Choosing An Area To Buy A Property

Any country is definitely zoned into geographical zones guided by its civil planning. Civil planning will also have a bearing on residential planning hence location of a property is very important. Imagine buying a property and then told later it is located on an illegal area or location.

Zoning of residential suburbs definitely follows plans and Surveyor General Zimbabwe has laid down plans for each suburb.

This post will classify residential suburbs according to directions and this is being used by many estate agents to identify suburbs. For example Classifieds Zimbabwe uses the same model.

Harare

  • Harare’s suburbs are normally classified into the following;

Harare North

  • Borrowdale Brooke,Glen Lorne, Avondale, Highlands, Mount Pleasant,Greystone Park,Helensvale, Crowhill Views, Chisipite

Harare West

  • Marlborough, Tynwald, Belvedere, Westgate, Bluff Hill, Mabelreign, Sandton Park, Avondale West, Milton Park, Madokero, Fairview

Harare CBD

  • Avenues, Harare City Centre

Harare South

  • Waterfalls, Hatfield, Mainway Meadows, Southerton, Cranborne, Prospect, Southerton, Willowvale, Prospect, Graniteside, Ardbennie, Braeside

Harare East

  • Greendale, Eastlea, Zimre Park, Mandara, Msasa, Manresa, Sunway City, Amby, Athlone, Rockview

Harare High Density

  • Budiriro, Glenview, Kuwadzana, Highfields, Glen Norah, Warren Park, Mufakose, Snake Park, Marimba Park, Dzivarasekwa.

Factors to consider when choosing a residential suburb

  1. Potential of the suburb. Harare South is a classic example of a location that has suburbs that have potential. Hatfield and Waterfalls are old suburbs.

Hatfield is a residential suburb in the South of Harare, Zimbabwe. The suburb was laid out in 1920.

Waterfalls is the name of a residential suburb in the south of Harare, Zimbabwe. The neighborhoods within Waterfalls are Derbyshire, Grobbie Park, Houghton Park, Induna Park, Midlands, Mainway Meadows, Malvern, Parktown, Uplands and Shortstone.

Characteristics of the these two suburbs;

  1. Bigger stands– many of the stands average 3 000 square meters and some even stretch to 7,000 square meters. This has presented opportunities for subdivision, farming projects (greenhouse) and cluster houses. Take note these need regulatory approvals
  2. Old houses– many houses that are in these suburbs are now old and some dilapidated. This means the houses will need renovations and sometimes extensive.
  3. Maintenance- linked to a and b above, most gardens are unkempt and thus are characterized by overgrown trees and grasses. Additionally, water challenges emanating from City Council water problems. City Council water is erratic or in other areas no longer flowing through the taps

Upside of buying properties from these areas

Potential– properties in these areas are forecasted to increase greatly in value in the immediate future. If many forward thinking and young property owners buy and renovate these houses, the value of these areas will increase greatly.

Price negotiations– buyers have power to negotiate based on characteristics noted above

Downside

Old houses and maintenance.

Will share tips and list of suppliers of equipment and material used for maintaining these properties.

4. Closer to amenities –Shopping centers, schools, clinics and transport accessibility affect a neighborhood. Service providers should be close so that no much time and money is wasted looking for these. Some neighborhoods are so far away from time or have limited access by public transport. Do you need to travel for many minutes or hours to get to a shopping center?

Do you have young children? are you old? or still young and energetic? Being closer to amenities like clubs, libraries, sports clubs will influence.

5. Servicing – is the area serviced- developer should have fully developed the roads, water and sewer network and electricity. Some neighborhoods still do not have electricity and have incomplete roads many years after the developer sold the properties. Imagine additional costs of alternative energy for years?

6. Geographical hazards– there have been an increase of residential suburbs that are located in low lying areas and some even closer to streams and rivers. Calculate please the consequences of buying properties in such areas. At the time of buying, you might not foresee the effects. Flooding? Special foundations?

7.  Other hazards– there are other locations closer to railway lines, airports, sewage treatment plants, bus terminus and industry. These pose noise and health hazards.

8. Neighboring suburbs– some neighborhoods are known for high crime or moral incidences and some are illegal. Being closer to such suburbs affect the valuation of your property and also may mean increased security risks. The best way to find out detailed information about the neighborhood crime statistics is to call the local police department. The police department should have information about specific neighborhoods, information regarding crime prevention, community policing, and more.

9. Registration and compliance– this is the most important factor especially for new suburbs. Many new suburbs have running disputes with city councils or “owners”. Before you commit first establish ownership and registration with city or town councils.

