You can purchase property through an Estate Agency or you can deal directly with the owner for a private sale.
Benefits of Purchasing through an Estate Agency
- Estate Agencies are controlled by the Estate Agency Affairs Board (EAAB) to protect you. They must be certified by the EAAB as property professionals.
- All Estate Agencies, Principals and individual agents are required to be registered with the Board and must be in possession of a Fidelity Fund Certificate issued by the Board.
- The Fidelity Fund protects you from financial loss as a result of default by the Agency/Agent.
- Agents must comply with a code of conduct set by the Estate Agency Affairs Board.
- Estate Agents are professionally trained, and bring with them comprehensive skills, e.g.:
- They will source the most suitable properties for viewing based on your brief
- Agents have a legal responsibility to disclose any information which may affect your buying decision
- They will assist in the negotiating process armed with comparative market analysis information
- They will provide all necessary documentation for the submission of an Offer to Purchase as well as secure copies of the Title Deed and the Surveyor General Diagram
- They will assist in ensuring that the transfer process takes place efficiently and will keep you updated.
Benefits of dealing directly with the owner
- You could negotiate a lower price as the owner will save on commission
When dealing privately with the owner, it is advisable to consult your attorney before signing an Offer to Purchase.
Transfer Duty and VAT
Transfer duty or Value Added Tax (VAT) is payable on all property transfers in South Africa. If the Seller is a registered VAT vendor, then VAT will be payable by the Buyer. If the Buyer is registered for VAT, then the transaction may be zero rated for VAT by the South African Revenue Service.
Alternatively, the Buyer can pay the VAT and then claim it back as an input tax. The present rate of VAT is 14%.
In all other cases Transfer Duty is payable at the following rates:
Private individuals:
R0 to 600 000 – No tax payable.
R600 001 to 1 000 000 – 3%
R1 000 001 to 1 500 000 – R12 000 plus 5%
R1 500 001 plus – R37 000 plus 8%
Companies, close corporations and Trusts – as above.
Raising a Mortgage Bond
Application for mortgage finance can be made either through a Bond Originator or directly to your bank. Bond Originators can usually ensure that you get the best possible rate and they drive your application through the process.
South African residents are subject to the National Credit Act. The NCA places the obligation on the bank to establish the ability of the borrower to repay the loan.
The bank will not only take your income and credit record into account, but will analyse your total debt situation related to your disposable income, and then decide on your ability to pay the monthly instalments.
Generally, banks will require a deposit of between 10% and 30% depending on the value of the property and whether or not you are an existing client. The banks all have different criteria and a Bond Originator will negotiate on your behalf to obtain the best possible terms.
Dealing through a bond originator is at no cost to the buyer and takes care of the administrative hassles of raising finance.
