Buying Property in
South Africa
There are a few pointers
on buying Property in South
Africa.
Foreigners – Non-Residents
Non-residents of South Africa
may take out a mortgage loan
up to 50% of the property
selling price. That means
that for every Rand (South
African currency) that you
take to South Africa, you
may borrow a Rand. You do
need the proof though that
you took the money to South
Africa.
If you take money to South
Africa for investments, make
sure that you have all documents
stamped at Customs or Bank
proof of transfer as a foreigner
especially if you need to
take the money out of the
country again as South Africa
has very strict currency laws
which allow people to take
out limited amounts of money.
You also need the proof of
course for the loan to proof
that you brought in money
to cover the 50%. If you took
enough money to South Africa
for various reasons, then
theoretically you should be
able to borrow more than the
50% and even 100%.
The balance of the loan could
be made up from borrowing
in your own country or other
means.
Of course borrowing money
in South Africa will be applicable
to the same general rules
and qualifications which are
applicable to banks you are
used to. Proof of income,
residence, proof of identity,
etc. Opening a local bank
account should not be problem.
If a mortgage loan is made
in South Africa as a non-resident,
then you also need the South
African Reserve bank permission.
The bank which gives you
a mortgage loan might expect
you to have a locale bank
account from which payments
will be deducted every month.
You should therefore then
make payments into this bank
account every month and the
mortgage lender will deduct
the payments from this account.
Opening of such an account
should not be a problem.
The local Estate Agent should
be able to help you with these
activities.
Foreigners – Residents
(temporary residence permits)
Foreigners, who live and
work in South Africa, can
get a 100% mortgage loan (of
course all the normal bank
qualifications/income and
rules apply).
It is important to know
that if a foreigner with a
temporary residence permit
leave the country, then he/she
will be liable to change the
mortgage to the type as described
under section Foreigners/Non-Residents
above.
South Africans /
Permanent Residents / Contract
Workers - working abroad
South Africans working abroad
can get an 80% mortgage. It
is possible in some case to
get a 100% mortgage. It must
be the intention of this person
to return to South Africa
to comply.
A person who applied for
emigration or denounced citizenship
or permanent residence does
not comply for this mortgage
loan.
Obtaining a Temporary
or Permanent Residence Permit
It is currently difficult
to obtain a residence permit
in South Africa.
It is fairly easy to
obtain a Residence permit
if you start a Tourist company.
Especially your ties with
your home country could help
to start a tourist company.
You do however need a good
business plan en generate
work opportunities for local
people and you would need
a starting capital.
You can also obtain a Residence
permit if you have a sponsor
or find a job with a company.
If you do not have a job
ready and waiting or do not
wish to start a business and
only want to live in South
Africa on basis of financial
independent or pension, then
you need to comply with various
criteria which could make
it difficult to obtain a residence
permit.
For more information, you
can access the following Internet
Pages/Websites.
http://www.home-affairs.gov.za/legislation_admin.asp
http://www.immigration-sa.co.za/index.htm
http://www.home-affairs.gov.za/documents/act13-02_x.pdf
It is important to know that
there is a new law in its
making which is far stricter
than the current law.
http://www.immigration-sa.co.za/hr/hr11.htm
In some instances it would
be necessary to invest in
South Africa for example buying
property. This could make
it easier to obtain a Residence
Permit.
Calculating the
costs of buying:
There are a few pointers:
Unless contractually stipulated:
Costs for Seller:
Beetle and Electricity certificates
(Beetle Free & Electrical
Compliance – Is the property
free from insects and termites
and is the property save as
far as electricity is concerned
and does it complies to the
safety norms.)
Agency Fee’s:
Usually 8% of selling price
Costs for buyer:
Conveyancer (Lawyer) Mortgage
Loan costs Transfer fees
1. Receiver of Revenue
If a private individual:
R0 - R140 000 exempted
5% if price is between R140
001 – R320 000
8% on balance more than R320
000 of selling price
If commercial:
10% of selling price
Plus:
20c per R100 in Duty Stamps
2. And other costs calculated
as follows:
· Mortgage costs are in
the order of 12-14% per year.
(Variations available for
example a loan with fixed
Interest rates for fixed time)
· “Assessment Fee's” – A
valuer sent by the bank to
determine the value of the
property which also is used
to determine whether the bank
will give a loan on that property.
Costs 0.2% of value/selling
price of property up to maximum
of R1000.00 incl. VAT
· “Initiation Fee” – Administration
costs of bank – usually R200.00
incl. VAT
· “Comprehensive Insurance”
– Bank requires sufficient
insurance.
· “Transfer Fee’s” – Costs
payable to Transfer Attorney
dependant on selling price.
