In its June 2025 Property Newsletter, automotive and property data provider Lightstone reports that only one formal house exists per 3.3 families who earn less than R26,000 per month. This accounts for more than 80% of South African households. The overwhelming majority of South African households are currently priced out of the South African property market, and this trend is worsening.

“There’s something very wrong if such a large demand is not being met and, although the problem is well known in the property industry, no real solutions are forthcoming from the government actors who are responsible for solving these problems,” says Renier Kriek, Managing Director of innovative home finance provider, Sentinel Homes.

He says the root causes are mainly systemic and need to be addressed by the government. It is simply not acceptable that since 2000 we have added 19.3 million inhabitants in SA but our economy has managed to produce only 1.9 million homes.

Where we are
Not only are there not enough houses but new developments are victim to rising construction costs, making each generation of property less affordable to consumers than previously. In fact, property prices have been outpacing wage increases for the past 70 years, not only in SA but in most of the world.

Add to this trend South Africa’s flaccid economic growth resulting in low job creation and low wage growth, and it’s easy to see why affording a home is becoming harder and harder for low to middle earners.

National changes
Certain things need to change outside the property market before problems can be tackled from within, says Kriek.

• Economic growth: South Africa sorely needs economic growth driven by consistent economic policy. Not only graft but also mismanagement of state and parastatal finances need to stop. “For example, paying CEOs of dysfunctional utilities more than the Prime Minister of the UK is wasteful and robs citizens of funds that could go towards housing,” says Kriek.

 

• Structural reform: Foreign investment coming into South Africa is not the kind that creates infrastructure or jobs. It’s portfolio money that can easily be withdrawn. The country needs structural reform that embraces deregulation, labour market reforms, trade liberalisation, privatisation or public-private partnerships, and tax reforms to encourage infrastructure investment. This may also require currency devaluation, which is a difficult political proposition and is unlikely to be popular with richer consumers.

 

• Vocational training: Artisans are retiring faster than they can be replaced, which puts upward pressure on housing production costs. Most of South Africa’s workforce is not well-suited to its services-oriented economy. It needs to reindustrialise to create jobs for the skills we have, encouraging technical trades, such as plumber or electrician.

 

• Restrictive labour policies: South Africa’s restrictive labour policies make labour much more expensive than in competing economies, such as Bangladesh or Sri-Lankha. This could be resolved by devaluing the currency or reducing imports, or simply by liberalising labour laws. That might mean workers are paid less but that more people will have jobs as a way of creating an economy that works for all – and this would be a temporary situation that will correct itself as more jobs are created.

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“Making such changes at a national level will ensure that problems in the property market are not intractable,” says Kriek. “But these necessary reforms will also go a long way toward rejigging the economy generally for the better.”

Property market changes
Inside the property market, several problems are making housing construction more costly and therefore less affordable when properties are sold.

• Bureaucratic sprawl: This is one of the largest problems developers face and not unique to South Africa. Bureaucrats and lawmakers heap regulation upon regulation, increasing time to approvals from month to years - or decades in some cases. The government needs to streamline or completely remove regulations that cause delays and add costs to housing developments.

 

• NIMBYism: NIMBY (Not In My Back Yard) refers to people who object to new developments they perceive to be invasive of their lifestyles or threatening to their status. In South Africa, it has become the nimby pastime to delay new housing developments them in the courts. This not only discourages development but the spectre of a nimbyist court challenge adds to the cost of producing new housing stock. Legislative and enforcement frameworks intent on solving for housing  production should be designed to allow for rigorous public consultation and objections but limit the time allowed for the process and restrict access to the already full and overburdened court system.

 

• Fixed charges: Fixed charges, like a basic electricity fee, hit poorer households the hardest. Low-cost housing becomes substantially more expensive when municipal rates and fixed charges are added, creating the risk that owners cannot afford the property. This disincentivises developers from entering that segment of the market. So, as a rule, fixed charges should never be applied and all municipal charges on property should be either a progressive tax (i.e. you pay a smaller percentage if you are poorer) or based on actual consumption.

 

• Small unit avoidance: Fitting more smaller units on a piece of land means building more kitchens and bathrooms, which are the most expensive structures in a house, regardless of size. It also takes the same energy to sell small properties as large properties. So, there are already structural disincentives to building small properties. “The government can offset this deterrent with better tax breaks, or programmes that release land to developers to build only small, affordable homes,” says Kriek.

