Types of Home Ownership in South Africa

Most properties in South Africa are sold either as "freehold", "sectional title", "99-year leasehold" or "Share block".

Freehold

Simply put, freehold means that you own a piece of land and everything on it. You will be required to pay rates to the municipality based on the value of the land and buildings.

Sectional Title

Properties such as townhouses and apartments / flats are usually registered under "sectional title". In this case you own the "inside" of the house only, up to and including the ceiling. The outside of the house, the land on which it is built, as well as boundary walls, the roof, outbuildings and the like are owned by the "Body Corporate" (which is made up of all the owners of the individual units) on behalf of the individual owners.

In a sectional title development, the expenses of the Body Corporate are passed on to the individual section owners in the form of a compulsory levy. This includes municipal rates, building insurance on the whole complex, repairs and maintenance, communal water and electricity, accounting fees etc. So you need to budget for the monthly levy in addition to your home Loan re-payments. As from July 2008 Sectional Title units are separately rated and you will receive your own account from the Municipality.

Before buying into a sectional title complex, it's essential to check the latest financial accounts of the Body Corporate to make sure it's financially sound and that the House rules imposed by the Body Corporate are reasonable and in line with the Sectional Title Scheme rules.

99-Year Leasehold

Where a property is built on 99-year leasehold land, the homeowner never owns the land outright. The plot is on lease to the owner for a period of 99 years. If you are buying leasehold land from an existing owner and the real owner is not government or a municipality, you will buy what is left in years on the lease. In the case where the government is the owner of the land, the 99 year period begins afresh with every change of ownership of the leasehold. The land remains the property of the lessor, usually the government or a municipality.

Title Deeds

Whether the property for sale is a freehold, sectional title or leasehold, it has a "Title Deed", a document which identifies the location and size of the property for sale as well as the particulars of the owner. Every time the property changes hands this document must be presented to the Deeds Office in that region, and a new title deed issued in the name of the new owner. This process is done by Attorneys who are qualified as Conveyancers and who specialize in Property Law.