Kinds Of Property Ownership

If you are considering buying property in South Africa, then you have many options for you to consider from. But it will greatly depend on the type of property you are looking for, for example buying a house for the purpose of living in it, renting or as an investment opportunity or simply as a means to collecting more assets in your name. Whatever may your purpose or motive be, before you buy a property you need to be aware and have at least some kind of rudimentary knowledge of the various options of owning property in SA. Some of the property options available to you as a buyer as follows:

• Freehold
• Sectional
• Property Company
• Syndication
• Listed Property
• Share Block Company

Freehold – this kind of ownership will enable you to have complete hold over the house or the property you are buying. This kind of ownership is the most common form that is available in South Africa. Under this form of ownership option, the entire control over the property will be yours and you may do whatever you want to do with it, for example use it for living, sale, or an investment etc.

Sectional - This form of ownership applies when a single property has several owners i.e. that several people have a stake in the same property. The property in question covers a huge area such as housing societies or schemes, and several people own houses built on this property. Besides owning the house, the owners equally own the other aspects of the property such as the parking area, the community swimming pool, the gymnasium etc. Thus, owning a section/piece of land on a larger property, along with other people, is termed as sectional ownership. 

Property Company - used by listed companies of the stock exchange when they purchase a property specifically for business reasons, without making their shareholders liable.

Syndication – when a property is extremely expensive, and out of a single buyers ability to purchase; several buyers invest in the same land and form a syndicate or syndication.

Listed Property - a listed property is one which can be listed on the Johannesburg Stock Exchange and can be traded in. a buyer can invest in this kind of property if he/she wants to invest in a property without controlling it.

Share Block Company – in this type, shareholders buy units or shares of the property offered for trade by the company. The shareholder has ownership of the property as well as its tax liabilities. This leaves the company free from the tax liabilities of the property.

The ownership option you decide to choose will depend solely on your reason or purpose for owning the property. All the above mentioned types of property ownership options can be rented out, but “Sectional” attracts most investors. Besides the reason or purpose of you buying the property, you will have to take certain other aspect under consideration before you decide on the type of ownership.