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Don't Be A Snob About Property Under R900,000. Gordhan Has Given Us A Gift.

Verashni Pillay recounts her experience of buying her home thanks to the tax cuts courtesy of Treasury, and cautions against property snobbery.

22/02/2017 16:07 SAST | Updated 23/02/2017 09:36 SAST
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Just because your standard is a house with a garden in a leafy suburb doesn't mean everyone else can aspire to the same. There are many areas where one can find decent, safe property for R900,000. 

It was hard work stepping into the property market. I was 28 years old and had just finished paying off my various student debts. That in itself took loads of scrimping and saving to clear by that age, but I was determined to free myself of the three different loans I took to pay off my studies, before I was 30.

I then had a bit of spare money left over at the end of the month. And I was tired of renting. As far as I could tell, I was paying off someone else's bond instead of starting with my own investment.

Like most black people in the country, I had also started supporting my parents financially as soon as I started working, so there was that to consider too. They definitely could not help me with a deposit or any other costs, unlike many of my white friends.

As a reporter, my salary was modest and it was difficult to cover my costs and save for the deposit needed for a flat at the same time. I was very privileged though in that I had a family friend who made me a great offer. They wanted to see me become financially savvy and make that first step of owning a property, which many people in our community had not been able to do at a young age. They let me live with them rent-free for a few months in order to save for my first deposit.

It was an incredible blessing and one too few in our country can benefit from. I did not come from much financial wealth, thanks largely to the effects of apartheid on generations of my family. But I did have social capital, and those little advantages add up for an individual.

But even with these hand-ups, I wouldn't have been able to make it if it wasn't for an incentive courtesy of Treasury. Property under a certain amount didn't incur any transfer tax. Transfer tax is significant: between 3 percent and 13 percent on the amount above what government deemed tax-free.

When I had accumulated enough of a deposit, I added up the costs of legal fees and started looking for a property. When I started, anything under R500,000 was free of a transfer duty, and had been that way for five years. In the year I started looking, Treasury announced that this had been moved up to R600,000. This was huge news for a first-time buyer like myself.

In 2015, the duty-free ceiling jumped again to R750,000. And on Wednesday, two years later, Finance Minister Pravin Gordhan made the announcement during his Budget speech that the threshold was now at R900,000.

This is a gift and opens the property market up dramatically for people in the missing middle.

But when this threshold increase was announced and pointed out, it didn't take long for middle-class naysayers to start whinging. "What can you get for R900 000?" they demanded. Nothing that wouldn't be dilapidated, ugly or unsafe, they claimed. Or unsuitable for their dogs.

That's snobbish and selfish. Just because your standard is a house with a garden in a leafy suburb doesn't mean everyone else can aspire to the same. There are many areas where one can find decent, safe property for R900,000.

I still live in that first flat that fell under the R500,000 mark back then. Five years later, the flats in my block in Braamfontein -- bachelor, one- and two-bedroom apartments -- still fall under the new R900,000 mark Gordhan has set out. Gorgeous two or three bedroomed apartments with wooden floors in Parktown, up the road, go for about the same. As do some flats in Melville. In Westdene, you can get a house for under R900,000 and still be close enough to the Johannesburg city centre, so that transport costs don't take up majority of your salary, as is the case for so many workers whom apartheid's ruthlessly efficient spatial planning cast to the outskirts of the economic centre.

We talk about radical economic transformation in South Africa endlessly. And the way we get there is a combination of all these little inroads.

Yes, Cape Town with its inflated property prices may be the exception, especially if you want to be close to the city centre. But it's not the norm for the rest of the country. Those looking down on property for R900,000 and under are hopelessly unaware of the reality facing the majority in this country. Your attitude to property that the rest of us are delighted with and grateful for is nothing short of insulting.

When I finally stepped into my own home, it was an incredible feeling. In the end it wasn't because I owned my own property. I had lived, till I was 18, in a neighbourhood the apartheid government had forced on my parents. Both their parents had been forcibly removed from their home in Marabastad, in Pretoria. Two generations later my government wasn't just allowing me to live anywhere I chose to: they were actively helping me to do so.