Wanna build your own home? Why your plot needs to be 120sqm
The idea of purchasing a piece of land and building your own home is a dream for many people. But what is involved in purchasing vacant land when building your dream home?
The big four banks in South Africa (Absa, Standard Bank, FNB and Nedbank) will only consider financing residential vacant land if it is sized 120m² or larger, and falls within a proclaimed suburb. Finance will be for a maximum loan of 60% of the value, which means 40% deposit is required over a loan term of only 60 months (five years).
Those building their own homes, therefore, need sufficient cash flow for the land purchase and the home. “The process of buying vacant land takes careful cash flow planning,” says Charlotte Vermaak, principal for Chas Everitt Nelson Mandela Bay. “Depending on your intended plans for the development of the vacant land, banks typically offer finance systemically as a particular building project progresses.”
Consider the costs of maintenance
When reviewing the costs associated with the purchase and development of vacant land, you need to include land survey costs, maintaining the land to an acceptable standard and obtaining a building permit.
“If your building plans do not comply with zoning restrictions or you want to apply to have the land rezoned from, say, residential 1 (single dwelling) to residential 2 (turning a home into a guest house), there are further costs and valuable time involved in getting approval from local authorities,” says Vermaak. “And in property development, time costs money and it needs to be factored into your budget.”
Before investigating any vacant land for sale it is important to clearly outline your objectives for the vacant land you’re purchasing. Is the land close to transport links and major routes?
Blue Horizon Bay, on the outskirts of Port Elizabeth, is a nature conservation area, offering amazing panoramic sea views, beautiful sandy beaches and scenery. The ideal spot to spend your retirement, or just to escape to for family holidays. For R340,000 you can purchase 1,103m² of land to create your own dream property.
If you’re a budding property developer, for R1,268,000 you can purchase 3,432m² in Windsor Park, Despatch. Despatch is a great area to invest and develop property as property prices are more affordable for many compared to Port Elizabeth and is close to one of the region’s largest employers, Volkswagen.
Lovemore Park, Port Elizabeth, has grown to be upmarket, and has priced many out of the area. But, there are still a handful of plots available in this in-demand area. Close to amenities, this 609m², northwest-facing plot overlooks the lake, and is close to local amenities.