Check on ownership of the project and whether the developer has complied with all town planning and civil requirements. Easy way to do this is to use the internet to google and residential suburb. Obviously the results will not be conclusive but will give you a starting point. Also visit the offices of the project owners and ask for evidence and ask all necessary information. Do this even when you are not buying directly from the developers- someone who bought it directly from the developer is selling you.

Also visit Surveyor General Zimbabwe for the maps and related civil planning approvals.

Simplifying The Immovable Property Transfer Process

The processes involved when buying a property are many and the terms used are difficult to understand. The objective of this post is to simplify the process and yet be as detailed as possible to assist you.

PROPERTY AND FUNDING IDENTIFIED

Previous posts have given insight on the process of identifying the property and also sourcing for funds through your Bank. Now you have signed the Bank agreement and now you are ready to transfer the property from seller into your name….so here are the processes involved;

PROPERTY TRANSFER

The process of changing ownership from the seller to you the buyer is loosely referred to as the transfer process or called conveyancing.

Normally the seller appoints this lawyer so that his interests are safeguarded. However, you can mutually agree on the lawyer.

Tips

  1. Track record counts. Reputable law firms will know the process involved transferring a property. Ask for their turn -around- times and ask them about some of the processes involved. Some firms have been known to take long to conclude only because they do not know the processes involved.

If you accessed a loan from a Bank to finance the purchase, the Bank will appoint a lawyer to guard its interests. This lawyer will work together with the lawyer of the seller. Seller’s lawyer will transfer the property and the Bank appointed lawyer will register a mortgage bond over the property. The two processes are carried out at the same time (simultaneously).

Transfer Documents

The conveyancing lawyers will call you for signing documents. Documents required include; Identity Documents, the original Title Deed, agreement of sale, proof of funds e.g. loan offer letter.

The conveyancer then draws up the transfer documents such as the Power of Attorney, the Seller’s Declaration and the Purchaser’s Declaration and thereafter the seller and purchaser will sign the documents in the presence of the conveyancer.

As the property buyer, you are responsible for payment of transfer fees to the conveyance, he will draft a proposal deed of transfer (in duplicate) deriving the powers to do so from the signed and witnessed agreement of sale. In drafting the proposal transfer deed the conveyancer will always refer to the deed from the seller and other information from the Deeds Office. The proposal must also refer to the diagram deed which will be annexed to the first transfer deed.

Zimra Interview and Capital Gains Tax (CGT)

Conveyancer will arrange a Zimra Interview so that Capital Gains Tax is obtained. Zimra interviews are held at Kurima House corner Nelson Mandela and 3rd Street.

The seller is responsible for paying CGT. Capital Gains Tax is a tax levied on the capital gain arising from the disposal of a specified asset. Specified asset include         immovable property (e.g. land and buildings).

It should be noted that with effect from 1 January 2014, disposal of property for which the seller does not hold title deeds (cessions) are also liable to Capital Gains Tax.

Tips

The following are exempted from paying CGT;

  1. No Capital Gains Tax is chargeable on a “roll-over”, that is, by spending all the proceeds from the sale of the old principal private residence on the purchase or construction of a new principal primary residence. This also applies where a residential stand which qualifies as a principal primary residence is disposed of and a new residential stand is acquired.
  2. Transfers of any specified assets between spouses.
  3. Transfer of principal private residence between former spouses in pursuit of a divorce order
  4. Transfer/disposal of a specified asset by a deceased estate

Rates Clearance Certificate

The conveyancer applies for a rates clearance certificate from the relevant municipality and the municipality will advise on the amount payable. The municipality normally request for payment of any arrears on account plus payment of three months in advance to ensure that no moneys are outstanding at the date of registration. The Deeds Office will not register a transfer if the rates clearance certificate has expired. The seller is responsible for the payment of the rates and taxes in advance.

 Tip

Please also check with Zimbabwe Electricity Supply Authority for any arrears on the account of the property you want to purchase. The seller is responsible for past arrears.

Lodgment & Registration

The conveyancer will then lodge the transfer documents in the Deeds Registry. Should a new bond be registered over the property or an existing bond be cancelled the documents will be lodged at the Deeds Office simultaneously with the transfer. The documents are examined in the Deeds Office by qualified examiners. The process takes not more than ten working days. When the Deeds Office is satisfied with the accuracy of the documents, the transfer is then registered.

Payment

Payment is the last process and will ONLY be done after successful transfer and bond registration has been carried out and confirmed by the lawyers.

Payment is done through a trust account held by the conveyancers.

