Click here to see some available positions in South Africa. To fill out our FREE immigration assessment click here. Recruitment Assessment Form click here. Queries about working in South Africa? Shipping cars? Foreign Qualifications? Click here.

 

 Complete the form below to be added to our newsletter.

PURCHASING PROPERTY IN SOUTH AFRICA

FAQ’S REGARDING THE PURCHASE OF SA PROPERTY BY NON-RESIDENTS

Are there any restrictions placed on a non-resident owning property in South Africa?

No – As a non-resident, you are not prohibited from owning property in South Africa. However, the purchase of South African property by a foreign individual or legal entity must take place in accordance with South African laws and legal requirements, and there are certain procedures that may differ from your country of residence.

How is the process of transfer of funds carried out, and what happens in the case of a Mortgage being required?

When purchasing property in South Africa, the transaction can take place without intervention from the South African Reserve Bank if you pay the full purchase price of the property in cash.  If a mortgage is required, you may borrow up to a maximum of 50% of the purchase price in South Africa; the other 50% of the funds must be transferred from a recognised foreign financial institution to a South African financial institution. The total amount of cash that may be borrowed is decided by the commercial bank in South Africa providing the loan. 

Is my investment financially secure?

Yes – South Africa’s banking system is established and absolutely dependable, so you can be rest assured that transfer of funds through any registered South African Bank is secure.  Once the money has been transferred, it is held in trust by the conveyancer / attorney / escrow or real estate company until transfer has taken place.

Will I be able to take my money out of South Africa should I later wish to sell the property?

Yes – In accordance with South African Exchange Control Rulings, funds brought into the country by a non-resident may be repatriated at any time.  What this means to you as a non-resident, is that you can sell your property and not lose your original investment.  Any profit from the sale may also be taken out of the country, so long as the necessary Capital Gains Tax has been paid.

What types of Property Ownership are available in South Africa?



The most common form of property ownership in South Africa is Freehold. Other types of ownership you may encounter are Leasehold, Sectional Title and Share Block.

Can property be leased to others, and can a non-resident receive a rental income?

Yes – As a non-resident owning property in South Africa, you have all the rights of ownership including the right to receive an income from leasing a property. Note however that you will have to pay rental income tax according to South African tax laws.

How does a purchasing property in South Africa affect applications for permanent residence?

Assessment of applications for permanent residence is an issue entirely independent of purchasing property in South Africa. Current immigration laws however do take ownership of immovable property into account when determining the net worth of the applicant.

Are there costs involved over and above the purchase price?

Yes – There are various costs involved in the transfer of property in South Africa. As a buyer, you are liable for the following costs:

A. Transfer Duty

Transfer duty is a government tax on transfer of ownership of fixed property.

In the case of the buyer being an individual person, the duty is calculated as follows:

No duty for properties costing R500 000 or less

For properties costing R500 001 - R1 000 000 – 5% of purchase price

For properties costing R1 000 001 and above – 8% of purchase price

In the case of the buyer being a legal entity, transfer duty is a flat rate of 8% of the purchase price.

B. Transfer Costs - Conveyancing and Attorney's Fees

These amount to between 1-2% of the purchase price.

LEGAL DOCUMENTATION

Agreement of Sale

Your contract to purchase property in South Africa will most likely take the form of an Agreement of Sale or Offer to Purchase.

In order to be legally binding, the Agreement of Sale must be in writing, contain certain prescribed information and be signed by both buyer and seller.   Once signed, the Agreement of sale is considered binding and neither party may withdraw unless:

The Agreement is subject to conditions which are not fulfilled

The purchase price is less than R250 000 and the buyer’s “cooling off” period is not yet over.

The Offer to Purchase/Deed of Sale will contain all or most of the following standard provisions:

“Cooling Off” Right

These are the circumstances surrounding this right:

The property must be used mainly for residential purposes and the sale price must be R250 000 or less.  Buyers who buy properties for R250 001 and more do not enjoy such a right.

The buyer has five working days to ’cool off’ which commences the day after he has signed - not the day the contract was signed by him.  Public holidays and weekends do not count so be especially careful over the Easter long weekend.

