The management of commercial property is usually undertaken by commercial agents who operate more like ‘dealmakers’ than traditional residential agents.

The agent will try to match the property with an appropriate business and can entice tenants by arranging attractive deals, like rent-free periods, free fit-outs and the like.

The lease

The details in the lease agreement can make or break a commercial investment.

Typical commercial leases in South Africa are three, five or even 10 years with an option to renew. The tenant in general pays all property related costs which mostly includes rates, water, body corporate fees, etc.

Most of the time the tenant has the option to make any physical changes such as to install partitions etc, however, the owner reserves the right to have the office, shop or warehouse restored to its original condition once the lease has expired. This enables the owner to rent out again to a suitable tenant when the existing tenant leaves.

A lease for ten years or more is a “long lease” and must be registered in the deeds registry

Immovable property is property that has a fixed location and cannot be moved or transferred elsewhere. It can be built upon or affixed to the ground; the term legally also refers to land or the premises upon which a home or building stands.

In2assets explains:

In real-estate law, immovable property has specific characteristics and ownership confers certain rights upon those persons holding full or partial title to the property.

House rules are in general Rules governing the control and management of the property in a Sectional Title development.

A property valuation establishes the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.

This valuation basis represents the current exchange value of the property if placed on a similar market as exists today but was placed on that market long enough ago to be properly marketed and the best price obtained as at the valuation date. 

A vacancy rate indicates the level of empty space in a specific area or building and is usually expressed as a percentage of the gross rentable area. It also refers to the period of time that a residential buy-to-let property is vacant during a year.

A Title Deed is the legal document which legally confirms the ownership of a property and is filed at the Deeds Office and contains details of the property. From the time that you registered a mortgage bond with your bank on the property that you purchased, they keep your Title Deed in safe custody until such time as your home loan is fully paid.

While commercial leases are generally longer than residential leases, vacancy rates can be an issue. If a tenant moves out of your house, it usually doesn’t take long to find another one. With commercial property, it can take months to find a tenant, which means you should make sure you have enough cash reserves to cover your mortgage if the property is empty for a period of time.

A sectional title scheme is a property divided into individual units, usually townhouses or flats, which are sold separately. Thus, tenure is held by the property owner over a section of the property, not the whole property. The sectional title property has common areas, such as stairways and lifts that belong collectively to all the owners of the units. The sectional title complex is managed by a body corporate, who takes care of the day-to-day management of the complex e.g. employment of maintenance staff, upkeep and collection of levies. All the owners of the individual units are members of the body corporate and pay monthly levies to contribute to the day-to-day running expenses.

A second mortgage bond a property is an additional mortgage or bond registered over the property.

South African Property Owners Association.