If the process involves a Bank, the Bank will transfer the amount as stated on the Letter of Undertaking into the Trust Account.

Trust Accounts highlights the need for a reputable and trusted law firms to handle the transfer process. Some lost money after the lawyers abused their Trust Accounts.

For additional information on costs and details, a report and commentary by the World Bank will assist you

Assisting you buy a property through a Mortgage

In the previous discussion  we advised that one can buy a property through a Mortgage. Let us discuss the step –by-step process in Zimbabwe.

A mortgage is when a Bank or a financial institution assists you purchase a property through a loan and that property is usually used as security for the loan.

Step 1identify a financial institution that will offer you the mortgage

In Zimbabwe, mortgage loans are offered by;

  1. Building Societies– these have traditionally offered mortgages as their main products and include CABS Building Society, ZB Bank, FBC Building Society
  2. Commercial Banks– Stanbic Bank, Barclays Bank, BancABC, MBCA,
  3. Property Developers and Insurance Companies– you find these offering ‘mortgage’ structures to assist you buy their properties

For their contact information, please refer to the last post.

Banking has evolved from transactional to relationship. Definitely you need to have a relationship with a Bank that will offer you a financial solution. So if you are thinking of getting a mortgage, find a Bank that will assist with that solution.

Like any relationship it should be based on;

  1. Mutual Trust– can the financial institution be trusted. Remember a mortgage is a long time (lifelong!!!!) relationship.
  2. Commitment– as a suitor, you are expected also to be committed. One way is meeting the minimum banking history. Most institutions require you to bank for a minimum of 3 months before a loan is considered. Are you committed to Bank to wait that long? When an exception is made that the 3 months is waived, will you direct your income as agreed?

It is also advisable to Bank with a Bank that banks your Employer.

Step 2- Affordability

You have to afford the mortgage loan you want to apply. By this we mean, you should be able to pay back the loan as per the loan agreement.

Tips

  1. Get a mortgage you can afford. Calculate your monthly installment on the mortgage and consider other monthly commitments that you have like car loan installments, accounts with clothing outlets and other financial commitments that you have.

Most financials institute wants your monthly loan installment against your monthly income not to be more than 30% and very few 40%.

  1. Be realistic about future income. Is your employer performing well and thus be able to meet future salary payments? Other sources of income?

In general, most Banks in Zimbabwe are not funding 100% of the purchase price. By this we mean, the Bank will not give you a loan that covers all (100%) of the purchase price. You are required to raise a deposit which may range from 20 to 40% of the price of the property.

Tips on raising a deposit

  1. Dispose a movable asset- for example a car
  2. Savings- this is a hot issue in Zimbabwe emanating from confidence issues with the Banking Sector. Would you consider taking the risk to raise a deposit for your dream home?
  3. Engage your employer. Your employer can assist you raise the deposit through a special loan or a special guarantee relationship with your Bank

Other upfront costs

It is not only the loan you need to qualify for and raising the deposit, but also upfront costs. Upfront costs are costs that are needed in advance to enable the purchase to go through.

You need to budget for ;

  1. Transfer fees- fees paid to lawyers to transfer or change ownership from the seller’s name into your name
  2. Bond registration fees- the Bank offering you the mortgage loan need to place a charge on your title deeds and will remove it after you have paid back the mortgage loan
  3. Facility fees or establishment fees- these are fees charged by the bank to set up the mortgage or establish a relationship. These are normally once off costs
  4. Insurance fees- insurance to cover the property and insurance to cover the loan

Step 3- Identifying the property

After knowing your loan qualification and related fees, you need to look for a property that is within your financial limits.Where to look for properties. The following will assist;

  1. Estate Agents. There are many registered agents who sell properties on behalf of sellers for a commission.Here is a list of reputable ones in Zimbabwe.

Classifieds and Property are top top websites listing properties for sale in Zimbabwe.

  1. Most newspapers have classifies sections listing the properties. The Held especially the Thursday paper has a broad listing. Also the Sunday Mail has a broad listing.
  2. Due to the depressed economic activity prevailing, many property owners are losing properties to Banks and other lenders or creditors after failing to pay. You can also attend auctions to buy properties. If you are not able to attend the auctions, you can visit the office of the Deputy Sherriff. The Harare office is located at corner Samora Machel and 4th Street. They have a listing of properties under auction. The office also works with estate agents who sale on their behalf.

What to consider

  1. You can bargain the price greatly. The highest bidder gets the property
  2. Moral issues. Does your conscience excuse you to buy a house from a family forced out because of debt?
  3. Location of property

The price of the property can be judged by its location. This is the key criterion to judge a property. It is said that a good house is equal to a good location. The more desirable the location, the expensive it is going to be.

