Buying property via a close corporation vs as an individual
In the intricate world of
property acquisition, understanding the financial structures and their
implications is vital. Among the many ways to buy a property, we will look at
the options of buying property via a close corporation (CC) or in your own name,
as an individual. In this article, we will delve into comparing the costs
associated with both options to help you make an informed decision for your
Advantages and disadvantages
Both options offer unique
advantages and disadvantages. With a CC, the primary advantage lies in
liability protection. Your assets are shielded from any potential legal or
financial issues with the property. However, all the administration that comes
with managing a CC could become a burden.
On the other hand, personal
ownership provides simplicity in property acquisition, but it exposes you to
full personal liability. When times are tough, your assets may be at risk.
So, one must weigh the level of
liability protection against the administrative complexities when you make a
A deeper dive into the financial
aspects reveals some critical differences.
With CC-ownership, you may incur
higher upfront costs due to registration and compliance requirements. There may
also be tax advantages, such as deducting expenses related to the property.
With personal ownership the
upfront costs may be lower, but you're liable for all expenses.
Our current record-high interest
rates play an important role in shaping the financial landscape. Currently,
we're experiencing the highest interest rates in 14 years, and this is having a
significant impact on home loans. Coupled with increasing inflation and other
economic factors, property owners feel financial strain. Many are selling their
properties, often below valuation.
This financial pressure has
created a buyer's market, where buyers have the upper hand.
Property market dynamics
Current market dynamics in
Namibia show a notable increase in cash sales and a growing inventory of
properties. This suggests that individuals who have access to cash prefer to
avoid home loans. It also indicates that some property owners are eager to
sell, which spoils the buyer's market with more choices and potentially lower
Legal and tax considerations
Legal and tax considerations are
significant when determining the overall costs of property ownership. One must stay
informed about any recent changes or updates in laws and regulations as it can
impact the entity you choose for property ownership.
In navigating the complexities of
property acquisition, Nedbank Namibia Home Loans offers valuable assistance. We
can guide you through the process and give you expert insight into the
financial aspects, legal considerations, and market dynamics to help you make
informed decisions. We understand the current market conditions and can help
you secure a loan that suits your needs.
Recommendations for buyers and sellers
We advise buyers in the current
market to get pre-approval from the bank so that they can know exactly how much
they qualify for and can start searching for the right property that meets
For sellers, competitive pricing
is essential. Look at recently sold properties in your area and consider
getting a valuation to set a reasonable price. Being open to negotiation and
ensuring your property is appealing to potential buyers are key to a successful
Buyer demographics and property features
There has been an increase in
first-time buyers, particularly in the middle-to-upper segments of the market and
properties listed below their valuation can be particularly attractive.
Short-term and long-term predictions
In the short term, high interest
rates and external economic factors will most likely continue to influence the
property market, maintaining a buyer’s market status. However, experts predict
a shift towards a more favourable market for buyers in the long term, with
interest rates expected to decrease by Q4 2024.
Ultimately, the choice between buying
property through a CC or as an individual depends on your own circumstances,
risk tolerance, and financial goals.
Whatever your choice, Nedbank
Namibia is here to offer you all the expertise and support you need to make the
best decision for your property investment.
With the prospect of favourable interest
rates and competitive property prices, now is an excellent time to enter the
property market in Namibia. Your financial future awaits.
Nedbank's Head of Secured Lending: Amanda von Wielligh