Property of any kind in South Africa is normally purchased through a broker or real estate agent who should be registered as a member of the Estate Agents Board.

The South African Reserve Bank refers to foreigners as NON-RESIDENTS - whether they be natural persons or legal entities, whose normal place of residence, domicile or registration is outside the common monetary area of South Africa.

A transaction can be processed without intervention from the South African Reserve Bank should a non-resident purchase a property for cash,

Non-residents may borrow up to a maximum of 50% of the purchase price in South Africa; the remaining 50% must be brought into the country by the purchaser and transferred from a recognised foreign bank to a bank in South Africa. The total amount that may be borrowed is at the discretion of the commercial bank offering the loan. Non-residents who are in possession of a valid South African work permit are considered to be residents for the duration of their work permit and are therefore not subject to borrowing restrictions placed on non-residents without work permits.


Can I lease my property out to others?

Non-resident owners of South African property have all the normal rights of ownership including the right to recover rental income from lessees. Rental income is normally taxable in South Africa.

What procedure is followed for transfer of ownership?

The registration of a property transaction is usually handled by a qualified attorney known as a conveyancer. It is the Seller's perogative to appoint the conveyancer of his choice, who will attend to the registration of transferof the property sold, and the costs relating to the sale are for the account of the purchaser.

The conveyancer prepares the required documentation after both parties to the transaction have signed the relevant paperwork. The documentation is then lodged in the Deeds Registry, together with the cancellation of any existing mortgage bonds and the registration of new mortgage bonds.

On registration, all existing mortgage bonds registered over the property are cancelled simultaneously with the registration of any new mortgage bonds by the purchaser in favour of the bank granting the financial assistance. The purchaser is recorded as the new owner of the property and the purchase price is paid to the seller.

This procedure does not apply where the shares/members interest and loans are acquired in a property-owned company/close corporation where no change in ownership is recorded.

Are there additional costs to the purchase price?

Yes, there are a number of variable costs that should be considered when determining the total amount involved in all property transactions.

Transfer costs and transfer duty on the Purchase Price
Bond costs based on the loan amount

Other costs (if applicable) are:

Drafting/checking Agreement of Sale
Conveyancers Sundry Expenses
Rates Clearance Certificate
Issue of Guarantees
Property Inspection/Valuation Fees
Insurance Premiums
Building Loans, - Interim interest
Pro rata share of rates and taxes
Estate Agents Commission

Transfer Duty and Transfer Costs
Transfer duty is a tax levied by the government on the transfer of ownership of fixed property. Where the purchaser is a natural person, the duly is calculated on the following scale:

No duty up to R150,000 of the purchase price
5% on R150,000 to R320,000
and 8% of the purchase price above R320,000

Where the purchaser is a legal entity, transfer duty is levied at a flat rate of 10% of the purchase price.

Transfer costs are calculated as follows:

Natural person - Individual
Legal person - Company, Close Corporation, Trustsl
Transfer fee - Legal fee is inclusive of VAT at 14% but excludes minor costs such as posts and pettiesl
Duty - Deeds Office feel
Purchase price or value of the property whichever is highest

These costs are calculated on a sliding scale regulated by a tariff and amount to between l - 2% of the purchase price, payable to the transferring attorney.

Bond Costs
These costs relate to the costs incurred in raising mortgage finance. Mortgage registration fees are payable to the registering attorney according to a prescribed fee schedule. Banks require the bond to be registered for an amount usually in the region of 20% higher than the amount loaned. This ensures that the bank's debt is secured in the event of the outstanding balance exceeding the original loan. The costs involved in cancelling a bond are payable by the seller who should budget to pay the bank's attorney between R500.00 and R600.00 for this service.

Estate Agents Commission
The recommended tariff by the Estate Agent Affairs Board is 7.5% plus VAT (currently 14%).

Factors calculated over a 20 year period:
Bank interest rate Factor
10% 9.65
10.5% 9.98
11% 10.32
11.5% 10.66
12% 11.01
12.5% 11.36
13% 11.71
13.5% 12.07

To calculate repayments on a bond of R100,000 at 12% over 20 Years: Factor + R11.01 x 100,000 = R1101.00 per month