Divorce - Falling Off the Property Ladder

Divorce is one of life's harsh realities that will often leave one or both parties reeling with the loss of hearth and home.



Whether you are plaintiff or defendant, divorce is a nasty business often resulting in both parties having to downgrade lifestyles and, in many cases, fall off the property ladder altogether. In today's ever changing economic climate it's often very difficult to recoup that lost ground. Recent statistics in South Africa show that whilst it is more often than not the woman who files for divorce, it also often the woman who comes off worst financially.



The days of chivalry are long gone.



Gone are the days of the gallant, soon to be ex-husband bequeathing the home, car and chattels to the prospective ex-wife for the duration of raising the children. It is more likely that the husband will consider 50:50 a fair split even when the wife is expected to house, feed, clothe and raise any offspring of the marriage.



Courts do not yet take into consideration that the lifestyle change foisted upon us as a result of divorce also means not having a man in the house.



This in turn leads to feelings of insecurity which could mean a location change and further expenses. In most cases divorce also means reduced finances, and whilst your ex may have agreed maintenance with annual increases, it's often insufficient to maintain the current living standards and hard to enforce.



Security and 'Semi-gration'



The security issue for many women becomes apparent in statistics that show that while 7.3% of South Africans live in greater Cape Town, 16% of all divorcees live there.



(AMPS 2005RA). Small coastal towns also boast a high percentage of divorcees and "semigration" is fast becoming the new fashion as single women flock to the coast for security.



Apart from the influx of wealthy 'up-country' families escaping the stresses of rising crime, the coastal regions of South Africa are also receiving more than their fair share of divorcees and single women as they no longer hang around their ex-husbands shirt tails but are feeling empowered and striking out on their own seeking security and lifestyle for their smaller families.



The added attraction of buying at the coast is that the property can be used to gain an attractive income from if necessary. Whether it's derived from steady rentals or tourism rentals, a lock up and go on the Garden Route is a perfect earner and 'semigration' is keeping property agents, removals companies and bankers busy whilst breathing fresh air into sleepy tourist towns.



The effect of the IT revolution on divorcees



"The IT revolution has released the stay at home Mom and enables them to look further afield in their search for security.



Women coming out of a divorce situation know that security is a huge issue and they are prepared to downscale for quality of life and safety." - Sheena Maree, Sothebys International



Areas like the Garden Route and the Klein Karoo are fast becoming magnets for women in these circumstances. Property is more affordable in towns like De Rust and Greyton, George and Aberdeen and single Moms have the option of boarding schools and local schooling close by.



To enable them to get back onto the property ladder some divorcees are spending a year or two working abroad to give their investment fund that much needed cash injection.



Care givers, nurses, radiologists and administrative workers are in great demand and can earn up to five times what they are paid in South Africa which is a welcome boost toward that lock up and go in picturesque Knysna!



A new Niche Market for Property Developers?



Property agent Deborah Scott of Pam Golding Properties in Knysna told Her Mortgage that she anticipates a change in the market as more single women are looking for entry level property as well as high luxury secure properties for themselves following divorce.



"High luxury apartments at the water's edge appeal immensely to divorced, child free women seeking security in an appealing environment, close to airports and in a town large enough to provide them with all necessities. I do believe that the faces of these towns will be altered to accommodate the trend."



Could it be that we will see an onslaught of rezoning in property markets in the coastal region of South Africa as construction firms, banks and cash strapped municipalities lock onto this ever expanding niche market?



The Royal Eagle Investment Fund based in George appears to be doing exactly that.



Dutch owned Royal Eagle Property Fund PCC is an unlisted property investment fund established in March 2007 to invest in direct property assets. They manage the fund in a wide variety of innovative property investment vehicles. The focus, however, is to invest directly in property in the Garden Route area, ear marking high density development plots.



What are South African long term lenders doing about scooping up this market?



Her Mortgage had a peek at what the main South African banks are offering divorcees to ease the strain.



Exactly. Nothing! Yet in the United Kingdom mortgage packages for divorcees have been around for a while now for those who are financially dependent on their ex partner. It enables those receiving regular maintenance payments and/or those self employed to obtain a home loan in their own right and offers a number of tasty 'add ons' to ease that transition from couple to single.



Are South Africa's Tax laws undermining marriage?



Understanding what drives the high rate of divorce in South Africa is difficult but certainly blame could be laid at the feet of the presiding government as our current tax laws just don't encourage marriage.



Recent online articles state that the rate of divorce is rising with the interest rates in South Africa.



Take the simple Investment Income law. Any asset that gives you income is regarded as jointly owned and each of you will be required to account for these amounts in each tax return - individually. Each spouse will then be taxed on 50% of the income received.



This has similar permutations on Capital Gains Tax as well. The good news however, is that the proposed Civil Union Bill may result in the concept of a marriage 'in community of property' where joint estates are created, falling away but bear in mind it may not affect those already married.



Hopefully this will encourage South African couples not to divorce for financial reasons!



It's time to grab the reins and learn!



With motivational e-book sales on finance ranking high in women's markets and books like Suze Orman's latest "Women & Money" walking off the shelves, Her Mortgage can only conclude that women want to learn about money and finance. For too long it has been the domain of the South African male and women have conceded this all too often to maintain the peace in the home and not ruffle male feathers.



Now it would appear that the shoe is on the stiletto clad, red toe nailed foot of South Africa's newest emerging market - the empowered divorcee!