 

• Slow land release: A major part of the solution is the faster release of new land for development. Socially responsible public comment and input must be part of a well-structured and well-managed but shortened process. Some processes, like an environmental impact study, could be run concurrently with others or even be eliminated completely for some areas. Ideally, processes would be designed to be carried out in advance on land earmarked for development and developers would be told which land is available without having to wait. For example, municipalities may conduct environmental impact assessments in advance on peripheral areas earmarked for development

 

• Lender and landlord protection: Home financers or landlords are often seen as large bureaucratic and potentially predatory institutions that do not invite sympathy from the public (or the courts). Yet, they provide an invaluable service by transforming the shorter-term savings of ordinary South Africans into capital that goes to homeloans and housing developments, among other longer-term investments. Eviction procedures and foreclosures need to be rationalised, and their timeframes shortened to ensure that, while consumers must be treated fairly, this important function is not put at risk through delays and procedural disadvantages. Burdensome termination procedures disincentivise capital deployment into the provision of housing finance or rental housing.

 
Opening the door to housing that’s affordable
If 80% of South Africans cannot afford a home, and developers are unwilling to meet the demand, something is terribly wrong. It’s not an innovation or economical problem but a systemic one that the government needs to rectify. The problem is market design, and that is something for which we rely on government, and for which the political will must exist to take some tough decisions.

“The private sector is profit driven and the demand clearly exists, so it’s up to the government to create the incentives and ease the restrictions that prevents the private sector from earning their bread in the provision of affordable housing,” says Kriek. “There’s more than enough money floating around – government just needs to create a market that provides incentives for the available resources to flow to where the demand already exists.”

Nothing is certain except death and taxes, the saying goes. Property owners must plan for both if they want their home and other assets to pass smoothly to those surviving them.

“Structuring your estate smartly, or at least having a will in place, will spare those grieving your passing further hardship, both emotional and financial,” says Renier Kriek, Managing Director at Sentinel Homes.

Any decision a property holder makes in this regard should be guided by advice from a professionally qualified financial and estate advisor. However, Kriek offers a good overview.

Basic factors
When planning for death, property owners need to consider two main factors.

The first is how to structure their estate so they don’t directly own anything when they die. This is usually only appropriate for those with large estates and minor dependents, or businesspeople who risk having their assets attached to repay creditors, but may not be the best tax planning advice for most consumers.

The second concern is their marital status. Are they single, married in community of property, or married out of community of property either with or without accrual?

“Each marriage model will affect the distribution of an estate differently,” says Kriek.

Make a will
Without a will, intestate rules apply to the deceased estate, as prescribed by the Intestate Succession Act 81 of 1987.

These rules determine which surviving relatives will inherit what portion of the estate, from the surviving spouse and descendents down to distant blood relatives.

The Act’s complex requirements could result in, for example, a spouse losing their family home to ensure they and each child receives an equal inheritance.

So, for anyone having assets such as homes or other fixed property and especially those property owners who have dependents, it is always best to have a will professionally drawn up to make sure assets will be distributed in a manner desired by the property owner.

“Again, the marriage model will affect how the will should be structured,” says Kriek. “Estate planning with a licensed and regulated professional is also likely to include investments and insurance, proper planning of which remain essential.”

Leverage trusts and companies
The beginning of the article mentioned not owning property at death, which is a desired outcome for some consumers due to tax, risk or other reasons. Avoiding direct property ownership while still enjoying the benefit of owning property can be accomplished through the use of a trust or company.

However, the cost of these vehicles makes them best suited to more affluent people who have larger estates and minor dependents, or entrepreneurs.

If property is transferred to or bought through one of these entities, the entity owns the asset. So, dying is of no consequence, if one’s dependents are the ultimate beneficial owners of the entity, such as through being beneficiaries of a trust.

The property held by a trust or company rather than in a person’s own name will not be subject to estate tax or capital gains tax at death, and typically cannot be attached by the deceased’s creditors. Only income that is earned through that property is taxed at a rate prescribed for the specific type of entity in addition to capital gains tax if the entity elects to sell the property concerned.

“Which structure is best suited to an individual’s needs must be determined with the help of a trusted estate planner or financial manager,” says Kriek. “Do not assume that the more complicated structure, using entities such as trusts and companies, is the “better” and therefore most appropriate one.”

