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Meyer de Waal

021-461006

 

Frustration at rates clearance delays for property transfers

Frustration at rates clearance delaysDec 02 2014 07:00 Carin Smith

Cape Town – Delays in the issue of rates clearance certificates in the Cape are causing huge frustration among property buyers, sellers, conveyancers and estate agents.

Property transactions cannot be lodged in the deeds office and registered while the attorneys are waiting on these rates clearance certificate.

“There is a huge problem. We are sick and tired of struggling and are all at our wits’ end,” a conveyancer, who wanted to remain anonymous, told Fin24 on Monday.

The delays in obtaining rates clearance certificates are causing huge losses, according to another attorney, who wants to remain anonymous.

“Only bridging companies is happy with the current situation, because more agents and sellers are forced to apply for expensive bridging finance,” he told Fin24.

“On top of that there remains the uncertainty of whether the deeds office will close between Christmas and New Year. They often decide on the spur of the moment and do not think about the further delays this will cause.”

New system

The problems are caused by the implementation of a new advanced electronic rates clearance system on October 21 2014. The new system has affected operations severely, including many inexplicable error messages produced by the new system.

Members of the Property Law Committee of the Law Society of the Cape of Good Hope met with representatives from the City of Cape Town early in November 2014 in order to discuss concerns.

Subsequent to this meeting the situation deteriorated further, according to the law society. It consequently resulted in an influx of complaints from law practitioners.

Alderman Ian Neilson, the City’s Mayoral Committee member for finance acknowledged in a response to the Law Society that a number of technical problems arose with the latest implementation phase of the City’s automation of its Property value chain system, which includes the processing of rates clearance certificates.

Technical problems also arose with previous phases of implementation.

“The City fully agrees that the facilitation of property transfers are important to our city’s economy and takes the matter of efficient processing of transfers, and the City’s role in that process, very seriously,” said Neilson.

Most recently, three issues have arisen:

– Erroneous and duplicate registration of conveyancers causing them not to be able to transact online;

– A weekend shutdown of the City’s SAP system for upgrading, that impacted on available processing time;

– A strict validation system that the City implemented.

“The first issue was a once-off occurrence that received immediate attention once identified. This matter should now be resolved,” said Neilson.

Any conveyancers who still have a problem in gaining online access should immediately approach the City by forwarding an email to help.users@capetown.gov.za and quoting the error message in the subject field and in the text, provide the company name, Business Partner number, registration number and, if electronic, provide their Kref and/or LAN number.

“The second matter is again a once-off matter that has been progressively overcome,” said Neilson.

“The key matter which requires further attention, is that of the validation system which the City imposed. This was imposed in good faith in order to ensure that further steps in the City’s value chain are not impeded.”

Neilson said the City certainly understands that the issuing of rates clearance may not require all the data that the City requests, but asks conveyancers to also recognise that the City has its own needs in the process.

The City needs to be able to adequately close off accounts of the seller, refund credits to a secure bank account, open the rates and services account of the purchaser and know where and how to deliver bills to the purchaser.

The director of revenue has reassessed the data verification requirements and has agreed that some of the requirements, especially those that emanate from the City’s side, such as the pending applications due to the data verifications, should not hold up the issuing of rates clearance certificates (RCCs) and has issued instructions that work around solutions be implemented so that these payment schedules and RCC applications can be processed.

“We shall on an on-going basis review the data requirements for validation and will continue to engage the Property Law Committee in this regard,” said Neilson.

“We are cognisant of the pending Deeds Office shutdown and understand the urgency that this matter presents to conveyancers. We are pulling out all stops to address these issues as practically as possible, including working extra hours of overtime and weekends.”

Long-term view

Joe van Rooyen of Seeff in Durbanville, says, although there are some initial problems with the new system, he believes that in the long run it will be a more efficient system.

“It is correct that the city has gone on a new system. All transferring attorneys had to register as business users for purposes of rates clearance certificates with the city. The cut-off for that was October 31 2014,” explained Van Rooyen.

“The verification process thereafter resulted in a few hiccups, but once a firm has been registered the process is easier than before.”

With the old process the attorney received the outstanding figures within one day, but after payment it took between 10 and 20 days to get a rates clearance. In some extreme cases it took up to six weeks.

“With the new system, it takes about three days to get the figures. It seems the city verifies their records during this time as we had queries about the information that we have provided. After payment though, it takes about three days before they issue a clearance certificate,” said Van Rooyen.

 

Bond originators will have to become more skilled and more effective & Solution by My Budget Fitness

Property 24

25 Nov 2014

Bond originators will have to become more skilled and more effective in the coming year if they are to be successful in keeping the flow of mortgage loans to the public at a reasonably satisfactory level.

Good bond originators have an exceptionally important part to play in helping prospective home buyers to get to grips with their financial situation.

This is according to Bill Rawson, Chairman of the Rawson Property Group, who says the end of September review of home loans by Absa has shown that the total value of outstanding balances in the South African household sector has dropped by R2.9 billion to R1.394 billion. He says this figure was largely due to unsecured loans, overdrafts, credit cards, general loans and advances but, regrettably, mortgage loans were also among the credit categories to experience a slowdown. By Absa’s calculations, they grew by only 2.2 percent year-on-year, he says.

Rawson says apart from lower overall economic growth and inflation, both of which have impacted on the household consumer, Absa have revealed that lending has been severely curtailed by a significant number of credit-active consumers having impaired credit records.

This factor, perhaps above all, has affected their appetite for risk and led to a tightening up in the lending criteria at virtually all the banks. With high interest rates expected towards the end of this year and in 2015, growth in credit, therefore, is highly unlikely.

Under the circumstances, Rawson says good bond originators have an exceptionally important part to play in helping prospective home buyers to get to grips with their financial situation. This, he says will involve teaching them to understand the banks’ loan criteria and rectify impaired credit records. It is also their responsibility to see that their loans are pitched at the right levels, thereby increasing their chances of success.

Certain Rawson Property Group franchises and other property marketing operations have, with the help of good bond originators, been successful in coaching prospective homeowners to success – with over 90 percent of their bond applications being approved, as against a national average of around 65 percent, says Rawson.

“Rectifying impaired records and aligning oneself to the banks’ requirements can take anything from six to 24 months. However, it is an exercise worth doing, particularly as in the volatile economic situation in which South Africa now finds itself, property owners will be in possession of one of the more stable asset classes.”

COMMENT BY MEYER DE WAAL – HOW TO RESTORE YOUR GOOD CREDIT PROFILE

Luckily the My Budget Fitness Programme developed by us caters for home loan applications that are declined says Meyer de Waal, a practising attorney and director of My Budget Fitness. When you participate with My Budget Fitness, we investigate the reason why your  home loan was declined  – it can be anything from a bad or negative credit profile, lack of affordability, or lack of a sufficient deposit.

Once we have established the problem we then design a tailor made programme to the aspiring home buyer, provide him with home ownership education, tools to prepare a personal budget, tools to manage and track each rand that you spend and follow you spending patterns.

The aim is to go back to a bank a few months later, with a proven track record, when your credit profile and affordability have been improved and you had the opportunity to save towards a deposit. In many instances the Rent2buy concept also enables the aspiring home buyer to secure a home much faster, through this innovative concept to own your own home.

Meyer de Waal

021- 461 0065 meyer@budgetfitness.co.za