Advanced Search
we found 0 results
Your search results

Frequently Asked Questions

Can I buy a property if I’m not a South African citizen?

Yes you can.  However there are certain restrictions in place for foreign citizens (especially where obtaining finance is concerned).

Should you be a foreigner wanting to finance the purchase of a property in South Africa, you will only be able to obtain a bond for a maximum of 50% of the purchase price.  The balance of the purchase price will have to be paid in cash.  This is used as security for the banking institution, in that half the property is paid for, and in the event that the bond instalments are not paid, they have excellent security to execute against.

In addition, there are proposed restrictions that are going to be legislated to restrict foreigners from purchasing agricultural land in the future.

However this will not prevent foreigners from buying agricultural land in a legal entity. All foreigners will then have to do is register a South African trust or company, and purchase the land through that medium.

Can I move into the property before it is registered in my name?

Yes you are able to take possession of the property prior to registration, however this is subject to agreement between the Purchaser and Seller and is dealt with in the Deed of Sale. Often referred to as occupational rental or occupational interest, the amount is generally calculated at 10 % of the value of the property per month, and is payable upfront as in the case of normal rentals.

In the event that you reside in the property only for a few days before registration takes place, you will only be liable for the pro rata occupational rental in respect of the days before you were the registered owner, and will be refunded the balance.

How long does it take to register a property once I sign the deed of sale?

There are several factors which may affect the time it takes for a property to be registered once the sale agreement is signed.  These factors may include, among others, the following:

  1. Whether the property is being bought cash, or financed by a mortgage bond – cash sales are quicker as the conveyancer does not have to liaise with a bank or the bank’s attorneys, who have to register a mortgage bond at the same time as the property is registered;
  2. Whether there is a current mortgage bond that needs to be cancelled, or whether the owner owns the property outright – similarly to 1 above, if a mortgage bond needs to be cancelled, the conveyancer again has to deal with a bank and their attorneys in order to cancel the existing bond over the property when the transfer is registered;
  3. Whether there are arrear rates and service charges, or delays by the municipality in furnishing a rates clearance certificate;
  4. Dealing with delays with SARS in obtaining a transfer duty receipt or exemption;
  5. Whether there are major repairs that are necessary in order to obtain compliance certificates (such as electrical, woodborer or even electric fence certificates).

Having regard to the above, and provided that there are no delays or serious complications a transfer should register in approximately 65 days where it is subject to finance through the bank.  However in the event that there are delays and complications, it can take anywhere from 3 to 6 months.

On the bright side, because we attend to the marketing, sale and transfer of the property, the transfer process is streamlined as all aspects of the sale are handled in house, thus reducing the likelihood of problems and delays.

Is it better to buy a property in my personal name or in the name of a company or trust?

There are various pros and cons in each situation, and as a result no one solution ‘fits all’.

Previously there were major tax cons in buying property in a trust or company, as the transfer duty payable was much higher than for individuals buying in their personal capacity.  However the tax laws changed in April 2011, when SARS declared that transfer duty on companies and CC’s would be taxed at the same rate as individuals.  This means that the major obstacle that previously prevented many from considering purchasing through these vehicles, has now been eliminated.

Trusts are a great vehicle to purchase property in, as they can be used to protect assets from spendthrift (wasteful and reckless) beneficiaries who are unable to handle money well, or even from creditors wanting to execute against your property.  It is also a great way to ‘reduce’ your personal estate for estate planning purposes, which will ensure that you aren’t taxed heavily on death.  The downside is that if you are contemplating selling the property in the future, you will be subject to Capital Gains Tax (CGT) at the rate of 26.6% (for Trusts), versus the 13.3% your would normally pay as an individual.

Companies are also good vehicles to purchase property, in that (similarly to trusts) the property is protected from creditors, and usually the directors determine what happens to the property, which can also protect the shareholders (as a trust protects beneficiaries).  In addition if you want to sell the property at a later stage, Capital Gains Tax is limited to 18.6% as opposed to 26.6% in the case of trusts.  In addition, if the company is VAT registered and the property is bought for the purposes development, the owner can claim the VAT back.  One of the drawbacks to companies are, depending on their MOI (Memorandum of Incorporation), they may be subject to expensive auditor’s fees.

From an individual perspective, although you run the risk of a creditor executing against your immovable property, if you purchase it in your personal name, and it is your primary residence, your are exempted from paying CGT on the first R2 million selling price of your home.

An alternative to the above is partnership property agreements.  This is where two or more couples, friends or colleagues decide to invest in real estate together, meaning it is more cost effective for all parties to own property.  This is just like a shareholders agreement and should be treated as such.  This means that if you decide to purchase property with mutual friends or colleagues, a written agreement should be drafted to decide on the rights and obligations each person as well as how the parties will determine the value should one party want to ‘leave’ the partnership.

What costs do I pay when buying a property?

