Dual living properties - What you need to know

Already a growing trend in South Africa prior to Covid-19, the pandemic, accelerated the concept of dual living and estate agents around the country have reported an increase in the number of enquiries for properties that will accommodate more than one family, but these are few and far between.

And, as the cost-of-living surges and interests once again rise, dual occupancy could be the key to maximising the investment you’re already sitting on, whilst still maintaining your current lifestyle.

Dual occupancy is a great fit for investors, owner-occupiers and families of all shapes and sizes and the best way to leverage your investment because when you’re an owner-occupier living in a single home, the only return you’re likely to see on that investment is if you decide to sell.

Financial advantages:

Getting a foot in the market: It’s becoming increasingly difficult for first time buyers to get onto the property ladder and dual living is a very viable option as the cost is reduced or subsidised when shared with tenants or co-purchasers.

Upgrading: It also enables investors to get a foot in a higher end market which might otherwise be out of their reach.

Double up on income: Dual living properties are also an excellent investment option if you are buying to enter the rental market as two homes on a property will generally yield a higher combined rental than a single dwelling – and you only pay one set of rates.

Lower running costs: if you are an owner-occupier, your monthly rates, bond, utility and maintenance costs are shared.

If you are entering the rental market, not only do you reap all the benefits of two rental incomes and receive higher returns whilst paying lower costs, because the property has a single freehold title, there are no body corporate fees like there are with duplexes or apartments,

Lifestyle advantages:

Safety in numbers: the fact that multiple people live on a property is often a deterrent to would-be burglars for a number of reasons.

Retirement living: there is a shortage of affordable retirement accommodation in South Africa and this way, aging parents can not only still enjoy their independence, they can also enjoy more quality time with their families.

Challenges

Some areas lend themselves better to creating dual living properties, and suburbs where freestanding homes have larger erfs are the best option.

However, it can be more difficult in the more densely built-up areas of older suburbs like Observatory, Woodstock and Melville, where the homes take up most of the erf and there is not much room left to add extensions or granny flats.

Also, many of these older houses also fall under Heritage due to their age and going up a floor without a painful and lengthy application process is therefore not an option.

Factors to take into consideration:

In order to ensure that the additional investment adds to the resale value of the property, the following needs to be taken into consideration:

Over-capitalisation: It’s always advisable to thoroughly research the market in your chosen area as over-capitalisation is one of the major pitfalls which will not only diminish return on investment in the long term but could also defeat the object of earning a decent income in the short term because the costs outweigh the revenue.

Consult a reputable and experienced estate agent with a thorough understanding of the local market who will be able to assist you regarding property prices, rentals and market trends as well as offer guidance in making a savvy selection.

Local regulations: Check the local zoning and planning regulations, especially if you plan on building a separate dwelling like a granny flat. You don’t want to take the leap and commit financially until you’re sure planning permission won’t be a problem.

Lifestyle needs: This is critical if you are going to be an occupier-owner as you will still want to enjoy a measure of privacy. This will also determine whether a separate, self-contained dwelling would be most suitable or if converting or extending existing structures would suffice.

Don’t cut too many corners to save a buck

Although one wants to avoid over-capitalisation at all costs, if you plan on more than a few internal alterations, going too cheap could be very costly in the long run.

If you want to add extensions to an existing building, or to build a separate cottage or granny flat, it’s crucial to consult a reputable architect and to have all plans approved.

Failure to do so can have many repercussions, especially years down the line when you decide to sell and the plans you hand over don’t match the current structure.

And if you’re considering building up and creating a double storey, then an engineering report is definitely required, as the foundations and the rest of the existing structure may need to be reinforced.

In the current economy, whether you want to offset the rising cost of living or simply create a new income stream, dual living makes a lot of sense.

And as long as all the normal rules of common sense apply in terms of buying in the best area you can afford, and being careful in the planning stages to ensure that the proposed changes or additions add to the property value, then purchasing a dual living home is a sound long term investment.