24 Jul 2009
What factors need to be taken in consideration when investing in these properties?
Dina Porteous, Margate area principal for Pam Golding Properties, says one should never submit an offer to purchase which includes the furniture, as although this is a common practice it has a monetary tax and commission implication for sellers and a rates and transfer cost implication for buyers.
"Banks also don't take the value of the furniture into consideration, should you apply for a loan. Negotiate the furniture at a separate, market-related price as often the cost of moving or storing it would outweigh the financial benefit for the seller."
"Most of these beachfront properties have excellent rental potential and currently there is a high demand for self-catering accommodation on the coast, which is driven by the current economy and a new emerging market.
"During your absence having an agent servicing and administrating your investment is most probably the second biggest decision that one has to make. Letting agents needs to be registered with the Estate Agency Affairs Board and should you invest in a sectional title complex that is administrated by a managing agent, the same applies. Rental moneys received on your behalf need to be in a trust account protected by the agent's Fidelity Fund Certificate," she says.
Verify the property's plans and boundaries. Being on the beachfront, these properties are situated in environmentally sensitive areas and there are instances when, unbeknown to buyers, illegal accesses and structures may have been constructed on the Admiralty Reserve which is the zone 200m inland from the high water mark. As a result, these perceived benefits may not be a reality and may result in high reinstatement cost and hefty fines for the new owner. Choose an agent that specialises in this field as they should be in a position to point out these thorny issues.
Take the quality and type of finishes of the property into consideration as maintenance costs can erode one's investment returns. Most of the recently built properties are safe options as architects and builders tend to ensure that the right materials for coastal conditions are used.
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