Address affordability
Unfortunately, structuring cannot save a property that surviving family members are unable to afford, whether it is bond repayments, rates or levies, trust administration fees, corporate accounting fees, or other expenses. This could happen if a surviving spouse does not work and cannot raise the required finances to settle existing debt against the family home or other property.

An estate might be able to cover its own costs, for example, where income is derived from rental properties or the entity receives cash bequests from the deceased person. Otherwise, a will, trust or company should be backed by some form of insurance that ensures funds are available after the owner’s death.

“By following this rough guide and using a properly qualified and licensed financial planner, you will allow your loved ones to continue enjoying the life you worked so hard to provide them with,” says Kriek.

ENDS


MEDIA CONTACT: Rosa-Mari Le Roux, [email protected], 060 995 6277, www.atthatpoint.co.za 
For more information on Sentinel Homes please visit:
Website: www.sentinelhomes.co.za
Facebook: Sentinel Homes

It's not easy to get a mortgage on your dream home if you're not employed full time and earning a fixed salary. Freelancers, those working on commission or sourcing their income from gigs, and many other independent earners, often find themselves facing a brick wall when applying for a home loan from banks.

However, more people than ever are becoming self-employed in these fields and are seeking easier alternatives to a traditional mortgage bond. This is according to Renier Kriek, Managing Director at Sentinel Homes, which specialises in financing home ownership through instalment sale agreements.

How does it work?
"Instalment sale agreements are steadily becoming popular not just among those that do not qualify for a bond but also many who do not fit the salaried mould for which the mortgage model was specifically developed," says Kriek.

An instalment sale makes acquiring a home similar to buying a vehicle on hire purchase. In Sentinel's case, the company finances the purchase and the buyer repays the value of the property in monthly instalments.

Although the company holds the title deed, the buyer enjoys all the rights and responsibilities of ownership during the period of the contract. Once the purchase price is repaid in full, total ownership is transferred to the buyer.

"On the surface, there is little difference between buying with a bond or via an instalment sale," says Kriek. “The only practical difference is the procedure followed when the buyers do not pay their instalment, but even in that case, an instalment sale is to their advantage.”

However, an instalment sale agreement offers several advantages to this class of homeowner.

Improved affordability
Because a freelancer or a self-employed person’s income may vary from month to month, the bank will only consider a portion of their earnings. So, even if they qualify for a home loan, they will likely have to settle for a cheaper property or fund any shortfall on the purchase price themselves.

Through an instalment sale, up to 100% of their income is assessed. “This gives the purchaser more freedom to choose a property they really want,” says Kriek.

Improved credit score
An instalment sale allows a buyer to acquire a valuable asset sooner and improve their credit score in the process. As the property’s value increases and their financial position grows over time, they may become a more attractive borrower. And they do not risk being caught in a rent trap while the values of homes continue to increase.

"Many of our clients have been granted bonds on the basis of their instalment payment history and were able to settle our instalment agreement early from bond refinance," says Kriek. “You can never get on the property ladder soon enough.”

Lower default risk
When a borrower defaults on their mortgage, they face losing their property through a sheriff’s auction, having adverse judgements against them, and being blacklisted for 5 years or more. This impedes their ability to acquire another property and obtain any credit, and may even limit employment opportunities.

However, with an instalment sale agreement, they have more options, including negotiating their position and, ultimately, selling the property to pay off their debt. "Even then, they retain a clean record and we have assisted clients that eventually recovered from such a position to buy another property," says Kriek.

Protected by law
As with a mortgage, the contract is governed by the very comprehensive National Credit Act. Another law, the Alienation of Land Act, also applies, ensuring the rights of the parties to the agreement are fully protected. Instalment sales are also registered against the title deed of the property.

A growing market
As more people start to freelance or work in other independent fields with irregular income, owning a home through an instalment sale agreement promises a logical alternative to mortgage bonds.

"It is apparent that an instalment sale agreement offers better advantages, more protection and greater flexibility to those who dream of owning a home without sacrificing their financial independence," says Kriek. “The offering is available via mainstream intermediaries, so be sure to ask your bond originator or estate agent about this currently lesser-known financing option.”
ENDS

MEDIA CONTACT: Rosa-Mari Le Roux, [email protected], 060 995 6277, www.atthatpoint.co.za 
For more information on Sentinel Homes please visit:
Website: www.sentinelhomes.co.za
Facebook: Sentinel Homes