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What is occupational rent?

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The payment of occupational rent is a standard clause in almost every property sales contract, and yet it is also one of the more common causes of contention between buyers and sellers.

Occupational rent is also known as occupational interest, designed to protect both the buyer and the seller. It can apply to freehold and sectional title purchases, whether you’re buying from an individual or off-plan from a developer, and should be carefully considered and negotiated before signing an agreement of sale.

Occupational rent typically comes into play when a buyer moves into the property before transfer and registration has taken place, or a seller remains in occupation of the property for a period after that point.

Occupational rent in off-plan sectional title purchases works a little differently to normal, with the developer typically stipulating that the purchaser must take occupation of the premises from the moment the occupational certificate is issued by the council.

This can happen well before the expected date of transfer, and will continue even if transfer is delayed because of complications on the developer’s end. It also has to be paid whether or not the purchaser chooses to physically occupy the space.

Occupational rent for sectional title development purchases is usually calculated as a percentage of the purchase price. One percent is common, but the figure is, in theory, open to negotiation before the contract is signed.