Since July 2016, all owners of Erven that fall within the City of Cape Town municipality, and which are zoned as Single Residential 1, have the automatic right to erect a second dwelling on their Erven. Prior to July 2016, you would either have had to apply to the City for a Consent Use or have your property rezoned to a zoning category which permits a second dwelling.
“The law amendment is especially good news for home owners who are in need of a cash injection or who want to pay off their bonds more quickly as well as for retirees and empty-nesters who don’t want to move away from the area in which they have lived for many years" says Claude KcKirby, Southern Suburbs Co-Principal for Lew Geffen Sotheby's International Realty. He continues: "In addition to zoning laws there are other bylaws of importance that relate to building regulations and approval of building plans on your particular property and for this reason, expert advice is essential”.
Unfortunately, on top of it being time consuming and pricy, neither of the aforementioned applications would necessarily be successful.
Even though these automatic rights have been implemented, there are still certain facts to consider:
1) Your title deed might contain a condition which prohibits a second dwelling.
This condition would supersede the new rights. However, there is a loophole – if you want to exercise your new rights, you can apply to the person/ party in whose favour this condition was imposed, for permission to remove the condition from your title deed.
This transaction could be timely and costly with the risk of it being denied. This is not a simple process and it is advised that you appoint a conveyancer and a town planner to advice you in the best direction.
2) Once you have built the second dwelling you cannot sell it and retain ownership of your existing dwelling.
Both buildings are considered to be on one undivided Erf and therefore when sold, the entire Erf with both buildings on it must be sold and transferred. Keep in mind that you get a title deed for the Erf and not for each improvement on the Erf.
Lara Colananni, Specialist Conveyancing Attorney at Guthrie Colananni Attorneys says "once we know what, if any, restrictions apply to your property, we can plan the best strategy for unlocking maximum value in the most cost effective and time efficient way. If restrictions against subdivision are at play, you would go the sectional title route and vice versa".
There are two ways out of this predicament:
Option One: to create two separate Erven, each with its own number and title deed. One of the Erven will contain your original dwelling and the other will contain the new dwelling. If all is successful you will be able to sell and transfer ownership of any of the two Erven to any purchaser. This process is tedious and costly. Because you have no automatic right to subdivide your Erf, you need to apply to the City for permission to do so. You would need to install services – e.g. water supply, sewers electrical supply. This process can also be dragged out if your property prohibits subdivision, requiring you to apply for the removal of that condition. You would need the City of Cape Town to be in favour of subdivisions in your area, otherwise the subdivision of your property will be impossible.
Option two: to convert your ownership from conventional Erf to sectional title. This can be done without the permission from the City and title deed conditions prohibiting such a conversion are seldom if ever found. Going this route would avoid all the problems a subdivision presents as described in option 1. A plus is that is it quick and not that expensive. The conversion to sectional title can occur either when you have completed the construction of the dwelling or before any construction has occurred. If you choose the latter option, the "benefit of sectional title ownership is that you can sell a right to develop a particular part of the common property" says Colananni. This is called a "right of extension" and is capable of being sold and transferred.
You can sell the land on which the new dwelling is to be built – subsequently passing on the construction of the dwelling to the purchaser. This also "opens the door for negotiations with developers and investors who may wish to acquire the right to build on the property at a later stage" says Colananni. The next process involves going to the deeds office to fill out detailed drawings of the proposed dwelling. The purchaser will have to build a dwelling in accordance with those plans and consequently you would not have to live next to a building that does not satisfy you. Be mindful when in the process of converting to sectional title to create exclusive use areas for you and the purchaser e.g. a swimming pool, parts of the garden.
3) You need to take into consideration the position and size of your existing dwelling.
There might not be enough room to construct the second dwelling when considering building lines etc. There is one option that can help you with this problem: to add a second story (or to reserve the right to do so) to your existing dwelling and to then convert to sectional title. The ground floor would be one section and the next floor would be another.