Properties are of two or even more kinds — freehold property and leasehold property. While the former refers to properties that are “free from hold” of any other entity except the owner for an indefinite period, the latter are properties usually leased for a period, commonly for 99 years from the time of construction. But, why the unusual figure, 99? Or, what happens or who owns the property at the end of the lease period? Or the applicable renewal conditions? What happens in other countries regarding the 99 year leasehold?
The development authority of a particular area provides land development rights to developers and sells properties for a lease of 99 years. This means that anyone who purchases a residential or commercial property will own it only for a period of 99 years, after which the ownership is given back to the landowner.
Buyers of leasehold properties are required to pay a ground rent to the landowner for this. Lease of such properties can be renewed after the completion of the term.
What happens upon expiry of said lease?
Usually, the government allows conversion of a leasehold property to freehold upon payment of conversion charges or guarantees the right to buy another lease upon expiry of the original lease.
Residential property players are becoming more innovative in their home financing offering to make property investment transactions more accessible.
Absa this week introduced the first lease mortgage finance product of its kind in South Africa to enable people to buy property on a 99-year leasehold basis in the much talked about Waterfall development, a massive mixed-use precinct taking shape between Johannesburg and Midrand.
Luthando Vutula, managing executive of Absa Home Loans, says that unlike many of their offshore counterparts, SA banks have been slow to bring creative mortgage products to the residential property market. “It’s high time that we offer our clients mortgage products that support different forms op property tenure besides traditional freehold or sectional title ownership.”
Vutula says the lease mortgage works no different to a traditional mortgage. It is also payable over 20 years and available at similar interest rates. In fact, there are costs savings involved for lease mortgage clients, as no transfer duties are payable.
Vutula says the product is tailored so that the mortgage bond is registered against a lease agreement between the lessor and the lessee. In this case, the lessor is the Mia family trust that owns the land in the Waterfall precinct.
Although lease financing is not an entirely new concept in SA, Absa’s product is unique as it allows an existing lessee to sell their rights to the particular property for a full 99 years on a perpetual basis. With previous 99-year lease financing products, the new lessee assumed the rights only for the remaining number of years. Absa’s 99-year lease product will be provided exclusively to buyers in various lifestyle estates developed by Century Property Developments within the Waterfall precinct.
Seeff Properties announced another first on the SA home financing front this week. The real estate group has introduced a way for buyers to delay paying their cash deposit until transfer, based on a product widely used in Australia, Europe and America.
The product is not a loan or bridging finance, but a deposit guarantee issued by an insurance company, says Ian Slot, member of Seeff’s National Board and Legal Sub-Committee.
Slot says the product is particularly useful for people buying in off-plan developments, where one’s deposit can often be sitting in a trust account for 12 months or longer before the property is transferred into the buyer’s name.
It’s not only a more cost-effective way to purchase a property but also convenient for investors who don’t want to liquidate funds before transfer that may be tied up in a fixed deposit or shares portfolio.
It may seem like technical legal language, but there are few things more important about your home than whether it is freehold or leasehold. It makes the difference between owning your own home outright, and having a landlord.
There are two fundamentally different forms of legal ownership: freehold and leasehold. Although estate agents tend to gloss over it, the difference can be between a home that is worth buying and one that isn’t. Many people who don’t sort this out when they buy a home end up regretting it – getting it wrong can be hugely expensive.
A 99-year leasehold flat is an owned asset, not a rental: Lawrence Wong
A Housing Board flat sold on a 99-year lease is an asset that will appreciate as the country prospers – a fundamental tenet of Singapore’s home ownership policy, said National Development Minister Lawrence Wong.
Mr Lu asked if the Government should clarify that a 99-year lease is actually a form of long-term rental, and if it was thus misguided for residents to seek capital gain from their properties.
Mr Wong said a 99-year lease is an ownership, not a tenancy. “When you buy a car, how long can you use a car for? Is it a rental car, or your car? A 99-year lease is far longer than 10 years. It is yours. It is an asset. It is owned by the homeowner,” said Mr Wong.
Explaining further, he set out why residential properties, public or private, are sold on 99-year leases. Since 1967, all land sold by the Government is on leases not exceeding 99 years. “We are land-scarce in Singapore, we have constraints. If we give out and sell freehold land today, everyone who buys it will be very happy, and your children and whoever you pass your land to will be very happy, but eventually, there will be those without land,” said Mr Wong.
Hence, the limited leasehold terms allow Singapore to recycle land for the future. Although finite, it will cover the housing needs of at least two generations, he added. Mr Sam Tan, who is also Minister of State for Foreign Affairs, Social and Family Development, agreed, adding that good economic growth in the past five decades has led to homes becoming valuable assets. “So long as we as a people and country work together to grow our economy and share in the wealth of economic growth, then going forward, our homes will be an important and valuable asset that we can use as a retirement nest egg,” said Mr Tan.
