When it comes to buying a home in South Africa,
there’s more to consider than just location and square metres. The type
of ownership you choose has implications for your budget,
responsibilities, and overall experience. Here’s the lowdown on the most
common property ownership options, plus some insights from property
experts to help you figure out what’s right for you.
Freehold Homes: The Classic Choice
What it is: Freehold ownership is when you own both the land
and the dwelling itself. This means you have complete control over the
property, including any renovations or extensions (sometimes subject to
neighbours’ approval).
Pros: Maximum freedom and flexibility, potential for greater
long-term appreciation as land values rise. Who doesn’t dream of having
their own garden, personalising the social areas, and adding a braai
pit? Plus, historically, freehold properties tend to increase in value
over the long run.
Cons: Higher maintenance costs, as all upkeep is your
responsibility. You’ll also bear the full brunt of rates and taxes. If
you buy property in a gated estate, what you are allowed to do may be
governed by the rules of the body corporates.
Best for: Families or those needing space to spread out and anyone good with a toolbox (or knows a good handyperson).
Noziqhamo Moss of Just Property Port Elizabeth
shares, “Freehold properties offer a true sense of independence. If you
value privacy and the ability to customise your living spaces, freehold
may be the ideal choice.”
Meanwhile, Andrew Schaefer, MD of leading property management company Trafalgar,
noted in an article published in October 2023, that there is even a
mixture of freehold and Sectional Title properties in certain gated
estates now, while Sectional Title ownership is certainly not restricted
to high rise apartment buildings or townhouse complexes.
“However, no matter what they look like, the most important
difference between Sectional Title and freehold property developments is
the fact that in a Sectional Title scheme, you are buying a share in
the common property in addition to your own apartment, townhouse or
house.
“This common property includes the land on which the whole scheme is
built, as well as gardens, parking, any other shared amenities and
security equipment such as electric gates and fencing, CCTV and
biometric scanners. And you will be liable to pay a monthly levy to
cover the maintenance and repair of this common property, as well
as certain other items.”
On the other hand, he says, when you buy a freehold or full title
home, you acquire exclusive ownership of an entire property, including
the land and any structures on it – although if it is in an estate, you
will also have to pay a monthly levy to the homeowners’ association
(HOA) to cover the maintenance and upkeep of common areas, roadways and
the security provisions. Your personal homeowners’ insurance cover (HoC)
will, however, not be included in this levy.
Sectional Title Units: Owning within a Community
What it is: With sectional title ownership, you own a specific
unit (like an apartment or townhouse) within a larger complex. You also
have shared ownership of common areas like gardens, pools, and security
systems. Sectional title developments are governed by a body corporate
made up of owners.
Pros: Lower maintenance costs, as they’re split between
owners, and everyone contributes via monthly levies. Built-in amenities
are a bonus, and having other owners nearby in a gated community or
block usually offers better security than living in a freehold property.
Plus, the barrier to entry is lower as sectional title units can be
less expensive than freehold.
Cons: There is less privacy, and body corporates have
rules—sometimes lots of them. Don’t expect to paint your front door neon
green without getting approval—there will be restrictions on
renovations you can make. Plus, monthly levies must be paid in addition
to rates and taxes, and everyone is responsible for the debt of the body
corporate.
Best for: First-time buyers, downsizers, individuals seeking a
more low-maintenance lifestyle and anyone who’d honestly rather hit the
pool than mow the lawn.
On Sectional Titles, Joe Alves of Just Property Blouberg
shares that “Sectional title schemes are an excellent way to enter the
property market. They strike a good balance between affordability and
convenience, making them a great choice for many. It’s worth noting that
Lightstone data shows that for the first time in two decades, sectional
title property prices rose faster than freehold.”
Apartments: City Living and More
What it is: Apartments are a subcategory of sectional title,
offering a compact living space within a larger building. They range
from tiny studios and micro apartments to multi-bedroom units, often
built in high-density areas ideal for a bustling lifestyle.
Pros: Affordability, minimal maintenance, location within
urban centres close to work and amenities. Live, work, play! And an
apartment can be a smart investment – think rental income down the line
when you’re able to move to somewhere bigger.
Cons: Limited space and sometimes even stricter body corporate
rules. Can be affected by noise from neighbours. Typically, there is
less long-term appreciation compared to freehold.
Best for: Young professionals, buy-to-let investors, and individuals seeking an urban lifestyle without extensive upkeep.
“Apartments offer access to the exciting pulse of city life without
the price tag or responsibilities of a larger property. For many, a flat
is an affordable opportunity to get a toe into the property market,”
says Chelsea Hendry of Just Property City Bowl in Cape Town.
Buy-to-let and Property Investing
What it is: Purchasing a property specifically to rent out is a growing investment strategy in South Africa. Any type of property – freehold, sectional title, even leasehold – can be used for buy-to-let purposes.
Pros: Rental income can help with the bond repayments and even
give you some extra cash flow. Long-term, it grows your assets and
builds your property portfolio. Plus, there might be tax advantages
(check with an accountant on that).
Cons: Being a landlord isn’t always sunshine and roses. You
need to find reliable tenants, deal with repairs etc. Fluctuations in
the rental market can affect income. Buy-to-let ownership requires
careful research and financial planning.
Best for: Those with solid financial footing seeking alternative income and long-term asset growth.
Our Dynamic Duo, Rob Pound and Robyn Kersten, from Just Property Heritage,
share that: “Property investment can be a smart wealth-building
strategy. When evaluating opportunities, it’s essential to partner with
an experienced agent who understands the local rental market. Once
you’ve bought, a managing agent can take a lot of the schlepp out of
being a landlord, like vetting tenants’ credit history, preparing a
water-tight lease and seeing to maintenance.”
Finding Your Fit
Choosing the perfect ownership type is a personal decision. How much
space do you need? Are you budget-conscious? Do you hate dealing with
admin? Be honest with yourself about these things.
