Development opportunities

Since mid-2016, the COCT has permitted two dwellings on an SR1 residentially zoned property and this has now been expanded to three properties, opening further development opportunities subject to certain guidelines and adherences.

This is an automatic right subject to any title deed restriction against more than one dwelling or building restrictions which would limit this. The building must comply with all zoning scheme limitations such as building lines, height or any required neighbours' comments and/or public participation.

If there is a council imposed one dwelling restriction, it can usually be dealt with relatively easily but will delay development by between approximately 6-12 months. A neighbour-imposed condition would be more challenging and a potential major obstacle. Start with advice from an architect and town planner, especially if title deed restrictions apply.

Therefore, the options for development potentially include subdivision or sectional title development. Subdivision will depend on erf size restrictions imposed by zoning laws and regulations. It is costly and time consuming and requires public participation but does offer excellent financial benefits. It can allow you to sell a development opportunity as opposed to a sectional title which requires building works before you can transfer and unlock cash in the property. You can also realise a land value without having to build and give buyers more freedom to choose what to build. You could subdivide into more than two erven and create further potential for six units (three on each portion) for example. You could also sell only the land and use the sale proceeds to fund the building works or offer the built house/unit on a turnkey basis.

A Sectional Title Scheme (regardless of erf size) enables you to get around the cumbersome, costly and non-guaranteed subdivision process. Subject to building regulations applicable to the erf, the property can be converted to a Sectional Title Scheme with two (or three) sections with common property and exclusive use areas (if applicable). A fully compliant Scheme would be approved without third party comment.

The only requirement to open a register are two dwellings constructed that have approved building plans. The second (or third dwelling in such cases) must be the same size or smaller and similar architecture to that of the main dwelling failing which special council permission is required. The second dwelling must be built to at least wall plate height before a Scheme can be opened. Transfer to a buyer cannot take place until a Scheme has been created.

Once built or partially built, the proposed sections, common property and exclusive use areas (if applicable) can be surveyed and a sectional title plan prepared for submission to the Surveyor General. If approved, a Scheme can be opened, provided Body Corporate rules or a Homeowners' Association (HOA) Constitution (approved by the Community Schemes Ombud) are in place. An HOA is more practical for a two-unit scheme.

Plans to add a third dwelling can only be submitted if there are already two built dwellings and there are sufficient municipal services available. You could however include a right to extend when you register/open the original Scheme (for two sections), identifying such in a roughly depicted plan. This right can be sold to a third party who then builds that section or buys the potential to build that section i.e. the land it will be situate on.

Source: https://stbb.co.za/

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