· “Bond Registration Fee”
– Registration of home loan
– dependant on selling price
and payable to Registering
Attorney.
· “Deeds Office Levies”
– Costs to register the property
deed at the state – compulsory
– via “Transfer Attorney”
between R55.00 and R500.00
dependant on the selling price.
-PLUS-
Costs for registering the
home loan payable to the “Register
Attorney” – dependant on the
Loan amount between R200.00
and R500.00
The total costs for a house
bought by a private person
(not commercial) WITH a mortgage
loan with a selling price
of R400000.00 amounts to R29000.00
(Exclusive Mortgage Interest)
The total costs for a house
bought by a private person
(not commercial) WITHOUT a
mortgage loan with selling
price of R400000.00 amounts
to R22000.00
Very important and handy
to know.
To calculate the costs to
buy property.
http://www.mortgagesa.com/tools/index.asp
http://www.mortgagesa.com/info/foreignbuyer_propertypurchasecosts.asp
Income Tax
Income tax is rather complicated
and will not discuss the details.
If you would like more information,
you can visit the following
websites.
http://www.mortgagesa.com/info/foreignbuyer_cgt.asp
In short we would like to
mention that there are various
regulations regarding paying
tax on what is called Capital
Gains Tax. As your property
increase in value, there might
be instances where you need
to pay tax on this value increase
especially if you speculate
with property and rent out
property. There are also costs
which are deductible.
http://www.sars.gov.za/cgt/Default.htm
Renting out Property
There is a number of Estate
Agents and very likely also
the agent through which you
buy/bought your property who
can assist you in finding
tenants and looking after
your property
See also further down in
this document `Arrived
in South Africa`
Investment
It is currently an excellent
time to invest in property
in South Africa. Prices are
rising with 10% and more per
annum.
Re-locating to South
Africa
Pets
You are allowed to take your
pets to South Africa by means
of an import permit.
Animals should be 8 weeks
or older.
The animal must be transported
in an IATA L.A.R container
with minimal 10 centimetres
space between back and ceiling
of container if animal is
standing upright.
You can request/apply for
an Import permit at:
Directorate of Animal Health
Import Export Policy Unit
Private Bag X138
Pretoria 0001
South Africa
Tel: +27-(0)12-3197514
Fax: +27-(0)12-3298292
Ask for a Veterinary Import
Permit for Dogs (for example)
(This is also the place
to be for other animals, plants,
leather and anything agriculture,
etc)
Costs for a small dog will
be 80 South African Rand (9
USD or 10 Euros and valid
for 6 months)
Additional costs are for
a veterinarian in departing
country at least 1 month before
departure for a general health
clearance and Rabies injection.
Then another general health
check 10 days before departure.
There may be additional costs
and clearance regulations
(Export permits) depending
on departure country.
Costs for exporting a pet
from the Netherlands will
be approximately 54 Euro (Legalising
export) at: RVV, Arnhem or
Amsterdam (check beforehand
– Tel: +31-(0)26-3528900 of
+31-(0)70-3578811)
Costs for the IATA crate
need to be added.
Costs for the flight to South
Africa vary from Carrier to
Carrier and an approximate
cost for an 8 kilogram pet
from Amsterdam to Johannesburg
is 530 Euro with KLM. (Note
that the animal can only enter
South Africa as Cargo and
not in the Cabin with the
passengers as with some other
countries due to health regulations)
It is necessary to obtain
a dog license from the local
municipality in South Africa.
Car
It is likely that it is not
possible to take your car
with to South Africa due to
the right-hand steer in South
Africa. Please check first
before importing your car
to South Africa as you may
have high costs adapting the
car to right-hand steer (if
it is currently left-hand
steer)
It used to be allowed to
import a car duty free if
the car was in possession
of the importer for at least
two years.
Furniture
Furniture can be re-located
without any problems. There
are basically three methods:
The last method is cheaper,
but usually takes longer.
The quickest and cheapest
is the first method. The first
method from the Netherlands
up to first port in South
Africa will cost you in the
order of 2800 Euros. Excluding
Insurance. Also remember that
you would need to pay customs
clearance in South Africa
port which would vary, but
for container load, it could
be 4000 South African Rand.
Restrictions
Please note that there are
restrictions on Exporting
various items to South Africa
from your departing country
and that there are Import
restrictions again when importing
into South Africa. You should
check both sides. While relocating
as a family with household
goods fairly easy to re-locate
and you do not need to pay
huge custom duties, but if
you do try to import prohibited
goods or for which you need
an import permit, you could
experience unneeded delays,
costs or even legal issues.
For example sending over a
few bottles of wine from your
collection is not a problem,
as long as you do declare
it.
