Costs of buying a property in South Africa (2024)

For many of you out thereinterested in buying a property it can come as quite a shock when youdiscover just how much all the associated fees can cost you inaddition to any deposits and costs you incur with renovations andfurnishing your new home.

These costs can have a bigimpact for first buyers and for our many foreign readers may come asa nasty surprise compared to what they are used to in their homecountries.

So below wegive you the breakdown and pass our thanks on tohttp://www.sahomebuyers.co.za/and IntergateImmigration for their help in putting thisarticle together.

There are 2 main costsassociated with buying a property in South Africa

1. The costs associatedwith the actual property purchase
2. The costs associatedwith any bond (home loan) that you may take out to fund yourpurchase.

Lets first examine theproperty purchase costs.

Conveyancers fees

The first costitem we will consider is the conveyancing (attorney) fees. Digressingslightly you should take note that although you, the purchaser, paythe Conveyancer’s fee, it is usually the seller who appoints theattorney. This ensures that the conveyancer acts in the Seller’sinterest and prevents unnecessary delays in the transfer process.

Yes that’s right you the buyer pay but the attorney does notrepresent you – consider using a buyers consultant and make sure
you get legal protection (www.sahomebuyers.co.za)

Cost are basedon a sliding scale and there is a recommended amount thatconveyancers should charge:

per R100 000 or part thereof above that, thereafter,
up to
and including R1 000 000where after the
recommended fee be R500
per R100 000 or part
thereof up to and including R5 000 000
where after
the recommended fee be R250,00 per R100 000

Property Search Fee

Part of the conveyancers role is to carry out a DeedSearch. This ensures there are no conditions in the title deed that
could prevent the transaction proceeding. The typical cost to do aProperty Search ranges from R75 to R200 plus VAT.

Postages and Petties

The appointed attorney can recover any direct costsassociated with the transfer of a property. This is generallycovered by a quotation item labelled postage and petties. A vagueterm that does indeed include Postages and Petties but is in no waylimited to just these. Expect to be billed for telephone costs,courier fees, administration fees and bank charges. Expect to paysomewhere in the range of R250-00 to R700-00plus VAT for Postages and Petties.

Financial Intelligence CentreAct

Under this act it was made compulsory forconveyancers (as Accountable Institutions) to establish and verifythe identity of a client prior to establishing a businessrelationship with them. In order to do so the conveyancer must begiven proof of who you are and where you live, for example – proofof residential address and verification of Identity Documents and aface to face identification. The documents relating to this must bestored by the conveyancer for a period of at least five years.Typically you can expect to pay between R200-00 and R550-00plus VAT.

Electronic generationfees

Not all conveyancers charge this but a goodpercentage do. In using a certain type of software conveyancers incura fixed fee per set of documents they generated in using it, and thisis passed on to the purchaser. The cost of Electronic GenerationFees for Transfers is usually around R150-00 per instruction plusVAT.

Rates Clearance

The conveyancer must obtain a Rates ClearanceCertificate from the Local Authority to verify that there are nooutstanding Rates and Taxes payable by the Seller. The municipalitywill not issue the Rates Clearance Certificate until outstandingrates are paid. The cost of a Rates Clearance Certificate iscurrently R165-00, depending on the Local Authority. And yes thepurchase does pay for this even though it is the sellers clearance.

Provisional Rates and Taxes

The purchaser will have to pay all rates and taxes4 months in advance before the registration of the property cantake place. Check what the rates are with the current owner.

Home Owners Association Consent and Admin Fee

If you are buying a property that is in a Home OwnersAssociation (HOA), such as an apartment or on a security estate, itcannot be transferred without the consent of the Home OwnersAssociation. The cost differs from one HOA to the next, buttypically is around R1000-00 plus VAT.

Deeds Office Fee

The Deeds Office’s Fee for transferring a propertyis charged on a sliding scale according to the purchase price of the
property. It is currently as follows:

TransferDuties

This is a big one. Transfer Duty is a Tax that ischarged by the Government on property transactions. It again works ona sliding scale but also depends on the entity that is buying theproperty. For the purpose of this exercise we have assumed it is anatural person (not a company or trust).

As an an example if you ate purchasing a ZAR2.5 million rand property expect to play in the region of ZAR 136,000in property purchase fees.
Okay now on to the bond (home loan)

Unless you are fortunateenough to be able to pay cash for your property purchase you willincur some bond costs.

Unfortunately there arefour parties (the bank, SARS, the conveyancer and the Deeds Office)to whom five different bond related disbursem*nts have to be made:conveyancer fees, Deeds Office registration fees, post and pettycharges, VAT and an initiation fee.

All these costs, bar theinitiation fee, which you will pay directly to the bank, you pay toyour conveyancer who will, in turn, disburse the appropriate amountsto SARS, the Deeds Office and themselves.

1. Conveyancer fees: Charged according to the size
   of you bond and are generally between 0.7% and 1.2% of the size of
   your bond.
2. Deeds Office registration fees: Again depends on
   the size of your bond and starts at around ZAR 200.00 per
   registration.
3. Post and Petty charges (again): These
   ‘incidental expenses’ should be between R 250.00 and R 500.00
4. More tax in the form of VAT – charged at 14%
   of the total conveyancer fees and the post and petty charges.
5. Be sure to argue this – it is a once off fee
   the bank charge for setting up your home loan. Not content with all
   the interest you will pay this fee covers once-off administrative
   expenses. It does differ and can be as much as ZAR 5,700.

Example

On a ZAR 1,500,000 home loan, the bond costs will be
as follows:

Conveyance fees – R 7,000.00
Deeds Office fees –R 400.00
Post and petty charges – R 250.00
VAT – R1,015.00
Initiation fee – R 4,250.00

Total Bond Costs – R 12,915.00

Summary

If you arebuying a property for ZAR 2,500,000 and taking out a home loan forZAR 1, 000, 000 budget around ZAR 140,000 extra in fees on top of thepurchase price.

* Pleasenote charges dovary from time to time and some charges are at the discretion of theconveyancer– soalways check with your property buyers consultant orattorney and use the above information as a guideline.