Slow money flow expected as Johannesburg transfer chaos continues

Ongoing health and safety issues at the Johannesburg Deeds Office are causing severe delays in the processing of property transfers, and property sellers and buyers in the metro unfortunately need to be prepared for registrations to take longer than usual, says Barry Davies, COO of the Chas Everitt International property group.

"Since December, the office has faced elevator shutdowns and protests over seriously unsafe working conditions in the 52-year-old building it occupies, temporary closures and a growing backlog of transactions. This is currently estimated by Johannesburg conveyancers at more than 5000 files, or almost half the usual number of transfers registered per month."

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"Despite a formal agreement to relocate about 170 staff and deeds examiners to new premises, this has not happened yet and recent flooding in the building has added to the chaos. We understand that there are now plans to secure urgent temporary accommodation for the office by next month, and a longer-term lease by September, but we anticipate that these relocations, if they take place, will cause further delays in transfer registrations.

"Indeed, it appears that home sellers, developers, estate agents and conveyancers in Johannesburg can all expect to encounter extended registration timelines and delays in accessing their sale proceeds, commissions and fees for at least the next few months. And this will not only have negative financial implications for the whole real estate sector in the city but will also slow the flow of many millions of Rands into the economy as a whole."   

Meanwhile, he says, home buyers and sellers also need to be prepared for some banking reforms just introduced to add time to the property sales process.

"The regulatory changes introduced by the banking sector are aimed at improving transparency, protecting consumers and strengthening the country's financial system against fraud and money laundering.

"They include mandatory disclosure of fees, meaning that banks must not only clearly communicate all charges relating to any account they open, including home loan accounts, but also obtain written confirmation from the customer that these are understood.

"In addition, the banks must now undertake biometric (physical) verification of identity for all high value transactions, including many related to property, and stricter background and affordability checks on credit or loan applications, which can be expected to slow approval timelines."

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Davies says that while home loan approvals could previously be expected within two to five working days, this could stretch to seven or more working days under the new regulations. "This may not seem significant, but it does have real implications for Offers to Purchase that include clauses requiring the buyers to obtain bond approval within a certain time frame for the sale to proceed.

"A longer approval period could result, for example, in an offer becoming null and void because insufficient time was allowed for the buyer to meet this suspensive condition. This would then allow a seller to accept a different offer, leaving the original buyer out in the cold.

"Consequently, buyers now need to double check that their Offers to Purchase include realistic timeframes for bond approval, ideally with some leeway for delays as the new banking regulations are implemented."