As a registered property practioner and a town planner, I have noted several instances where prospective buyers purchase a property without full knowledge of what they can do and/or cannot do on the property. In most cases, purchasing a property without conducting due-diligence results in unintended consequences that may be costly and time-consuming for the buyer to rectify. For instance, utilizing land/property in contravention of the town planning, building and environmental regulations etc. may attract a fine/imprisonment and/or both. Thus, this article seeks to provide a summary of key issues to be considered when buying a property, whether you are a developer, individual and/or an organization. The guideline below is not exhaustive, but acts as a checklist document for obtaining the right information from the estate agent/seller.
| Checklist Vacant Land: highest and best use | Checklist: Property |
| Finance: A deposit of 10%-30% may be required to obtain mortgage finance | Finance: 100% mortgage bond may be obtained from financial institutions |
| Zoning and the applicable development control measures (height, coverage, FAR, building lines etc.). The proposed land uses should align with the zoning of the property. | Zoning and the applicable development control measures (height, coverage, FAR, building lines etc.). The existing/proposed land uses should align with the zoning of the property |
| Size of the property and boundary lines | Size of the property and boundary lines |
| Availability of engineering services (water, sewer, electricity, stormwater etc) | Legal installation of services: illegal electricity connections are on the rise |
| Is Bulk Services Contributions (BSC’s) payable? | What are the adjacent zoning and land uses |
| What are the adjacent zoning and land uses (compatibility of the proposed land use and the surrounding uses)? | Condition of the house: patent and latent defects |
| Environmental consideration (wetlands, rivers etc. have a direct impact on the development potential) | Copies of the approved building plans |
| Holding costs (rates and taxes, levies, and security etc.) | Levies and rates and rates: affordability in the long-run |
| Is the registered landowner the seller? | Is the registered landowner the seller? |
| Are there any ‘occupiers’ on the land? Evictions without alternative accommodation are discouraged | Is there any possibility of hijacking of building(s) |
| Servitudes and encumbrances have a direct impact on the development potential | Is the property occupied by tenants? What is the lease period and are they willing to vacate the property? |
| Proposed future plans of governments: e.g planned future roads may affect development potential |
Importance of conducting a due-diligence study before purchasing a property:
- Assist in making an informed decision (highest and best use of a property);
- Assist with purchase price negotiation(s) with the seller;
- Assist to understand the required town planning, environmental and building development processes etc. and respective time frames;
- Assist to ensure compliance with government’s (national, provincial and local authorities) policies, plans and regulations and avoid ‘illegal’ land uses;
- It saves time and resources (regularization of ‘illegal’ uses);
If you require guidance/assistance with any land development processes and due diligence studies, please contact me today to discuss your project.
Useful . Thank you