Types of home ownership
The two different ownership types for residential property are Freehold or Sectional title. Know the difference between the two and what your obligations are.
Freehold
The most common form of freehold ownership is a free standing house which has it’s own erf number. The other form of freehold which is becoming more and more popular as people move away from large properties is a freehold cluster home.
In both of these cases the property would be owned by you along with any improvements thereon (house, swimming pool etc) and you would be responsible to pay for rates, sewerage and electricity directly to the council.
A less common form of freehold ownership would be in the form of a smallholding which would be less than 20 hectares and within 150km of an urban area.
On a freehold property, you are generally entitled to do as you please within the council building regulations and would not need to seek approval for any alterations or additions you may wish to do apart from submitting plans and having them approved by the local authority. In a small number of cases, for example themed cluster developments, you ,may need to seek approval from the developers to ensure that the overall theme of the development is not compromised.
Sectional title
A sectional title unit is simply owning a portion of the buildings and common property of a development. The most common forms of sectional title ownership are in the form or flats/apartments and townhouses.
Your section would be demarcated as the portion within the walls that you live. You would also be allocated an undivided share of the common property usually calculated as a percentage of your units square meterage expressed as a percentage of the total square meterage of the development. Some sectional title developments also offer ownership of the parking bays and these sections can be sold or purchased separately. In areas like Cape Town it is particularly important to ascertain whether the parking bay forms part of the common property with exclusive use or ownership of the parking bay/s is transferred. Parking bays have sold for large sums of money in areas where there is limited parking like Clifton and Bantry bay.
In a sectional title development you would pay a levy to the body corporate which is intended for the upkeep of the exterior of the building, the common property and any services required like security, auditing fees or general maintenance and upkeep of the development as a whole.
In recent years sectional title owners now each receive a rates account, where before the rates were calculated for the entire property, billed to the body corporate and then divided according to each units square meterage and share of the common property.