South Africa has become a common place for foreign homeowners. The South African property market is a great investment for foreign nationals willing to spend their dollar’s, pound’s and euro’s here.
Whether you have been attracted by the delightful light blue waves of Pennington beach or have fallen in love with the bountiful hills of ‘Valley of 1000 Hills’, South Africa has a mesmerizing home waiting for you. Most people are not only looking for a luxurious and lovely homes perched in the middle of the Safari, but they also want and need a home which will provide peace of mind or be a escape from reality.
First of all, it is important to know that foreign nationals are permitted to purchase property in South Africa. This means that any foreign natural person or legal entity may purchase property. However, an illegal national is not permitted to own property. Therefore, a foreign national can be described as anyone who is domiciled or who’s registered residence is outside the territorial lines of South Africa but who is lawfully allowed permission to be in this country.
Once a foreign national has been granted lawful entry in South Africa, they must abide by the laws and regulations of buying and selling property. In South Africa it is common to purchase a property through an estate agent, therefore a foreign national’s best guide in navigating the process of purchasing a property is an estate agent.
A foreign national may elect to purchase property in cash without any assistance from any of the national banking institutions. However, should a foreign national require financial assistance from the bank they may borrow up to 50% of the purchase price which is require in order to complete a contract of sale.
Foreign nationals are entitled to own property in their own name or own an interest, property may be owned as a whole or the national is allowed to own a portion and/or share of the property.
Once ownership transfers the foreign national acquires the standard and ordinary rights of ownership including but not limited to the right rental income on said property which is taxable by the South African Revenue Services (SARS).
The foreign national may own property in the following respects:
Through individual title,
Through joint title by having an undivided share, or
Through a company or trust.
Upon registration all ‘live’ mortgage bonds are cancelled, and the bonds registered in the name of the new purchaser become the ‘live’ mortgage bonds.
Additional costs to look out for:
Transfer duty costs which might be payable;
Mortgage bond costs;
Costs for the drafting and finalisation of the sale agreements which is to be agreed up and signed by both the buyer and the seller to protect each of their rights respectively;
The conveyancer’s costs;
Any costs which might be charged for inspection e.g. pest, electric, surveyor’s fees etc.;
Costs of insurance which could be taken out over the property including covering costs for any renovations or buildings being erected on the property; and
Estate agent’s commission.
Foreign nationals must be aware, however, that all investments are subject to South African tax. Should they elect to transfer or alienate their property further and wish to transfer those proceeds out of the country then they must bear in mind that the local tax laws will apply.
Foreign nationals must abide by the following requirements:
Certified copy of passport;
Certified proof of residence
Capacity to enter into the deed of sale – in this country it is 18 years old;
Provide proof of marriage under foreign laws which will further determine legal capacity;
A valid deed of sale;
Security payment of the mortgage bond; and
All transfer documents which may be lodged with the Deeds Office thereafter registration and transfer of ownership will occur.
It is essential to keep in mind the legal or conveyancing fees which are applicable these are calculated and stipulated by tariff which is available at the Deeds Registries.
Utility fees are another aspect which must be considered in this transaction, whenever a property is purchased in South Africa the purchaser must pay for electricity and water connections as well as the installation of the municipal meters.
Do not let the costs and fees deter you. Buying property in this country is a great investment. However, location is everything and most foreign nationals come to South Africa to see our majestic animals, swim in our deep blue oceans and learn about our long history. They are often tantalized by the thought of buying a heritage home, these older properties generally require a lot more work than a more modern home, but heritage homes are immaculate and timeless which makes them invaluable.
Heritage homes offer a unique opportunity to own a piece of history and this then becomes a lifelong investment.
So, whether you are looking at owning a retirement home, holiday home or office space in South Africa, Randles Incorporated offers property services to assist you with your transfer.