Both historians and amateurs contend that Russia was unlawfully deprived of Alaska – that it was never sold, but instead leased to the U.S. for 99 years and not reclaimed in 1967. This unusual version of history surfaces from time to time, and so we take a close look at the truth behind it, and explain what Stalin has to do with it.
In 2014, a petition appeared on the White House’s official web page, urging the president to return Alaska to Russia. Reasons cited were that Russians first discovered the land, civilized and governed it. The petition gathered over 20,000 signatures, but nothing ever came of it. Still, this petition reignited the discussion about the ownership of the state.
A claim out of the blue
In a previously published article we traced the story of Alaska’s sale in 1867, and it is clear that no questions about lawful ownership were raised until many decades later. After the Bolshevik government seized power in 1918, it announced the cessation of all financial and territorial obligations made by the Russian Empire. Concerning Alaska, there was never any question.
According to the 1867 treaty, Russia and the U.S. agreed for “cession to the United States of all the territory of all the territory and dominions now possessed by His Majesty on the continent of America, and in the adjacent islands.”
At the end of World War II, during the Yalta Conference, Stalin is rumored to have mentioned that the USSR won’t exert its claim over Alaska. Americans were a bit baffled, because the USSR had absolutely no rights on the North American continent.
Still, since then, this rumor has surfaced from time to time, and even found its way into the speeches of some Russian politicians such as Vladimir Zhirinovsky, the firebrand leader of the Liberal Democratic Party of Russia. His claims haven’t sparked any serious debate, but there’s another myth that we have to debunk – many Russians and Americans have long thought that Russia didn’t receive the payment for the Alaska lands.
There are actually three types of property ownership in Mozambique, he says, the first being the “real registered right” (title deed) that applies to all new developments in tourism-designated areas and is ownership in perpetuity.
These developments – whether for timeshare, fractional ownership or holiday homes – are all subject to the Periodic Housing Decree, which requires the developer to meet a string of requirements to do with land use and zoning, environmental assessment, development plans and construction standards, the availability of services and financial guarantees before he can obtain certification for the development.
What is more, the Decree makes it illegal for anyone to promote, market or sell any such development or part of a development unless it has been properly certified. “So the bottom line for South African and other investors is that if you are offered property in a new development in Mozambique and the developer cannot produce his certificate for the project in terms of the Periodic Housing Decree, he is breaking the law, and more importantly, you should not even consider buying there.”
As for existing or pre-owned property, there are two types of “land tenure” in Mozambique, says Lunenburg, who amassed many years of experience in international financing and property development before establishing himself in Inhambane.
“In rural areas you can have tenure of the land by ‘right of use’ (which is 45 years plus 45 years renewable), in terms of which any structure that is built on the land remains yours.
“And in municipal areas, you get tenure of the land by way of a ‘certificate of usage’ (in perpetuity), in terms of which you not only own any structures built on the land but register your ownership.”
He says that in both these instances, the legal holder of tenure – which could be a lodge or a hotel – will have a document known as an Alvare, but that this document does not give the holder any kind of permission to sell off any structures built or to be built on the land, such as timeshare units or holiday chalets.
“Quite simply, there are no exceptions to the rule that holiday developments have to be certified in terms of the Periodic Housing Decree and if potential buyers remember this they will not be at risk.”
As for good reasons to invest in Mozambique, Lunenburg says these include the fact that the country already has the second-highest economic growth rate in Southern Africa. “In addition, it is set to be the world’s fourth biggest coal producer by 2015, and also has colossal reserves of natural gas, iron, copper and gold as well as vast tracts of fertile agricultural land. As a result, billions of dollars are being spent on developing and upgrading the roads, railways, harbours and other infrastructure, while the demand for housing is rising.”
In Inhambane, however, the focus is on tourism and likely to remain so. The area boasts miles of unspoilt beaches and clear, warm seas perfect for divers and anglers, as well as an international airport and direct flights to and from Johannesburg, lots of restaurants and pubs, and good medical and banking facilities.
“And with the country opening up and demand growing, now is a good time to invest in property here, especially in the Praia da Barra, Tofo/Tofino and Inhambane City precincts that make up the municipal district. However, it is obviously very important to get the correct certification for any purchase or proposed development, and that’s where our expertise comes in.”
Hundreds of white farmers who had been discriminated against while their black counterparts were getting 99 yearlong leases have a reason to celebrate as they have now been put in the same bracket.
Initially, the white farmers had their leases limited to 5 years.
