June 11, 2014
All you need to know to restore an old house
There are some older properties purchased by foreigners in South Africa that are in need of restoration, renovation and modernisation.
The most common examples are farmhouses that have been neglected since they were built in the 18th and 19th centuries, and were abandoned many years ago.
SURVIVAL TIP Before buying a property that needs renovation or restoration, it’s vital to obtain accurate estimates of the work involved from one or more reliable local builders. You should budget for costs to be up to 100 per cent higher than quoted, as it isn’t unusual for the costs to escalate wildly from original estimates.
Before buying a property requiring restoration or modernisation, you should consider the alternatives. An extra R200,000 (€20,650) to R400,000 (€41,300) spent on a purchase may represent better value than spending a similar amount on building work. It’s often cheaper to buy a restored or partly restored property than a ruin in need of total restoration, unless you’re going to do most of the work yourself.
The price of most restored properties doesn’t reflect the cost and amount of work that went into them, and many people who have restored a ruin would never do it again and advise others against it.
It’s important to ensure that an old property has sound walls. Properties that have walls with serious defects are best avoided, as it’s usually cheaper to erect a new building! Almost any other problem can be fixed or overcome at a price. A roof that doesn’t leak is desirable and making a building waterproof is the most important priority if funds are scarce. Sound roof timbers are also desirable, as they can be expensive to replace.
Don’t believe a vendor or agent who tells you that a roof or anything else can be easily repaired or patched up, but obtain expert advice from a local builder. Old buildings may also need a damp-proof course, timber treatment, new windows and doors, a modern kitchen and bathroom, re-wiring and central heating.
South Africa is governed by National Building Regulations and the Building Standards Act (although planning permission is dealt with locally). You need to ensure that you and your builder (if applicable) are familiar with what can and cannot be done, and comply with the rules. The regulations require three inspections of building work in progress: one of the foundations, one of the open drains, and one when construction is completed. There’s no mention, however, of the question of privacy: in South Africa, privacy in a built-up area is a privilege rather than a right, and the same applies to a view.
Planning permission must be sought from local town-planning departments and isn’t always a straightforward process. To begin with, the rules vary in different parts of the country; secondly, some departments are understaffed and their employees poorly trained; thirdly, some local officials have been found to be boosting their meagre salaries with bribes in exchange for granting approval (referred to by some people as a ‘Pretoria handshake’), while politicians have been known taken ‘donations’ from powerful property developers to smooth the path of planning applications.
In the City of Johannesburg, for example, any new building and any alteration that adds to or changes the structure of an existing building must be approved by the city’s Planning Development Management Department. If you build or alter without having obtained approval, a building inspector is entitled to enter your property and order the work to stop. In extreme cases, he can obtain a Court Order to have the building demolished, at your expense (and you must pay the legal costs!). You might also be fined or even sent to prison. Even if you complete a building or alterations without permission and a building inspector doesn’t notice, the problem will resurface in the future when you come to try to sell the property and the prospective buyer asks to see approved plans, which you won’t have.
To submit a planning application, you complete an application form (obtained from the Planning Department), sign it and attach a copy of the title deed. Local zoning regulations may also require you to attach a site development plan. If structural work is part of the proposed work, you must attach a separate form completed by a professional engineer registered with the Engineering Council of South Africa. There’s a fee to pay, which varies with the size and nature of the project and is sometimes calculated as a percentage of the value of the building work or as a fixed rate per square metre of the building. The minimum fee is usually around R325 (€33.55).
SURVIVAL TIP It’s important to find out exactly what you can and can’t do before buying a property for restoration.
All building work, including electrical installation, masonry and plumbing is priced by the square metre (m2) or metre, and prices should include VAT at 14 per cent. The cost of total restoration by professional builders varies according to the type of work involved, the quality of materials used and the region. You should expect to pay a minimum of R1,000 (€103) per m2 to bring a ruin to a habitable condition and up to R7,000 (€722) per m2 for a top quality job, e.g. insulated roofs, double glazing, full central heating, marble or expensive tiles in kitchens and bathrooms, fully fitted kitchens and an elaborate fireplace. As a rough guide, you should expect the cost of fully renovating an old ‘habitable’ building to be at least equal to its purchase price and possibly much more.
How much you actually spend on restoring a property will depend on your purpose and the depth of your pockets. If you’re restoring a property as an investment, it’s easy to spend more than you could ever hope to recoup when you sell it. One of the reasons there are so many derelict buildings for sale in some parts of South Africa is that restoration costs are far higher than potential resale costs. In the last decade some foreigners have spent a lot on renovations, only to find it difficult to recoup their investment. It isn’t unusual for buyers to embark on a grandiose renovation scheme, run out of money before it’s completed and be forced to sell at a loss. On the other hand, if you’re restoring a property as a holiday or permanent home, you can spend as much as you like (or can afford).
Always keep an eye on your budget (which will inevitably be at least 25 per cent below the actual cost but could turn out to be 25 per cent of the cost!) and don’t be in too much of a hurry. Some people take many years to restore a South African holiday home, particularly when they’re doing most of the work themselves.
Paying for restoration
It’s possible to obtain a mortgage that includes the cost of renovation work, but you must obtain detailed written quotations for a lender. It’s also possible to obtain a grant to restore a historic property in some regions.
It’s important to ensure that you pay for work on time; if you get a reputation as a late payer (or for not paying at all), you will soon find that you cannot get anyone local to work for you. However, you should make sure that a job is completely finished (including repairing any damage done by workmen) and passed by your architect or surveyor before paying bills.
Never pay a builder in advance (apart from a deposit), particularly a large sum, as it’s possible that he will disappear with your money (particularly if he’s a foreign, non-registered builder). It’s best to pay a month in arrears, which most builders will agree to. On the other hand, if you want a job done while you’re away you will need to pay a builder a sum in advance or get someone local to supervise his work and pay him regularly; otherwise he’s unlikely to finish the job.
Cash deals are often negotiated without VAT, although it’s important to bear in mind that, if you don’t have a legitimate bill, you won’t be able to offset the cost of work against rental income and won’t have a guarantee.