Inexperienced buyers often not aware of the extra cost of home ownership

One of the most commonly encountered mistakes made by estate agents and others assisting inexperienced home buyers to purchase a home is to 

neglect to explain to them the extra costs of home ownership ie those in addition to the transfer and bond origination costs (which can also often be underestimated).

Provision has to be made for monthly payments on home insurance, municipal rates and taxes and, in some cases, levies and failure to budget 

correctly for  these, says Rowan Alexander, Director of Alexander Swart Properties has led to real financial problems for some new home owners.

“Home insurance is, in fact, mandatory if the home is being bought with a mortgage bond. The banks insist on this in all cases. However, 

two factors regarding such policies have to be realised. These are, firstly, that such policies cover only the structure and permanent 

fixtures, not the contents of the home. If the contents are destroyed or stolen, the policy holder will be unable to claim unless he has a 

separate policy for them. Secondly, the home insurance policies issued by the banks and other lending institutions are frequently more 

expensive than those of an independent organisation which, in addition, often give them more comprehensive insurance cover.”

Surprisingly, says Alexander, many new owners, having previously been tenants, are either unaware of or completely underestimate the cost 

of municipal rates and taxes for such essential services as water, electricity, sewerage and rubbish removal. For some these charges come 

as a complete shock but failure to pay them can result in the services being cut off.

Those buying into  sectional title or gated estates or developments where there is a Home Owners Association sometimes do not appreciate 

just how onerous the monthly levies payable here may be.

“Certain upper end estates have levies well over R3000 per month. These, of course, ensure that the residents get excellent round the clock 

security, beautiful landscapes, good communal facilities and often ongoing maintenance and insurance."