On the road to property ownership: The differences between Sectional Title and Freehold property
Category Advice
You may own several properties, or you may be making your very first investment, either way, the more you know, the more empowered you are to make the best choice, so we're here to unpack different types of property ownership as well as the advantages and disadvantages of each.
Freehold Ownership
Freehold ownership means you have full ownership rights including that of the land and buildings. This kind of ownership means all maintenance, bills and insurance costs are the owner's responsibility. Homes in residential estates can be either freehold ownership or sectional title depending on the estate.
Advantages
- Outside of municipal regulations, building regulations and zoning rights, you can pretty much do what you like with the land.
- In terms of square metres, freehold properties are also usually bigger than sectional title.
- A freehold home offers more privacy and more space, especially between your home and the next.
Disadvantages
- Although having a no-holds barred freedom to do what you want with the property and full rights of use, you are also solely responsible for all upkeep and maintenance.
- A larger home normally means more access points and can therefore mean there is a greater security risk. Additionally, the costs to establish a secure perimeter and other security features are yours.
- A larger property requires more upkeep and therefore can be more costly to run in terms of general maintenance costs and monthly utilities. In comparison to a home in an estate for which you pay levies, your month-to-month costs can fluctuate depending on what needs to be done to the property.
You can, however, have the best of both worlds. Estate within the Sibaya Coastal Precinct, like Gold Coast Estate offer bespoke homes of varying sizes which come with all the freedom of a freehold property yet also enjoy the benefits of being within a secure, gated estate.
Sectional Title Ownership
This is ownership of a part, or section within a building, complex or development. This type of ownership means you have bought an undivided section within something, and the rules are governed by the Body Corporate which is responsible for the holistic management of a scheme, including things like owner's levies and maintenance or upkeep of common areas and facilities. In South Africa, duplexes, simplexes, apartments, and townhouses are normally held under sectional title scheme.
Advantages
- Sectional title property is most often found with an estate, or smaller complex where security comes with the package. As an owner, your monthly levies pay for security which means that there is a vested interest from all owners that security remains a priority.
- Your monthly levies also cover maintenance costs which means that the upkeep of common areas, facilities and gardens is taken care of already.
- A smaller home can be cheaper to run than a larger one as monthly utility costs are generally lower.
- Because a smaller home has fewer access points, you're able to simply lock the place up and leave. What's more is that if you're within a secure estate, you'll have an added tier of security over and above any personal home security systems you may have put in place.
- With the advent of companies like Airbnb, short-term and holiday letting have grown in popularity. Sectional title homes within secure estates are better places to attract the sector of the market looking for a short-term rental, or holiday rental option, especially those estates, like OceanDune and Pebble Beach, which offer great communal facilities and robust security.
"Purchasing a Sectional Title property is a hassle-free choice; you can easily lock up and go knowing there is a high level of physical security and access to an array of facilities and amenities. The advantage is that general maintenance and upkeep is the responsibility of the Body Corporate or Management association and that you're in the best possible position to get a rental return on your property."
-Pam Naidu, Sales and Marketing Director of Devmco Realty
Disadvantages
- Sectional title homes are beholden to Body Corporate rules and the Homeowner's Associations. This means that approvals are needed before any changes are made to your home. However, this can also be an advantage as it ensures there is uniformity when it comes to the look and feel of an estate or complex, which ultimately, adds value.
- Depending on where you buy, you can feel like there is a lack of privacy due to the proximity of the other properties. With that being said, many people who live in sectional title schemes find that there is a collective responsibility when it comes to security with neighbours happily "keeping an eye on things" for each other when needed.
Modern estates, like Gold Coast Estate, offer both freehold and Sectional Title homes. Parc is a sectional title development within Gold Coast estate which takes all the best elements of a freehold property, like being pet-friendly and having private-use gardens and fuses it with the best of sectional title ownership within an estate.
Author: Devmco Realty
