SECTIONAL TITLE OR FREEHOLD OWNERSHIP: WHICH SUITS YOU BEST?
Sectional title living is quite popular among South African buyers for its heightened security, affordability, and communal way of life. However, understanding and evaluating the pros and cons of sectional titles and freehold ownership is vital before deciding which property type suits you best. To help the decision-making process, below are the pros and cons of each ownership type.
Sectional title ownership
Sectional title describes separate ownership of units or sections within a complex or development. When you buy into a sectional title complex, you purchase a section(s) and an undivided share of the common property. Sectional title dwellings comprise mini subtype houses, semi-detached houses, townhouses, flats or apartments, and duet houses.
- Better security
Most sectional title developments have excellent security around the perimeter and at the entrance of the development, which is all included in the monthly levies.
- Guaranteed curb appeal
With sectional title ownership, you’ll be paying a fixed levy to cover the maintenance of the common property, wages and salaries of cleaners, security and additional staff, plus the water and electricity needed for the common property. As a result, you’ll be guaranteed curb appeal across all units within the sectional title. Everyone will also need to follow the rules set by the complex’s Body Corporate or Home Owner’s Association, which means that none of you neighbours will be able to construct an eye-sore in their front yard.
- Communal living
Because most sectional titles are situated within a gated community, homeowners enjoy a greater sense of community living. Most sectional title schemes boast far greater interaction with your neighbours, especially those with clubhouses or common areas within the complex or estate.
- Lack of freedom
Sectional title developments are governed by a Body Corporate or Home Owners Association (HOA). When you invest in a sectional title scheme, you’ll own part of a scheme. As a result, you’ll need to comply with the management rules and conduct rules as laid out by the Body Corporate or HOA. This also means that you don’t have as much freedom to make external improvements to the property. If you want to renovate, you’ll first need approval from the Body Corporate.
- Majority rules
The rules and regulations of any particular complex may change, and, unlike freehold property owners, sectional title investors or owners may not be happy with the changes but won’t have the power to change them in an individual capacity.
- Liable for the debt of the Body Corporate
It’s important to note that all owners within the Sectional Title scheme may be held liable for the debt of the Body Corporate. Therefore, it’s important to assess if the scheme is being managed correctly and that the financial statements of the Body Corporate are in order.
Freehold or full title describes the transfer of full ownership rights when you own a property, which includes the building and the land it’s built on. These kinds of properties include free-standing houses, cluster houses, residential property used for business purposes, and smallholdings.
You are in complete control and financially responsible for the property in its entirety. This means that you are free to renovate your home however you choose as long as you have received planning approval from the relevant municipality.
- Spacious living
Freehold properties tend to have larger grounds than sectional title units because the whole plot on which the property stands belongs to you alone. This means you’ll usually have a larger garden and more space between you and your neighbours.
- Less security
With freehold properties, owners are entirely responsible for their own security – you need to pay to secure the perimeter, and often for an armed response security company to be on call.
- Additional costs
You’ll have to pay for the general upkeep of your home, including the pavement, garden, and exterior of the home. Unlike the levies paid in sectional titles, these costs are not fixed and can be trickier to budget for unless you hire a professional garden service to take care of your property regularly.
Your decision between sectional title or a freehold property will largely depend on your property needs. If you’re looking for less maintenance responsibility, then a sectional title might be better suited to you. If you’re looking for freedom of your property, freehold ownership is for you. Before you start searching for your new home, reach out to an agent from a reputable brand who can guide you towards the right property to fit your lifestyle.