Homebuyers hard hit by three sets of substantial fee increases

Three different sets of fee increases in the past few months have added a heavy burden to the upfront costs of ownership of a residential property - and they have come at a time when the hard pressed consumer really cannot afford them, says Ivan Neethling, the Chairman of the Western Cape branch of the Institute of Estate Agents.

Firstly, says Neethling, there was, in February, a big rise in the Deeds Office registry fees – and these came on top of earlier increases in September last year.

The Deeds Office price hike was followed in June by a sudden steep rise in costs levied by banks on bond initiations and approvals. The buyer of a typical R1 million property (with a 90% bond) will now find that his bond approval costs have gone up from R7 980 to R9 400 – and the initiation cost from R4 800 to R5 700.

Then, too, says Neethling, the conveyancers increased their fees in July this year – after holding them steady for five years. Their fee scale, says Neethling, varies, but for most homebuyers the new scale represents an increase of at least 25%.

“Coming on top of the very tight credit criteria imposed by the National Credit Act and the refusal of the South African Reserve Bank to drop the interest rates further, despite requests from the entire home sector that they do this, these measures will slow down the long-awaited recovery in the housing sector,” says Neethling.

Neethling asked whether the Deeds Office, in particular, could feel justified in what is, in fact, a second increase.

“We were advised that their office staff went on a go-slow in January in order to secure payment for overtime – but perhaps they should be reminded that, with 35% of South Africans out of work, they are, in fact, in a privileged position.”

Looking at the banks’ increased charges, Neethling says that they should perhaps be reminded that their fee and mark-up structures are already way ahead of those of most First World financial institutions – and they have been criticised for this by the Governor of the South African Reserve Bank.

“This situation” says Neethling, “is exacerbated by the fact that, although there is limited competition for bonds among banks, the range on offer is not that wide. Whatever choice the buyer makes, he will find himself more out of pocket now than ever before.”

The South African consumer, says Neethling, badly needs the protection of a non-government but state-approved body, which, acting independently, would challenge increases of this magnitude.

“We all recognize,” he says, “that a revival in the economy depends on the consumer being given greater buying power (without allowing him to incur excessive debt). He also needs to be encouraged to invest once again in housing. However, these latest increases will be of benefit to none except those that have imposed them.

Article by: www.startprop.co.za