Arriving in South
Africa
Driving a Car
Driving in South Africa is
on the left-hand side of the
road as in Great Britain.
Security
For your own safety, keep
your doors locked, do not
stop on the side of the road,
not even if you have flat
tyre.
Driving through a red stop
light is not permissible,
but if you do not feel safe
at stopping at a red light
due to suspicious looking
people hanging around at the
stop street, rather drive
through if traffic permits
and risk a fine.
Criminal activities in certain
parts of South Africa are
extremely high while in other
parts (and it could be 1 kilometre
further up the road) it could
fairly quite. South Africa
is a pretty country and worthwhile
re-locating to South Africa,
but it is wise to keep your
eyes open and make the necessary
precautions for your own safety.
Electricity/Water
In South Africa a municipality
will provide the electricity
and water (unless you are
in some remote farm communities
where it might be possible
that ESCOM provides the electricity
directly to the consumer.
A municipality provides most
amenities required in a household
and that is electricity, water,
sewage, driving license, etc.
Please note that live is
different in South Africa
to what you are used to in
your home country. There may
be totally different rules
and always check with friends,
colleagues, neighbours and
especially authorities how
one should organise or do/pay
for services.
Quality of water and electricity
supplies are excellent. It
is unlike most African countries
normal to drink water from
the tap.
Renting
Renting property in South
Africa is rather easy. You
can rent where and when you
like. The first to arrive
with the deposit and signing
a contract is the person who
will be able to rent the property.
There is no rental control
except for certain laws applicable
to property above a certain
age, etc.
It is important to know
that Tenants have the law
on their side if they have
a lease for a specific time.
In other words, if the tenant
is renting with a lease contract
with a 2 months notice period
or until a certain date, then
you cannot give them notice
because you bought the property.
The tenant has the right to
occupy the property until
that date.
Renting of property is usually
with a stove, all lights must
be in working condition as
well as carpeted or tiles.
It is not permissible for
an owner to rent out property
with the above not in place.
It is not allowed by law to
build/sell/rent a property
without floor carpet/tiling
and working lights.
The person renting the house
pays for electricity and water
and the person renting out
the house pays for taxes and
sewage.
Electricity and water usage
meters are read once per month
and a bill send and payable
within the next month. Person
renting pay connection fees
and a deposit which is refundable
upon moving out of the house.
100 Euro or higher is not
unusual.
Person renting pay a deposit
of 2-3 times the monthly rental
from which damage and cleaning
costs can be deducted.
Renting Agents arrange all
rentals and mostly everything
will go well. It can happen
that a tenant leave without
paying the last month’s rental
or cause damage, but that
will then get deducted from
the deposit paid by the tenant.
The Renting Agent usually
receives 10% of the rental
every month. The Agent will
also find tenants, advertise,
arrange keys, regular inspections,
etc.
Rental is usually paid in
advance.
Television
There is no cable television
in South Africa and reception
is by air and traditional
type television aerials. The
person renting out is house
do not have to provide such
aerials, but can do so. Within
sectional title homes (cluster
type homes and apartments),
there is usually a common
antenna system with cable
distribution and fitting of
Dish antennas or other external
antennas very often prohibited.
Satellite reception is of
course possible, but the amount
of channels is limited compared
to Europe or America. It is
possible to receive what is
called DSTV with channels
Discovery, National Geographic,
Cartoon Network, etc.
There are roughly 4-5 television
channels which can be received
by air and a number of radio
channels. It is required to
pay a television license every
year which is bought at the
local Post Office. It is not
possible to buy a Television
set or Video machine without
a license.
Telephone
Telephone service is of a
high standard and Internet,
ISDN and leased lines are
available as well as broadband
Internet connection at some
cities. It is possible to
take over a telephone connection
from a previous tenant/occupant
of a house in which case you
save connection fees. Then
a reading will be made of
the counters and the previous
user will be billed for usage
up to that date and the next
user from that date.
Swimming Pools
Should you buy a house with
a pool, look after it well
as black algae could damage
a pools lining. Maintenance
on a pool could be relatively
expensive depending on the
size. The chemicals are usually
around 100-200 Rand per month
depending on the size and
season. The pipes used for
the automatic cleaner needs
to be replaced on a regular
bases, but isn’t too expensive.
Refuse
Refuse from the house (Kitchen,
etc) gets collect once per
week. In some municipalities
there will be a restriction
on the amount of plastic bags
which could be left outside
while in others there are
no limits. Often garden refuse
may be left to be picked up
as well, often not.
More Information
For more information and
a photo album on South Africa:
www.southafrica.co.za
Do you need more information
on particular property/properties?
Contact us via the Contacts
page and we will assist you
find the property which is
right for you!
