FAQs

The cap rate is a term that refers to the income capitalisation method of valuing which is based on the capitalisation of the nett income generated by the property and is achieved by the algebraic manipulation of the formula:

Value = Nett Income / Capitalization Rate

The capitalisation rate, known in valuer jargon as “cap rate”, is determined by analysing sales of similar commercial property in the same area, to determine the selling price and the expenses of the properties which have sold. These selling price and expenses are then used to generate a cap rate

A servitude is a right which may belong to one person over the land belonging to another person. Servitude arise out of many varied requirements.

An example would be where the owner of a piece of land A would like an access road across land owner B’s land. If A and B can agree on a price B will accept a servitude on his land to allow A unhindered use of the agreed piece of land.

The servitude is registered at the Deeds Office and the servitude is registered in favour of the owner of land A and is effective even if the owner of land A sells the property to another buyer.

This is an example of one of the simplest forms of servitude and there are many other examples of servitudes.

Expropriation is generally the process where the state dispossesses an owner of his right of ownership, without his consent. The process occurs in terms of the Expropriation Act.

Consent use occurs where for example a property is zoned for residential purposes such as a house and the owner would like to use the property as offices. Generally the easiest way to legally operate offices from the house would be to apply for consent from the municipality, hence consent use.