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Heres how to subdivide or sectionalise your property
Category Property News
Due to its limiting topography and the high demand for homes, Cape Town homeowners who live on large erfs should seriously consider subdividing their properties – based on an investment case and due to the city actively encouraging this practice.
While subdividing your property holds numerous benefits, such as an additional source of income, reduced maintenance costs and rates and taxes, as well as the potential to achieve a higher return on investment when selling, it’s not as cut and dry as some first expect.
How does sectionalising your stand affect municipal rates?
Subdivision entails an application to the local authority, the re-surveying of the property at a high cost, and can take years to finalise in the instance where objections and restrictive title conditions are raised.
“Land subdivision and zoning is stringently regulated by a multitude of existing laws and bylaws, as well as numerous new and amended legislations, so before making a final decision it is vital to thoroughly research the process, preferably in consultation with an experienced professional town planner before making a decision,” says Arnold Maritz, Cape Town’s Southern Suburbs co-principal for Lew Geffen Sotheby’s International Realty. “Whether or not a site is sub-divisible is dependent on the size of the erf and what council regulations apply to your suburb. Your local town planner or a land surveyor can advise you of the possibility of subdividing, the minimum site size requirements allowed and other factors such as building lines and maximum allowable floor areas.”
Maritz says that while owners in older suburbs, living on large stands, may believe their properties are subdividable, minimum subdivision sizes differ from suburb to suburb. For example, in Bishopscourt in Cape Town most plots cannot be subdivided to less than an acre (4,046m²), while a stand of half this size in Claremont can be divided into multiple plots.
“The position of the existing house is pivotal,” says Maritz. “A building situated in the centre of the plot will limit your options for further development as will the inability to create two separate access points.”
The how-to
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Consult a town planner together with your architect and together they will draw up plans and a detailed report which will be submitted to the city council;
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You will need approval from your neighbours and registered letters need to be sent, informing them of the planned rezoning. Adverts also need to be placed in the press allowing for objections;
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Once approval from neighbours is obtained the plans can be submitted to council for approval.
Does your bank know?
Bonded properties cannot be subdivided without the bond holder’s consent, according to Lew Geffen, chairman of Lew Geffen Sotheby’s International Realty. The subdivision will therefore need consent from the lending institution as well as approval from the local authority, registration with the Registrar of Deeds, and registration of the new diagrams with the Surveyor General.
“The land surveyor will draw up the new site diagrams and lodge these with the Surveyor at your cost after which a conveyancer needs to register the subdivision with the Registrar of Deeds usually simultaneously with the transfer of the newly created plot,” says Geffen, noting that most applications take approximately 18 months to be completed after attending to all the conditions of approval. “Property owners also need to determine whether it would be more beneficial to sell off the new plot or to first develop the land and should therefore carefully calculate building costs in relation to property values in the area. Overcapitalisation can be a very costly error which can easily negate expected returns.
HomeTimes suggests you consult an experienced real estate agent to assist you on current and projected property values in your area as well as current popular trends in housing styles, and fittings and fixtures.
Choose your title
You can build a second, freehold dwelling or multiple units and sectionalise your property – this entails moving the property from the ground register to the sectional title register.
“To do so one needs to lodge an application to open a Sectional Title Register in the deeds office,” says specialist conveyancing attorney, Elana Hopkins of Dykes Van Heerden Inc. “The application must include a set of sectional plans approved by the Surveyor General, the Rules of the Body Corporate, and a Section 11(3)(b) schedule which contains the title conditions, the title deed, any application for the registration of conditions in favour of the developer and a certificate of registered sectional title for each unit.
“Upon the first transfer of a unit, one needs to lodge a rates clearance and a Form W which confirms the body corporate has come into existence. The property will be governed by the Sectional Titles Act and the body corporate will have to adhere to its strict requirements.”
New Sectional Title Act signed by President Zuma
Each unit has a separate sectional title deed and can therefore be bonded separately; they will also have separate municipal ratings.
Many properties contain conditions in their title deeds stating that no more than one dwelling is permitted, says Hopkins, noting that if this is the case the condition needs to be uplifted – this despite its zoning of single residential allowing for two dwellings.
“This process is now also dealt with at municipal level so it is predicted that this will be a much faster process than in the past when this was mostly dealt with by the Department of Environmental Affairs,” she says, noting that building plans still need to be approved for the construction of the units and in order to speed up this process it is essential to appoint an architect for advice on how to position and design the units so that it does not trigger any departure from approvals that might require neighbours’ and other consents which could delay plan approval. “This is good news for property owners who in the past had to apply for the subdivision of their properties to allow for the construction of a second dwelling.
“Subdivision is a much more onerous and lengthy process with a lot of red tape involving a number of municipal departments which all need to give their approval before a section 137 clearance can be issued to register the subdivision of the property in the deeds office.”
Homeowners should, however, properly research subdivision and sectionalisation, and consult with competent professionals, says Maritz. “It can yield excellent returns and offers investors many benefits, however, it is also peppered with potentially costly minefields and should never be undertaken lightly,” he says.
Author: lew Geffen Sotheby's International Realty