Property stokvels have become popular investment vehicles but buyers looking to take advantage of what they can offer must ensure everything is above board.
In stokvels that are working well, says Shaun Rademeyer, chief executive of MultiNET Home Loans, the returns for investors are incalculable.
However, one of the concerns around property stokvels is that the founder usually administers the stokvel at their sole discretion, with carte blanche to run and manage the scheme as they want. To ensure transparency, he says, members must be given clear direction on what recourse they have if they’re dissatisfied with the administration of the scheme.
They also need to know exactly how the ownership of the purchased property will work, whose names will appear on the title deeds and how the decisions are made when it comes to allocating property.
“There are also tax implications where multiple transfers of property are involved, so it is imperative that these are unpacked in the constitution of a property stokvel and that members understand what could happen to them if the tax laws are breached.”
Regardless of who runs the stokvel, he says due diligence is essential and members must:
• Ensure the stokvel has a clear and robust constitution.
• Know the leadership and membership structure.
• Ensure they know everything about where their money will be invested and how it will be used