Housing and Interior Flashcards
(23 cards)
Define acquisition
The act of getting something
Define tenure rights
The financial agreement under which someone has the right to live in a house or apartment
4 ways housing can be acquired
Buying, Building, Renting, Renting with intention to buy
What are the financial and contractual rights and responsibilities when renting?
- Signing a lease which gives you rights and responsibilities as a tenant
- Paying rent in monthly instalments (Deposit to protect landlord from financial loss)
- In case od a breach in the lease, the landlord may evict the tenant
- Both parties must inspect lease and not any defects present.
Advantages and disadvantages of renting
Advantages of renting
- Can leave at any time with due notice
- Greater freedom of movement and less responsibility
- Landlord responsible for maintenance and insurance
- Rental is cheaper as a short term option
- Tenants can run a business from there with permission from landlords
Disadvantages
- Not legal owner of property
- Do not benefit in the long term due to payments made
- Do not accumulate wealth in the form of an asset
- Landlord may terminate contract and tenant may end up homeless
- You cannot sell the unit for profit
- Rental will most likely increase
- Not an investment
Financial and contractual rights and responsibilities when building a home
- Buying land in the right location
- Choosing a house plan you like and that suits a building plan
- Selecting the contractor or builder
- Finding enough money to finance the house
What is the NHBRC
National Home Builders Registration Council
What does a building contract usually contain?
- A breakdown of all the building costs
- The exact size of the house
- The date by which the house will be finished
- Guarantees provided to ensure structural defects will be repaired at a later stage
- Dates and way in which the payment should be made
- Consequences if either party does not fulfill part of the contract
What is the standard home builders warranty
- An undertaking that goes to the heart of the agreement, which if breached, entitles the home owner to cancel the agreement and sue for damages
Advantages and Disadvantages of building a home
Advantages
- A form of forced saving towards an asset
- Owning a house means own decisions made about house
- You can choose design and feature of house
- You are not inheriting original owner’s problems - do not need to renovate
- New houses generally built in areas that are growing and not declining
Disadvantages
- Generally more expensive
- More complicated and takes long
- Additional work and extra costs
- House you want must fit building codes
- Required to pay local rates and taxes
- More difficult to move
What does Free Title/ Freehold mean?
A form of tenure that indicates that a person is the legal owner of the entire property
Advantages and disadvantages or Free Title
Advantages
- It is your own house which gives you security of tenure
- You become the legal owner and leave it to your children
- Use unit as security for a bank loan
- Unit can be sold to make a profit
- A room can be rented to generate income
- A business can be run from the home
Disadvantages
- Long-term financial agreement where you make monthly payments
- Maintenance is your responsibility
- Bond repayments tend to be more expensive
- Safety and security is your responsibility
- Have to pay rates and taxes
What does Sectional title mean?
- Condominium
- A form of tenure where you are the legal owner of a section of a housing complex
- Common property (Do not form part of individual sections) is jointly owned
- Each owner is a member of the body corporate which must control, administer and manage the block
- Money to run the block is raised by monthly levies paid by all owners = employ staff, maintain buildings, pay rates and cover extra expenses
Advantages and Disadvantages of Sectional Title
Advantages
- Legal owner = can leave property
- Provides greater security
- Can enjoy common facilities with responsibility of maintaining it
- Save on travelling costs
- Fewer responsibilities
Disadvantages
- Have to abide to Body Corporate rules
- Have to pay charges levied upon your section
- Neighbours may be noisy
- Outside space is limited
- Levy rises every year when inflation rate increases
- Have to get permission to make any changes to the exterior of your unit
What is the offer to purchase agreement?
A document in which the buyer makes an offer to the seller, and which contains the terms and conditions for the purchase and sale of the property
What is the deed of sale agreement?
A formal written legal agreement between the buyer and seller, detailing the terms and conditions of the sale of a property
What is included in the DOS agreement?
- Accurately records the description of the property
- Correct purchase price
- Identity of buyer and seller
- Records all the conditions agreed upon
- Records an suspensive conditions
What is a mortgage bond?
A right over a property of another
Mortgage home loan agreements
A loan that is secured on immovable property. Receive a loan in a lump sum which is legally bound to the property which you pay over time.
What is a deposit?
A sum of money you must pay in advance to show commitment and used as financial security
Interest
The money the bank charges you for the amount you borrowed
Fixed interest rate - An interest rate that is fixed over the agreed-upon period of time
Variable interest rate - Fluctuating interest rate depending on the home loan lending rate
3 types of fees
Initiation fee
Service Fee
Bond registration
3 types of Insurance
- Homeowner’s Comprehensive Insurance (HOC) = Short-term insurance that protects the structure and permanent fixtures from disasters
- Household contents insurance
- Mortgage protection insurance = when you die, debt is paid off
