Buying vacant land in South Africa
Buying a vacant land is very different from buying a home or office building. When you buy a developed site, you’re buying a structure that already has water and electricity set up and you usually know what amenities are close by. But, when you buy a vacant land, you need to consider a few more factors, such as future time and capital involved in the purchase.
While buying land is a huge decision to make – one that must be carefully considered – it can be a fantastic opportunity for you, if done right.
Here are our tips on buying vacant land in South Africa:
1. Have as much cash upfront as possible
Most major banks and lenders will require the entire or at least a large portion of the property to be paid in cash. Securing finance on vacant land is often more difficult because it’s considered a riskier asset.
However, vacant land is often cheaper than a developed site. If you manage to secure a bond, you should be able to pay it off faster and save on interest.
2. Beware of hidden costs
Remember to consider other costs involved in buying vacant land, such as maintaining the land, obtaining a building permit, survey costs, storage facilities and municipal charges.
3. Decide the purpose of the property before you buy
Are you buying for residential purposes or commercial purposes?
Let’s say you want to purchase land to run a logistics company. In this case, secure and central access to main roads and lots of parking space are required. You need to make sure that the land can support these requirements.
Future developments that will happen close to the land will also influence the resale value of the property, so just make sure you do as much research on the area as possible before you purchase the land.
Also consider zoning laws in an area. These regulate what is and isn’t allowed in certain areas. So, the land may only allow residential buildings or only allow commercial buildings.
4. Research the area and land for building purposes
Is there sewage, water and electrical installations available? Is the land in an established suburb? Make sure you do your homework so that you know what services are available to you.
Another thing to consider is building regulations and restrictions. Your title deed will stipulate how your property may be used and developed. It will also explain the rights, obligations and privileges that come with owning the land. There are costly ways to potentially amend restrictions and suspensions that are on the property.
You will also have to keep in mind that specific estates are governed by a homeowners association. So, you may encounter hurdles when it comes to building regulations. Usually, there will be laws as to the specs a building should have, such as number of rooms, multiple stories, paint colours, etc.
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