Of the home loans Standard Bank granted in 2012, almost 50 percent were for first-time buyers wanting to get more value out of the money spent monthly on rent in order to have a roof over their heads.
Buying a house is one of the most significant steps in creating a personal financial platform that most people will take and the practical transition from renting to home ownership requires careful planning.
Many existing homeowners are waiting for the economy and house prices to improve before selling their homes to buy a different property.
With a market share of 35 percent, Standard Bank is the leading mortgage lender in South Africa.
However, the state of the economy also seems to be driving people who are currently renting to make the long-term investment of getting onto the property ladder.
They would rather pay towards building their own asset base than helping landlords.
Buying a house is one of the most significant steps in creating a personal financial platform that most people will take and the practical transition from renting to home ownership requires careful planning.
For example, one of the common problems we see is the tenant’s need to get out of a lease or rental agreement early, to meet the occupation date for the new home.
A tenant is liable for the rent for the months left in the lease, running the risk of having to pay a bond and the rest of the lease payments at the same time.
Some tenants are able to sub-let the rental property, but this can be done only with the landlord’s consent.
Other costs to consider include creating a municipal rates, water, and electricity account for the new home while still paying for the electricity and water used in your last month of rental.
If a landline telephone is used, costs would be incurred for transferring the landline or for a new connection altogether.
The cost of moving furniture from one property will also be incurred.
It’s important to plan for these expenses before committing to buying a home as the last thing one wants is to fall short on the first bond payment because you’ve been taken by surprise by the practicalities of your lifestyle change.”
One way to reduce the transition costs is to ensure that you get your full rental deposit back.
The best way to do this is to make a snag list of things that are wrong in the rental property so that you know what might have to be deducted from your deposit for repairs to be made.
It is helpful to do the same for your new home, ensuring that you don’t end up paying to repair damage that was done before you bought the house.
Also, if you have your own water and lights account where you rent, you can arrange to have that deposit transferred to your new property, reducing set up costs with the municipality.
There are a number of other useful ways to cut costs, such as booking your furniture removal to happen on a weekday in the middle of the month, because weekends and month-end removals can be up to twice as expensive.
Being pro-active about planning your transition from tenant to homeowner will mean you can actually enjoy the process of acquiring one of the most important financial assets of your life. - Steven Barker
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