Buying a new home is an exciting, incredible achievement and experience. There’s so much to celebrate and so much to remember, and while we can’t blame you for getting sidetracked with all things decor, housewarmings and figuring out new routes to your favourite grocery store, there’s a lot to be mindful about when it comes to the financial, admin side of all-things associated to being the new owner of your own home.
Episode 14 of our PodAcademy Podcast has Dora Lou sharing the ins and outs of municipal accounts. Please click here to enjoy the audio podcast, and for those of you who prefer to take it in via written format, we’ve put together this informative blog for you.
Registration isn’t the last step
Registration is an exciting step in the process. If things didn’t feel real yet through the browsing and bonding processes, this is that proud moment when things get very real and the realisation that your new home is more than just a lot of paperwork, but something that you’re on the precipice of moving into. This step isn’t the last in the administration process however, and getting your accounts with your relevant, local municipality is an important part in making sure that enjoying the services of your new home aren’t interrupted.
It is important that first-time homeowners know about activating municipal services and pay rates and taxes.
Once you’ve received confirmation that your property has been registered in yours — the new owner’s — name, do you then make a trip to the municipal offices to sort out the account. It should be noted that the buyer has to first open their own Municipal account before the seller can close theirs. Once your property is registered in the deeds office (and into your name), this triggers a notification to the relevant municipality.
If we look at an example whereby you might have bought your new home based in Midrand, then the municipality for the City of Johannesburg is notified and the Land Information System (LIS) is updated with the new owner’s details; this includes your:
- ID Number
- Size of the property
The complete updating of all relevant information with LIS can take up to two months after registration and for the new ownership details to reflect. Bear in mind that Covid protocols may add some lag to this timeline; this isn’t necessarily anything that the local Municipality’s can help while adhering to Government regulations.
Commencement of billings
Creation of the account is done internally by the council but the effective activation and payment processes is a responsibility that lies with the new owner. Remember that Rates and Taxes are their own line-item as part of the Water, Electricity, Sewage and Refuse Removal services.
To receive your monthly statements electronically, you can choose to have these sent to your email address, and/or you can create a profile online where you can login and review your monthly balances due.
In the context of complex living
If your property is within a Body Corporate or Home Ownership scheme, some of these elements are billed within your Body Corporate or Home Ownership scheme fees as part of your monthly levy statement.
It is important to pay attention to the very specific descriptions as line items on your billings wherever you are living, so that you are sure your fees are being accounted for and paid by you under the relevant payment directives as predetermined by either a free-standing home or one within a complex.
To avoid duplication (or alternatively missed payments due), remember to confirm with your managing agent as to what’s included in the monthly levy — and what’s not.
Being mindful of due payments is as important as knowing what you are paying for under a levy scheme. No one wants to be paying too much; rare cases have occurred where a tenant was paying sewage (for example) as both a direct payment to their local municipality as well as a line item on their levies account. This duplication is not only incorrect but is bound to alter your careful budgeting in ways that negatively impact you.
In-person versus online facilities
During these times of safety protocols and social distancing, it’s understandable that you may be looking for an online (remote) solution to solving your municipal activation needs. Unfortunately, this is not possible at the activation stage and this function does still need to be completed manually, directly and in-person.
We understand that you will want to limit the amount of trips to your local municipal office, so before heading out to your local municipal office, be sure to confirm:
- what their operating hours are
- when they accept walk-ins for municipal account activations
- what documents you need to have as originals and/or certified copies of.
Here’s a guideline of what you will need to provide:
- Proof of registration (issued by your conveyancing attorney)
- ID documentation (individuals)
- Company registration documents and Director’s ID (where a company is buying the property)
- Service Deposit: this serves to buffer you against missed or late payments; this is usually an amount of two-months worth of your averages for municipal expenses
- Bring your water and electricity readings (taken at the time of registration); this facilitates a smooth handover where the previous owner’s billings end and yours begin
While the activation of the new homeowner’s profile can take up to two months, the payments associated with the account are effective based on the timeline associated with your registration, so budgeting for billings from that date is important and is not simply subject to receiving a new statement; the activation of your fees is linked to the registration dates rather than the completion of the notification that your municipal services are linked to your own details with LIS.
It is a common mistake to assume that no statement means no fees.
If there is a month or time-period where you don’t receive your statement, this doesn’t mean you aren’t due to pay nor does it relinquish the responsibility of a payment from you. You should be sure of making a payment every single month, so in the event that you don’t receive a statement — and rather than getting your account into arrears (and possibly being cut-off) — you should take the initiative to proactively enquire about what is due and be sure to keep your accounts current as best as possible, at all times.
Budgeting for Rates and Taxes
In the event of the system malfunctioning and not sending you your current statement — and if you consider complex living in a Reeflords type development — then you can budget for an estimate of half the amount of the monthly levy as the amount apportioned to Rates and Taxes. So if your levy is R1,000 )for example), you can budget on R500 of that being for Rates and Taxes; this way you can proactively make the relevant payments where appropriate in the event of not receiving an itemised bill on time.
We at Reeflords Property Development are as excited about property and the home-making journey as you are. It’s with that in mind that we aim to cover and produce relevant, useful content that is of value to you — whether you are buying a home from us directly or elsewhere. While we’ve explored some extensive, financially-directed reminders here, the aim is to have you in the best position to enjoy your hard-earned new home as best as possible — and without any last minute, nasty surprises.
If you have any questions related to this topic or anything within the realm of property (as a homeowner or investor), feel free to drop us an email on firstname.lastname@example.org or post them to our Facebook page.
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