructs a house for R100 000 with the allocable land having cost R20 000. In Year 1, the employer transfers ownership of the house to an employee for R120 000 on a non-interest bearing loan account provided by the employer. The loan is repayable over 20 years. The employer transfers ownership of the house subject to a condition that the employee remains in the employ of the employer for a minimum period of 5 years. The employee will be entitled to the market value of the house at the date of the potential return. In Year 2, the employee repays R20 000 of the loan provided by the employer in Year 2.
Result: In each of the Years 1 and 2, the employer is entitled to a deductible allowance of R12 000 on the loan provided to the employee.
However, the employer has a recoupment of 20 000 in Year 2 due to the repayment of the loan capital by the employee.
It is required that the residential unit must be a "low-income residential unit", which is defined as a building, the cost of which does not exceed R200 000 exclusive of the land and the bulk infrastructure, or an apartment, the cost of which does not exceed R250 000. In the draft Bill no mention is made of the cost of the land or bulk infrastructure in the context of the R250 000. However the Explanatory Memorandum and the Bill appear to be at odds. In the Explanatory Memorandum the R200 000 and the R250 000 are inclusive of the land but not the bulk infrastructure for section 13sept, while these amounts are exclusive of the land and the bulk infrastructure for the purposes of section 13sex. It remains to be seen whether the Bill will be amended.
A further requirement is that the employer may not charge a rental of more than 1% per month of the actual cost of the unit (as determined above).
Also, the low cost residential unit must be part of a residential establishment that consists of at least five residential units in the same geographical vicinity. It is further required that the disposal to the employee cannot be subject to any condition, other than two possibilities on termination of service by the employee. These are for the repurchase by the employer at market value at that time or repayment of the balance of the loan amount owing.
The provision would also apply where the taxpayer disposes of a residential unit to the employee of an employer that forms part of the same group of companies as the taxpayer, for example where the property is owned by a company within a group but the employer is another group company. In these circumstances the property-owning company would claim the tax deductions.
A number of gremlins have crept into the wording of the draft which one hopes will be corrected before the Bill is passed into law. It is also interesting that the terms "bulk infrastructure", "apartment" and "same geographical vicinity" are not defined. It is also doubtful, based on the current wording of the draft, whether the recoupment of the allowance would operate as envisaged in the example above.
Monday, October 13, 2008
Commercial property
I have been strolling around a number of major shopping centres and the number of vacancy signs and 'closing down sales' seems to be sharply on the up.
I know a lot of the property pro's who get interviewed have said that the problem isn't as bad as it looks and residential property prices are likely to bounce soon but I think that the commercial properties losing tenants is a good indication of what is happening in the 'real' South African economy.
If there is a lean Christmas / festive season in front of us for both retailers and consumers then this is likely to get a lot worse before it gets better....
I know a lot of the property pro's who get interviewed have said that the problem isn't as bad as it looks and residential property prices are likely to bounce soon but I think that the commercial properties losing tenants is a good indication of what is happening in the 'real' South African economy.
If there is a lean Christmas / festive season in front of us for both retailers and consumers then this is likely to get a lot worse before it gets better....
Tuesday, October 7, 2008
Savings and property investments
Article we posted here on a savings culture in South Africa. Maybe you have some of your own comments to add to this?
Monday, October 6, 2008
'Five months to flog a house'
Johannesburg - SA's housing slump has deepened further in the third quarter of 2008, pushing the average time it takes to sell a house to an all-time high of five months, new data from FNB shows
Read the complete article here on Fin24.com
Read the complete article here on Fin24.com
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