What Is Needed To Buy A House In South Africa

What Is Needed To Buy A House In South Africa

In this article, Satacts.co.za tries to answer this question by publishing the requirements needed to Buy A House in South Africa

Foreigners are free to buy property in South Africa without restrictions, subject to meeting the visa requirements to live and work in the country. Expats with a criminal record are not permitted to buy property.

As in other countries, you must provide a range of documents to buy a home in South Africa. This includes a valid passport, proof of your address, your most recent bank statements, and paychecks from your employer.

If you’re buying the property with a mortgage, you need a certificate from the South African Reserve Bank (SARB) to confirm that you’re eligible for finance. As an expat, you’re likely to need a big downpayment before a mortgage lender will offer you a loan – more on this later.

If you’re buying a property from outside South Africa, you must notarize your documents or sign them at a South African embassy.

Buying a house in Cape Town

Around four million people live in Cape Town, and the city is one of South Africa’s most beautiful (and expensive) locations.

The most popular places for family homes tend to be in the suburbs. South of the city center, Constantia, Tokai, and Bishopscourt are among the more affluent areas for expats, with large family homes and highly-regarded schools. To the west of the city, the neighborhoods of Bloubergstrand, Milnerton, and Tableview offer more affordable family properties.

The most expensive properties are in Camps Bay, to the west of Cape Town. The estate agency Seeff says prices in Camps Bay increased by 131% between 2010 and 2021. Properties sold for an average of R14.2 million in the first 10 months of 2021.

Buying a house in Johannesburg

Johannesburg is South Africa’s economic center and has a younger demographic than some of the country’s other cities.

The most desirable properties in Johannesburg are often in high-end gated communities, which have amenities such as gyms and restaurants.

Many expats live in Fourways, a family-friendly suburb of Sandton, an area north of the city center that is home to some of South Africa’s biggest multinational companies. Heading further northeast, the Midlands is also popular among foreign buyers.

Costs of buying a house in South Africa

There are a series of additional costs you need to factor in when buying a house in South Africa. These include the following:

Transfer Duty

A transfer duty applies to all property purchases above R1 million. The rate you pay depends on the value of the property you buy and must be paid within six months of the purchase date. In the event of late payment, interest is calculated at an annual rate of 10% for each month the bill remains unpaid.

The South African Revenue Service publishes the latest transfer duty rates on its website. In 2022, the rates are as follows:

  • Properties priced up to R1,000,000: 0%
  • R1,000,000–1,375,000: 3% of the value above R1,000,000
  • R1,375,000–1,925,000: R11,250 + 6% of the value above R1,375,000
  • R1,925,000–2,475,000: R44,250 + 8% of the value above R1,925,000
  • R2,475,000–11,000,000: R88,250 + 11% of value above R2,475,000
  • R11,000,000 and above: R1,026,000 + 13% of the value above R11,000,000

Legal fees

Buyers need to pay two fees related to the legal aspects of purchasing property (conveyancing).

First, the bond registration fee covers the cost of registering your mortgage. This is payable to a bond registration attorney, who is appointed by the bank you take out a mortgage with.

Next, the transfer attorney fee covers the cost of transferring the ownership of the property. This is paid to the transfer attorney, who is appointed by the seller.

Both of these fees are on a sliding scale depending on the value of the home you’re buying. The mortgage comparison site Ooba provides a calculator, which can give you an estimate of the costs you might incur.

In addition to these charges, you may need to pay a small fee to cover the processing of your documents. The exact amount varies between firms.