Currently there are zones or locations that have great potential. These are literally investment zones at the present moment. These areas can be said to be in rebirth and thus their property values will significantly increase in 10 to 15 years to come. Most of the properties are now old and neglected but are sitting on vast land. With renovations on reasonable budgets and investment in gardens, the properties will be transformed into gems. Areas include Waterfalls, Marlborough, Hatfield and Prospect.

Would you invest in new areas being developed?

What to consider when considering location;

  • Closer to shops and medical facilities
  • Access to transport especially public transport

 

  1. Time to search

The truth is you are making a lifelong investment and besides you are not buying sweets.

Take time and shop around. Visit as many properties as possible before you settle for the final. Do not be swayed by emotional attractions like paint and some modern fittings. Look beyond that!!!!!

Conduct a sales comparison of similar properties in your area that have been sold recently is critical. You don’t want to buy a property based on just market value, rather look further to assess if – given the style, land content and existing condition of the property – what is a reasonable price to pay?

Don’t hesitate to make multiple offers. It can help your goal of finding a good buy.

Step 4- Bank processes

The bank will carry out its assessments to determine whether you qualify for the loan. After their internal assessments, they will communicate the result of your application.

They will look at;

  1. Ability to pay back- your income
  2. Credit history- they will check public records and other records of your previous dealings with other creditors
  3. Valuation of the property- Valuation of the property you want to buy will be carried out. So make sure you have access to the property and the property meets the minimum valuation that equals the purchase price being requested by seller

If they are satisfied, you will sign a loan contract and thereafter lawyers will transfer the property into your name and a mortgage bond is registered.

Your seller is then paid after….is this clear?? If not I will dedicate another session giving more detail on the transfer process and bond registration…..what it is and all.

Well…

Do you need any clarification on any issues raised above?

Any issues you want clarification on?

Feel free to get in touch on

In the next posting we will discuss the process of property transfer in detail and will share tips in indetifying lawyers to assist with the transfer process

 Enjoy

Get Your Home

GetYoHome-Yes You Can

Renting or owning a property? – What would you choose? Generally in Zimbabwe, Getting Your House is a better option.

Here is spine chilling thought- when you pay rent to your landlord; you are assisting him/her to buy the property. This means if you die renting, you have spent your lifetime toiling to get someone own a property.  Take for example if you are renting a property in a medium density suburb like Westlea or Ashdown Park. A 3 bed full house has a monthly installment of +/- US$500.00 on average. Imagine if using the same amount to pay toward a mortgage loan with a Bank?

So what funding options are there for you to Get Your House? 

Herewith a discussion of the options;

  1. Cash
  2. Mortgage Finance
  3. Credit/ Installment
  4. Rent-to-buy a house.

Cash

This is when you have saved some cash and you use the cash to buy the property. This is the option that we all wish we would use!!!! No hustles, you have your money and all you worry about is getting the right property.

….and cash here includes savings in a savings account with a Bank…you not encouraged to keep loads of cash at home….you are taking all kinds of risk!!!!!

Advantage

The Zimbabwe market is currently described as a buyer’s market.  A buyer’s market is a market or a situation where the buyers have more negotiating power over sellers. The market has limited buyers who have cash or means to pay for the purchase price. Therefore if you have cash, you have loads of power to negotiate the price down and some have seen price coming off by more than 5%.

Advice & Tips

  • Negotiate the price. The market is yours because you have the cash!!!!!
  • Just because you can buy on cash does not mean you need to give it away. Before you pay, make sure you have rights to the property. The seller should have rights to the property or simply should own the property or given the rights to the property. Before you pay or transfer the property, make sure your rights to the property are secure.

The next article will discuss tips on ownership, agreement of sale and how you can pay in a secure way.

But I know a thought first crossed your mind in the first lines of this cash option. You know how limiting the economy is. It is very difficult to raise the full cash price for a property in this environment.  What option can assist?

Mortgage Finance

You have heard about the word mortgage a lot or the expression I bought my house on mortgage.

A mortgage loan, also referred to as a mortgage, is used by purchasers to raise funds to buy real estate- a house of stand. So it is a loan given by a Bank or Building Society to an individual who qualifies to use it to buy the stand or house with title deeds or in some instances cession. We will explain these terms in detail in the next articles.

The loan is “secured” on the borrower’s property. This means that the title deeds of the property will be held by the Bank until the borrower has finished paying back the loan. In the event that the borrower later fails to pay back the loan, the Bank will take sell the property to recover the outstanding loan in a process they call “foreclosure” or “repossession”.

