Extra costs when buying property in South Africa

A variety of fees (also called closing or completion costs) are payable when you buy a property in South Africa, including those detailed below.

Before signing a preliminary contract, check exactly what fees are payable and have them confirmed in writing.

In addition to the fees associated with buying a home, you must also take into account the running costs. These include local property taxes, building insurance, contents insurance, standing charges for utilities, community fees for a community property, garden and pool maintenance costs, and a caretaker’s or management fees if you leave a home empty or renting it. Annual running costs usually average around 2 to 4 per cent of the cost of a property.

a) Transfer Duty

Transfer duty is a tax levied on the transfer of ownership of fixed property.

• If you’re buying as a company, a close corporation or a trust (sometimes called a ‘legal entity’), transfer duty is levied at a flat rate of 8 per cent of the purchase price.
• If you’re buying as an individual (officially termed a ‘natural person’!), duty is calculated on the following scale:
• If you buy a home in South Africa, you must pay transfer duty on the value or the purchase price (which ever the higher) of a property above R500,000.00
• Duty is levied at 5 per cent on the value between R 500,000.01 and R1 000,000.00
• and 8 per cent on any value over one million rand. For example, on a property costing R800,000 you will pay R15 000 00 transfer duty

Value (R) & Duty Rate (%)

Up to 500,000 --- 0%

500,000.01 – R1 million --- 5%

Over R 1 million Rand ---- 8%

b) Legal Or Conveyancing Fees

These are calculated on a sliding scale and amount to between 1 and 2 per cent of the purchase price, depending on the value of the property.

c) Bank & Mortgage Costs

Bank inspection fees are around 0.2 per cent of the valuation, and the mortgage arrangement fee is around 1 to 1.5 per cent of the loan amount.

d) Utility Fees

If you buy a new property, you must usually pay for electricity and water connections (and occasionally gas, but it’s little used in South Africa) and the installation of meters. You should ask the builder or developer to provide the cost of connection to services in writing. If you buy a resale property, you must usually pay for the cost of new contracts, particularly water.

e) Other Fees

Other fees may include surveyor’s or inspection fees, architect’s fees and the cost of moving house.
Note that stamp duty was abolished in the 2004 budget but is still (erroneously) mentioned on many websites dealing with buying property in South Africa