The decision to give the 99 year leases comes barely two months after President Emmerson Mnangagwa, in his inauguration speech, announced that his government was going to compensate white farmers whose land was violently seized during the controversial land reform programme under former president Robert Mugabe.
In a statement to eight acting provincial resettlement officers throughout the country, the Lands Ministry said there should be no more restrictive five year leases to white farmers.
“Please be informed that the Ministry of Lands, Agriculture and Rural Resettlement has directed that all remaining white farmers be issued 99 year leases instead of the 5 year leases as per the previous arrangement,” said the statement Tuesday.
There are two categories of Land in Zambia: These are:
- State Land – comprising only 6% of land in Zambia. The land is zoned into residential, commercial or industrial use by the District Councils according to their jurisdictions
- Customary Land – Approximately 94% of all land in Zambia is held under this system of tenure. Such land falls under the jurisdiction of the traditional Chiefs.
Systems of Tenure
There are only two types of tenure in Zambia. These are leasehold and customary tenure. Zambia has no freehold system of tenure.
The leasehold tenure runs for 99 years and is renewable for further 99 years. Further renewal possible if there is no breach of the
conditions in the existing agreement. Land in the customary area can be converted to leasehold – thus allowing it to be used as
collateral. Under the 1995 Act, land now has value and can be sold even without improvement on the land.
Land Acquisition and Transfer
The following are the ways in which land can be acquired and transferred in Zambia
a) Acquisition of State Land by Non Zambians
A non-Zambian can acquire land under the following conditions;
- He / She is a permanent resident in Zambia
- He / She is an investor within the meaning of the ZDA Act or any other law permitting investment in Zambia
- In exceptional cases, by Presidential consent in writing
- A person registers a company under the Companies Act, with no less than 75% Zambian shareholding.
- Title Deed will be issued in the name of the registered company.
- Under a short term tenancy of not more than 5 years
- If the person is granted concession or right – under the National Parks and Wildlife Act.
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We in South Africa also have various land systems in place.
Trustland and landclaims fall under two different legislations. Those areas only have communal rights. On the Trustland, only for Zulu people (no others are allowed there) , the Zulu King is only a Trustee of that land. When you claim land under CPA, it is the very same.
A CPA must be registered and those on the landclaims have only communal rights.
KWAZULU-NATAL INGONYAMA TRUST ACT NO. 3KZ OF 1994
ACT 28 OF 1996: COMMUNAL PROPERTY ASSOCIATIONS ACT, 1996
Wet op die Beheer van Aandeelblokke, 1980
Maatskappy Wet, 2008
Gewoonlik is daar slegs een manier waarop die eienaarskap van eiendom oorgedra kan word van die verkoper na die koper: deur die eksekusie ( tenuitvoerlegging) van ‘n oordragakte voor die betrokke Registrateur van Aktes.
Lank voor die inwerkingtreding van die Wet op Deeltitels in 1971, was pogings aangewend om woonstelbewoners die reg te gun om hulle eie woonstelle te besit, waarvan die beste voorbeeld bekend dié is van die ‘Aandeleblok’ sisteem, wat ‘n aandeelhouer van die maatskappy, wat ‘n blok woonstelle besit, die reg bied om ‘n spesifieke deel van die gebou te beset.
Ingevolge hierdie skema, egter, neem die aandeelhouer nie daadwerklik eienaarskap van die deel van die gebou wat hy/sy okkupeer nie: die eienaar van die eiendom behou eienaarskap.
‘n Ander uitstaande swak punt van die skema is dat, sou die maatskappy insolvent raak, die aandeelhouers agtergelaat sal word met slegs waardelose aandele in ‘n insolvente maatskappy.
Tensy dit as ‘n bedoeling daargestel was ten tyde waarvan die aandele aangebied was, mag ‘n Aandeleblok maatskappy nie die leningsverpligtinge daarvan vergroot sonder die toestemming van ten minste 75% van die aandeelhouers wat ten minste 76% van die aantal stemme besit nie.
In die Wet op Aandeleblok Skemas, is voorsorg gemaak vir die omskakeling van deelblok regte na deeltitelregte – slegs deur die omskakeling van die skema na deeltitel kan ‘n lid van ‘n deelblok maatskappy titel van die eenheid verkry.
Daar is akte registrasiekantore in Kaapstad, King William’s Town, Kimberley, Vryburg, Pietermaritzburg, Pretoria, Johannesburg en Bloemfontein. Die dokumente wat ingedien moet word om registrasie van oordrag te verseker moet opgestel en onderteken word deur ‘n prokureur toegelaat as ‘n aktebesorger. Die opstel van oordragaktes is ‘n gekompliseerde en tegniese taak wat aktebesorging ‘n roeping van besonderse gespesialiseerde aard maak.