Providing practical advice on this issue is Kevan Govender, regional investment manager at Business Partners Limited – a specialist financier for small- and medium-sized enterprises (SMEs).
As he advises: “Business owners who are buying commercial properties have specific duties and responsibilities to carry out in the property registration process. The key to expediting the registration is to understand the steps involved and how proactive intervention can assist in streamlining the process.”
The rest of the process, whereby several compliance checks are carried out, is managed by the examiners at the Deeds Office who will eventually conclude the registration of the property.
Currently, as Govender advises, applicants can expect to wait up to six months for their property to be registered and transferred. And while delays at the Deeds Office are beyond the buyer’s control, they can do their part in assisting conveyancers by applying foresight and being prepared ahead of time.
The first step in making sure that the property registration process runs as efficiently as possible is for business owners to do a credit health check by obtaining their credit score, and where necessary, the credit score of their small business. Typically, credit scores in the upper quartile (75 and higher) will meet with the most favour when applying for any kind of financing.
Another important step that business owners can take is to check that their tax affairs are in order. As Govender cautions: “As a financier of business property for over 40 years, we have seen many delays due to tax issues. Property transfers are used to administer tax compliance in both personal and commercial capacities. Therefore, any outstanding tax obligations or penalty payments will cause a delay in the transfer of the property before the application reaches the Deeds Office.”
Buyers are also encouraged to get pre-approval on the bond or loan that they will use to finance the property. Banks and other lending institutions will undergo a thorough process of due diligence on aspects such as affordability, credit history, and property before entering into negotiations with the buyer on the cost of finance.
Govender advises business owners to conclude these negotiations and where applicable, obtain a formal letter of pre-qualification as far in advance as possible.
“If you can view potential properties with pre-approval in hand, this may work in your favour and afford you the credibility you need to put your best foot forward in negotiations with the seller. Once an offer to purchase has been signed, having pre-approval will also fast-track the process,” he explains.
Concluding his advice on the topic, Govender explains that: “Timing is everything. As a rule of thumb, business owners should avoid buying property over the December period, which is a notoriously busy time for Deeds Offices around the country, who often only employ skeleton staff during this period.
"SME owners looking to buy commercial property need to therefore plan ahead and factor in potential delays of up to three months, which may impact time-sensitive events such as business or product launches.”