Bewares the pitfalls of property development

Posted On Tuesday, 20 September 2005 02:00 Published by eProp Commercial Property News
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Most people think that property development is an easy way to retire young but there is many a slip between bold and sold as scores of self-styled and even professional developers have discovered on the long and bumpy road to property riches. 

Saul GeffenSaul Geffen, Managing Director of MortgageSA says, “Development requires large amounts of cash throughout the process and many factors such as difficult neighbours, outdated systems and lack of infrastructure can bring a development to a jarring halt.

“It’s something potential buyers need to consider before they sign up for what they think is a done deal – it’s always worth doing a bit of extra research to find out factors that could hamper the process.”

These are some of the most common problems to a smooth development:

Deeds Office

“The property boom, tax and FICA requirements has placed excessive pressure on the Deeds Office and conveyancing attorneys - as a result, the property transfer process has become extended,” says Geffen.

“The number of deeds lodged and registered has increased and at present title deeds are being kept in the Deeds Office for around three months before being delivered to the conveyancers. Developers as well as regular property purchasers are unable to commence with building or any other transactions while their Deeds are held up.

Infrastructure

Geffen notes that infrastructure in South Africa does not facilitate a quick development process. Inefficient systems cause unnecessary delays resulting in an approval process, like rezoning, taking years to complete.

“Delays at municipal level can hinder the progress of many developments.”

Environmental protection

Geffen notes that Stellenbosch University's unit for environmental ethics found that developers obtained the lowest rating for adherence to legislation.

Their report, going to cabinet in July in order to set policy guidelines for developments, goes on to say there is ‘potential for consultants to be biased as they are invariably paid by the developer’, and that the relationship between developers and decision-makers is far 'too close' for comfort. It also said 'developers make inappropriate use of personal contacts with decision-making bodies to get projects approved’.


“Environmental action groups increasingly concerned with preserving an area’s natural heritage are becoming very proactive about saving South Africa’s natural heritage.”
 
Neighbours

“Interestingly, neighbours are often able to bring the most well thought out and well funded development to its knees. Local rate payers may object to rezoning due to planned structures blocking their views, disrupting privacy or even its effect on the visual appeal of the area.

“This generally results in the architect having to redesign the proposed plans, which may be rejected by the rate payers over and over again.”

MortgageSA pioneered home loan origination in South Africa by re-engineering the home loan application process, and today is South Africa’s leading home loan facilitator, placing one in every five home buyers into their new homes. MortgageSA provides a turnkey solution from property search, right through to financing the purchase and obtaining insurance cover. We offer innovative and tailored solutions for all our clients' property finance requirements, backed up by a passionate service culture. MortgageSA’s vision is to create the ultimate home-ownership experience by delivering convenient, value added home related products and services to our customers.  

Last modified on Sunday, 25 May 2014 19:34

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