Buyers do not enjoy the right if:

The property was bought at an auction.

The property was bought through a Trust, Company or CC.

The buyer reserved the right to appoint a Nominee.

The buyer exercised an option, which had been open for at least five days.

The buyer and seller had previously entered into a sale on the same property.

The land is agricultural.

Deposit on Purchase Price

The down payment a buyer makes when buying a property, either in the form of cash or a guarantee, i.e. the deposit may well be coming from the proceeds of the sale of an existing property.  A deposit is not required by South African Law, but is recommended as gesture of good faith and as an indication of financial security.  The deposit amount will be invested by the estate agent/conveyancer in an interest bearing account, benefiting the buyer.

Occupational Rental

A buyer who takes occupation of a property before it is registered in his name usually is required by the seller to pay a monthly amount for such occupation. This is referred to as occupational interest or occupational rental.

Transfer

The actual date of registration of ownership in the Deeds Registry in favour of the buyer

Voetstoets

It has become common practice in South Africa for a seller to contract out of his liability for defects, that is to say the buyer buys the home “voetstoets” – meaning “as is”.

The only time this clause will not protect the seller is if he knows there is a latent defect and he does not disclose it or, even worse, tries to hide it in an attempt to defraud a buyer

Fixtures & Fittings

When land is sold, all the permanent improvements are included by law i.e. house, garage, outbuildings, etc together with all movable items which have been permanently fixed to the house or building referred to as permanent fixtures.

Anything that the seller wishes to take with him that is clearly considered a permanent fixture owing to the fact that it is screwed/nailed to the floor/wall/ceiling should be clearly indicated in the sale agreement.

Signature of Documents

All documentation must be signed in black ink and if signed outside South Africa, must be authenticated by the relevant authority.  The signed and authenticated documents must then be posted to South Africa.

This process can prove inconvenient, and cause huge time delay & frustration (if documents are for instance “lost” in the post).  It is advisable to grant a General Power of Attorney to a trustworthy person within South Africa, enabling them sign all documents on the buyer’s behalf.

If there has been a Mortgage application and the buyer is married, and the marriage is subject to the laws of a foreign country, then the buyer’s spouse will have to sign the mortgage bond documentation alongside the buyer.  Marriages according to the laws of the England and Scotland are exceptions to the rule.

THE PROCEDURE FOR TRANSFER OF OWNERSHIP

• Property transfer in South Africa is handled by a Conveyancer – a legal professional qualified in Property Law. 
• Once the Sale Agreement has been signed, the Estate Agent sends a copy of the agreement and instruction to the conveyancer on the seller’s behalf. 
• If the buyer requires a mortgage on the property, we assist the buyer in applying for a loan and the application is submitted. The term used for mortgage in South Africa is ‘bond’.
• Estate Agent ensures deposit is secured (i.e. placed in trust or guarantee given).
• If the sale is “subject to sale of another property”, the deposit will be secured by way of a guarantee from the buyer’s conveyancers in lieu of actual cash paid.
• Bank inspects the property.
• Buyer’s bond is granted.
• Bank instructs bond registration attorneys to proceed with registering the buyer’s bond.
• Conveyancer sources the title deeds and applies for cancellation figures of seller’s existing bond.
• Estate Agent arranges for entomologist report to be issued.
• Estate Agent arranges for electrical compliance certificate to be issued.
• Estate Agent and conveyancer ensure that all “suspensive conditions” have been fulfilled.
• Conveyancer prepares documents for both parties to sign.
• Agent ensures that buyer’s transfer costs have been placed with the conveyancer.
• Conveyancer applies for transfer duty receipt from the deeds office.
• Conveyancer applies for rates clearance certificate/ levy clearance certificate from local municipality/ managing agents.
• Conveyancer calls in both buyer and seller to sign transfer papers.
• Conveyancer calls for guarantee from bond registration attorneys.
• Conveyancer lodges all necessary documentation with local deeds office.  This process is referred to as “the sale has been lodged”.  Depending on the time delay in the deeds office, the transfer should take approximately 7-10 days.
• Property is registered in the buyer’s name.