Homes in South Africa
Purchase Property
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 Property of any kind in South Africa is normally purchased through a broker or real estate agent who should be registered as a member of the Estate Agents Board. The South African Reserve Bank refers to foreigners as NON-RESIDENTS - whether they be natural persons or legal entities, whose normal place of residence, domicile or registration is outside the common monetary area of South Africa. A transaction can be processed without intervention from the South African Reserve Bank should a non-resident purchase a property for cash. Non-residents may borrow up to a maximum of 50% of the purchase price in South Africa; the remaining 50% must be brought into the country by the purchaser and transferred from a recognised foreign bank to a bank in South Africa. The total amount that may be borrowed is at the discretion of the commercial bank offering the loan. Non-residents who are in possession of a valid South African work permit are considered to be residents for the duration of their work permit and are therefore not subject to borrowing restrictions placed on non-residents without work permits. Additional Information
All contracts must be in writing, contain certain prescribed information and be signed by both the buyer and seller to be valid and legally binding. Contracts usually take the form of an Agreement of Sale or Offer to Purchase. Once an Agreement of Sale has been signed by both parties, it represents a valid and binding document from which neither party can withdraw without legal consequences, save for certain instances where: The agreement is subject to certain suspensive conditions which are not fulfilled; The purchase price is less than R250,000 and certain additional criteria in terms of the Alienation of Land Amendment Act are present entitling the Purchaser to “cool off”. ‘Cooling Off’ clause In terms of Article 29A of the Alienation of Land Amendment Act 104 of 1998, a Purchaser has 5 days to revoke or terminate a Offer to Purchase / Agreement of Sale by notifying the Seller in writing that the Offer to Purchase/Agreement of Sale has been unconditionally revoked or terminated. A non-resident must open a ‘non-resident’ account at a South African commercial bank, to facilitate loan repayments. This account would normally be funded from abroad or from rentals received on the property purchased, subject to the bank holding the account being provided with a copy of any rental agreement. Land Registration South Africa is reputed to have one of the best deeds registration systems worldwide, with an exceptional degree of accuracy and of tenure being guaranteed. Frequently Asked Questions 1. How secure is my investment? The banking system in South Africa is dependable, established and highly advanced. Transfer of funds through any registered South African Bank is secure and guaranteed. Once the money transfer has taken place, it is usually held in trust by an attorney or real estate company, either on behalf of the purchaser or the seller until registration of transfer. The holding of the funds in trust by an attorney is a cornerstone of the attorney’s practice and is regulated by the relevant Law Societies and secured by the Attorney’s Fidelity Insurance. 2. Can I get my money out of South Africa? The Exchange Control Rulings stipulate that funds brought into the country by a non-resident may be repatriated at any time, as well as any capital gain thereon after deduction of any Capital Gains Tax payable. 3. Can non-residents own property? Non-residents can own property partially or wholly, in their own names or through ownership of an interest in one or other forms of legal entity. 4. What forms of ownership are available? Freehold is the most common form of property ownership. Other forms of ownership include Leasehold, Sectional Title and Share Block. 5. Which is the best form of ownership? The most common form of ownership is that of individual title. Property may also be held through share ownership in companies, through holding membership in Close Corporations or ]as a beneficiary in a Trust. This choice is usually dependent of decisions related to tax or transfer duty issues, or relating to the protection of assets. Companies and Trusts in South Africa are based on English Law and are very similar in nature to those in England. A Close Corporation is a type of company, which is flexible and cheaper to form and administer than a normal incorporated company. A Close Corporation or a Trust can usually be formed in less than a month. A Proprietary Limited Company may take a few weeks longer. 6. Can I lease my property out to others? Non-resident owners of South African property have all the normal rights of ownership including the right to recover rental income from lessees. Rental income is normally taxable in South Africa. 7. What procedure is followed for transfer of ownership? The registration of a property transaction is usually handled by a qualified attorney known as a conveyancer. It is the Seller’s perogative to appoint the conveyancer of his choice, who will attend to the registration of transferof the property sold, and the costs relating to the sale are for the account of the purchaser. The conveyancer prepares the required documentation after both parties to the transaction have signed the relevant paperwork. The documentation is then lodged in the Deeds Registry, together with the cancellation of any existing mortgage bonds and the registration of new mortgage bonds. On registration, all existing mortgage bonds registered over the property are cancelled simultaneously with the registration of any new mortgage bonds by the purchaser in favour of the bank granting the financial assistance. The purchaser is recorded as the new owner of the property and the purchase price is paid to the seller. This procedure does not apply where the shares/members interest and loans are acquired in a property-owned company/close corporation where no change in ownership is recorded. 8. Are there additional costs to the purchase price? Yes, there are a number of variable costs that should be considered when determining the total amount involved in all property transactions. - Transfer costs and transfer duty on the Purchase Price - Bond costs based on the loan amount - Other costs (if applicable) are:
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