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Cash-strapped homeowners in Kwa-Zulu-Natal are opting to let their properties go through bank-approved forced sales, rather than their being repossessed.
Estate agency Chas Everitt said sales of this type accounted for 30 percent of its sales between June last year and July this year.
Another estate agency reported selling at least 30 “distressed” properties in the past three months as desperate homeowners battled under the strain of a global economic recession, job losses and high debt levels.
In a recent judgment involving applications by Absa against three defaulting homeowners, Durban High Court Acting Judge Peter Olsen noted that national statistics provided by Absa “indicate the extent of the problem with which the bank is confronted”.
The figures showed that more than 5 000 section 129 notices – notifying consumers they were in default – had been sent out between December and May. The average amount of debt involved in each month was R532 million.
Nedbank said the number of homes being repossessed had decreased as clients took up other options, including reduced instalments. Those who could not pay had taken advantage of the bank’s assisted sales programme which entailed marketing and selling their homes through estate agents.
Standard Bank spokesman Erik Larsen said while the number of repossessions had decreased, they remained at historically high levels and consumers were under pressure.
Durban estate agents said areas such as Kloof, Hillcrest, Queensburgh and Pinetown and the North and South Coasts were particularly hard-hit, with dozens of home-|owners having to sell through bank-assisted sales or risk repossession.
Clint Ellice, principal of the Chas Everitt International Upper Highway office, said he had been taken aback by the volume of distressed sales, and expected the number to increase.
“The average prices are between R800 000 and R1 million. The highest was R3.6m.”
Annatjie Angelo, owner and principal of Harcourt Tops, based in Pinetown, agreed that distressed sales were becoming prevalent. In the past three months, the agency had sold 30 such homes.
Greg Wilson, of Claudine Hickman Properties, said 20 percent of sales by the group’s Queensburgh office were distressed sales.
“It is more widespread than that and is occurring in a lot of areas.”
An employee at auction company Peter Maskell Auctioneers said many people were selling their second homes or holiday properties, especially on the South Coast.
The company had carried out several valuations in Kloof, which was the first step when a bank intended to take legal action against the homeowner.
Pam Golding Properties’ national general manager, Richard Day, said distressed sales were occurring across the province and high-value properties in the traditional greater Durban North and Highway areas were not immune to lifestyle changes.
Ecomomist Mike Schussler, of economists.co.za, said the property industry was expected to remain a buyer’s market for five years.
The judgment by Acting Judge Olsen puts more barriers in place for banks to overcome before they may apply for a default judgment against homeowners.
He suggested that the practice of sending Section 129 notices by registered mail was not enough. Ordinary post could also be used, with multiple letters being sent to the owner’s home address, work address and any other provided.
Greg Allen, of law firm Easton-Berry Inc, which acted for Absa, said the three cases had been adjourned indefinitely and the judge had asked that the section 129 notices be sent again by registered mail and by fax, e-mail or in person.
Allen said the acting judge had also ordered that in similar cases where summons had been issued, the banks would be required to bring applications so the court could give a directive setting out the steps that needed to be followed to conform to National Credit Act requirements.