A purchaser usually has to cover the following:-

  1. Transfer Costs: These are the fees payable to the transferring or conveyancing attorneys (our company), for changing ownership of the property at the Deeds Office from the seller to the purchaser.  These fees are based on a fixed tariff according to the purchase price.
  2. Deeds Office Fees:  These are the fees the Deeds Office requires payment for in order to register the property.  These fees are similarly based on the purchase price of the property and are set by the Deeds Office.
  3. Transfer Duty: This is the tax payable to SARS for the transfer of the property. Transfer duty rates are also calculated according to the purchase price of the property, and are payable by all natural persons as well as juristic entities such as companies, close corporations, trusts and partnerships.
  4. Rates Charges: When the transferring attorney applies for rates clearance figures, the local authority will provide the figures for the payment required for all rates to be settled up to the end of the municipality’s financial year (end of June).  These charges will be divided between the seller and purchaser on a pro rata basis according to the date of the transfer of the property.  As a result, the buyer and seller will either get a refund, or a request to pay an additional sum for their share of rates for which they are liable, based on the point at which they become the owner, or cease being the owner of the property.

What costs do I pay when selling a property?

This is pretty standard, meaning you won’t often find any deviation from this aspect.

A seller usually has to cover the following:

  1. Commission:  This is either the estate agent’s commission, or our own.  The difference between a normal estate agent and ourselves is that with us you will only pay 3.3% plus VAT whereas with estate agents you will usually pay between 5 and 7% plus VAT.
  2. Arrear rates and services:  If you have outstanding rates and utilities with the local authority, you will be liable for all the arrears, as well as all charges up and until the date of registration.  This means that you will usually have to pay an amount in advance to the attorney doing the transfer, to cover any arrears and future potential charges, in order for the transfer to go through.  However, if you are unable to afford to cover all arrears, the attorney is able to organise bridging finance for you, in order to cover the expenses in the interim, which will be deducted from the proceeds of the purchase price
  3. Clearance Certificates:  Certain clearance certificates are required before registration is permitted to take place.  There are statutory as well as non-statutory certificates that are required.  The statutory requirements include electrical, gas and electric-fence compliance certificates.  Without these certificates, the Registrar of Deeds will refuse to allow the property to transfer from one owner to the other.  They are non-negotiable.  However the other standard, even though non-statutory requirement is the woodborer certificate.  This is standardly put into sale agreements, as a fail-safe and added protection for the purchasers.  It’s one thing that can lead to costly litigation after the fact, and thus has become common-place where sale agreements are concerned.
  4. Rates Clearance Certificate: This goes hand-in-hand with arrear rates.  Usually in the deed of sale, the seller agrees to pay for all costs related to obtaining a rates clearance certificate.  Other than the actual arrear rates (and estimated rates the parties will have to pay), the local authority charges a small fee in order to actually issue the rates clearance certificate.  This is usually under R300.00.
  5. Bond Cancellation Costs: This is only applicable if you have a current bond registered over the property you are selling.  If you do, you will have to pay a firm of attorneys (which are chosen by the bank who has a registered bond over your property), who will ‘cancel’ the mortgage bond over your property at the deeds office simultaneously when registration occurs.  Usually this fee (generally under R3 000.00) will be paid from the proceeds of the sale, however some bond cancelling attorneys require payment upfront before allowing the bond to be cancelled.
  6. Rates Charges: When the transferring attorney applies for rates clearance figures, the local authority will provide the figures for the payment required for all rates up to the end of the municipality’s financial year (end of June).  These charges will be divided between the seller and purchaser on a pro rata basis according to the date of the transfer of the property.  As a result, the buyer and seller will either get a refund, or a request to pay an additional sum for their share of rates for which they are liable, based on the point at which they become the owner, or cease being the owner of the property.

What happens to my deposit until the property is registered?

Depending on what the Sale Agreement states, usually you will have to pay the deposit (if applicable) on demand by the Conveyancer.

Upon receipt of your deposit, the Conveyancer usually invests the money in an interest bearing account, in order for your money to gain some interest while it is not being utilised.

Only once the property has been registered in the Deeds Office, will the funds either be paid to the bank to settle the seller’s mortgage bond, or directly to the seller if the proceeds exceed the bond.

You as the buyer will then be refunded the interest earned on your deposit.

When do I have to pay my first bond installment?

When signing the Bond registration documents with the bank’s attorneys, the Purchaser will be asked on what date of the month he or she would like to have the monies deducted from their bank account by means of a debit order.

With that in mind, the first bond instalment will take place on the day of the month chosen, either within the month after the property is registered, alternatively the month following the date of registration (when the property is registered in the Purchasers name).  This is because the date chosen may have been the 7th of the month, while registration takes place on a date after the 7th of the month.  In that case the instalment will be deducted in the month after the registration date.

  • Contact Conlon Prop

    47 Vincent Road
    Vincent
    East London 5247

    Email: info@conlonprop.co.za
    Phone: 043 555 0310
    Fax: +27 (0)86 268 0105

  • Mortgage Calculator

Compare Listings