Did you know?

The word mortgage is derived from French Law and the term used by English lawyers in the Middle Ages meaning “death pledge”, and it refers to the pledge ending (dying) when either the obligation is fulfilled or the property is taken through foreclosure.

Most Banks in Zimbabwe (if not all) require you to put down a percentage of the property purchase price as a deposit- raising a deposit. For example if a property is being sold for $50,000.00, some will require you to raise a deposit of $10 000 (20%) and the Bank will assist with a mortgage of US$40,000.00.

Advantage

Assist you to raise buy a property by paying over a reasonable period. It’s a method to make you save!!!

Disadvantage

After the loan period, say 20 years, you would have paid to the Bank almost double the initial amount you were given as a loan. This is mainly due to the double digit interest rates in the Zimbabwean economy. Interest is calculated on the outstanding capital balance. This changes when the rates becomes a single digit- say 2% to 9% per annum.

Another disadvantage is that your negotiating powers are reduced if you are on mortgage. The selling price if it is a mortgage tends to be higher than the cash price. The market has the perception that it takes longer to receive the money if a mortgage than cash and thus add a premium.

Here is a list of Banks and Building Societies assisting with mortgage loans;

 

BANK WEBSITE CONTACT NUMBER EMAIL ADDRESS
Stanbic Bank www.stanbicbank.co.zw +263 (04) 759 471-9 zimccc@stanbic.com
CABS Building Society www.cabs.co.zw +263 (04) 883823/33 management@cabs.co.zw
CBZ Bank www.cbzbank.co.zw +263 (04) 748050
FBC Building Society www.fbc.co.zw +263 (04) 700312 info@fbc.co.zw
BancABC Bank www.bancabc.co.zw; +263 (04) 369 701-15
MBCA Bank www.mbca.co.zw +263 (04) 701636-52
ZB Bank www.zb.co.zw 08677 002 001

In the next article we will outline the step by step process in the mortgage process in Zimbabwe and the tips involved.

Credit Or Installments

Some sellers especially property developers are selling their properties on credit or on installments. The developers will sell directly to sellers and they offer you to pay the purchase price in installments over period of two (2) years. In some instances you will be required to pay a deposit and the balance you pay over a period of time.

Tips

  • Make sure the agreement you will sign is reasonable. Look for clauses that talk about default, penalty and possession.
  • Compare the cash purchase and the credit price. Is it cheaper to get a loan elsewhere -say a Bank than directly from the developer?
  • Reputation of the developer. There have been media reports of fly by night developers- yes bogus developers. Imagine contributing funds and you are swindled!!!!! (In a future blog we will assist you how you will do a background check on a developer).

Rent to Buy

If you cannot qualify for a mortgage or afford the credit option, there is an alternative: a rent-to-own agreement. When buyers sign this kind of contract, they agree to rent the home for a set amount of time before exercising an option to purchase the property when or before the lease expires.

Renters pay a certain amount each month to live in the house and have the option to buy the house. Each month of rent they pay is income for the seller while a portion of it goes toward a down payment to eventually buy the house.

For example if you pay monthly rent of $500.00, $300 will go to cover rent and the $200 toward your deposit contribution.

This option is not common though in Zimbabwe. In most cases it has happened is when the parties in the agreement have a special relationship and in most cases it has been a good social relationship.

Advice

  • Have an agreement in place and understand the terms of the agreement

Thank you for your time.

Until next time!

You need more information join us at @getyohome or email getyohome@gmail.com

WELCOME

Welcome to GetYoHome!!

Throughout my profession l have realized that many people need more information on acquiring a property-a house and how to turn into a Home. Additionally, many that l have interacted with do not have the step-by- step information on buying a property.

The series of this blog will definitely assist you. The reason why this blog was set is summarized as;

  1. Share information– many people do not have much information surrounding purchase of a property (stand or already completed house).
  2. Simplify– many processes involved in buying a property are normally legal terms. Terms like transfer, transferring attorneys, a bond, agreement of sale confuse the public especially among the low income earners or the poor populace. This blog will assist.
  3. Advice– many people need advice on what property to buy, how to buy, and how to turn a house into a Home. Here in Zimbabwe, we have a lot of stories on bogus sellers and developments-we will assist you with advice on that too.
  4. Investment– we have investors outside Zimbabwe and Zimbabweans living abroad who need information about the Zimbabwean property market. You have come to the right media.  Will share information to assist you make measured decisions.

For your views and comments please write to us on this email and follow us on twitter at @getyohome.

Next time!!!!