Sectional title or Freehold? Knowing the difference

PUBLISHED 8 SEP 2021   

Sectional title properties continue to gain popularity - especially with first time homebuyers. If you’re in the market for an apartment or townhouse, you’ll want to make sure you know what kind of property you’re buying before you sign your offer to purchase.

In this article we’ll go over the difference between freehold and sectional title properties to help you choose the type of title that suits your needs. 

What does sectional title really mean?

Sectional title is a type of property ownership that is frequently found in developments like apartment buildings and some complexes. 

  • While some of the resources owned by the development are shared (for example, swimming pools, gardens, and gym facilities), the individual owner is free to sell and let the residential unit. 

  • One of the features that distinguishes this type of ownership from freehold titles is the need to pay mandatory monthly levies. These fees are determined by the body corporate, a committee of property owners that is responsible for the management of the building or complex. 

By contrast, a freehold title gives its holder full ownership of the house or land they have bought and there are typically no shared facilities or amenities that require collective maintenance.

Things to consider before you buy 

Sectional title Cape realty comes with a variety of benefits, especially when it comes to shared facilities like pools and recreational amenities. 

The shared cost of maintaining these desirable facilities can be dramatically less than the expense incurred in having your own swimming pool or gym. Similarly, if you live in townhouse complex or block of flats under section title, the upkeep of the exterior is also a shared expense.

Perspective buyers should note that obtaining financing to purchase a sectional title property is a slightly more complex process than applying for a bond on a freehold home. 

  • Your bank or bond provider may request further information about the complex or apartment building where you plan to buy. 

  • After examining the body corporate’s financials and ensuring that the development is properly insured, your bond provider will make a final decision on your application. 

This process may seem cumbersome compared to a normal bond application, but it has an added benefit. A body corporate whose financials don’t pass a bank’s screening process is probably not an organisation you’ll want to be dealing with on a regular basis. 

On the other hand, if their financials satisfy the bank’s requirements you can have confidence in the management of your new complex or block of flats. 

Ready to buy your Cape Town home? Start your search with us today. 

A sectional title property could be the ideal choice for a 
first-time home buyer. To start your home ownership journey, contact the Cape Realty team today. 

Image Credit: https://pixabay.com/illustrations/house-home-ownership-domestic-2368389/