How the 2014 National Budget will affect commercial property in Cape Town
It seemed as if the whole country was holding its breath as Pravin Gordhan made his national budget speech this year. When it’s the time of year for National Budget speeches, the whole country is on the edge of its proverbial seat. It is this proposed budget that dictates how our finances are going to fair in the coming months, and often for property owners it can have a daunting or negative impact, especially if interest rates keep getting hiked. Billions of Rands have been spent on infrastructure over the past few years and while this does a great deal for our country, it can also mean that things are a little tight.
Of course in order to understand how the budget will affect you and property investors you need to understand the basic outline and what was discussed. Fin24 has a comprehensive resource of information related to the 2014 budget here.
A number of issues that were raised in the latest national budget could be of significant importance to property owners. After its presentation it became obvious how the national budget will affect commercial property in all major centres such as Cape Town, Johannesburg and Durban to name a few.
In 2014 it was hoped that the property market would see property specific tax relief schemes, especially to help first time investors, but unfortunately this did not happen.
Specific elements of the national budget that will affect the commercial property industry include the following:
- R814 million over the medium term has been designated to an integrated city development grant. This is being done with the hope of creating city-planning strength in the long term and it is to encourage private investment.
- Investor’s rights are said to be protected by the proposed “Promotion and Protection of Investment Bill”, which has currently been released to the public for comment.
The property market still seems to be booming even after the 0.5% interest rate hike. Many believe that the R814m set aside for medium term integrated city development, while generous, will not go very far and should have been more considering the billions that are being spent on things such as Gauteng e-tolling system.
Despite the various challenges faced by the commercial property market, it is said to be doing better than before, especially since the economic downturn around 2007.
Other national budget highlights would include reduced income tax for those earning less than R250 000 per year. This of course affects individual’s affordability of property and is a great thing. Retirement funds lump sum taxes have also been promised some relief which has gained great support from the public. Sin tax and fuel levies have unfortunately been increased, so there is some bad news for those who like to enjoy a beverage or need to be travelling.
It goes without saying that the national budget this year affects each and every one of us. Commercial property investors in Cape Town and the rest of South Africa may not be experiencing tax and transfer duty relief, but great development of infrastructure is planned for the country, where increased property prices promises new revenue for the country.
Those who wish to invest in new properties in 2014 and going forward need to keep a close eye on the interest rate and inflation as this will definitely affect the rate at which they can acquire finance, and what their monthly payments will be for the coming years. Regardless of the promises that the government has made for the property market, it is vital to seek out the advice of a property broker who can assist you with understanding how the interest rate and national budget affect your potential investment.