Housing and Interior Flashcards
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
