Buying Property In South Africa
South Africa has come out of the shadow of being a pariah to become one of the fastest developing countries in the Horn of Africa
. Just a quarter of a century ago, it was a pariah because of its policy of apartheid. Now, it has hosted the World Cup and is at the cusp of creating one of the fastest growing economies in the world.One of the burgeoning sectors of the economy is the South African property market. Not much information has been provided for the market players, so here are some juicy tidbits for Indians with purchasing power that can help in choosing to invest in this part of the floor. Aside from the long history between the two countries, investing in South Africa is a good way for Indians strengthen the bonds between the two countries.
Foreign Ownership. As of the moment, there is a restriction regarding property ownership in South Africa. The law stipulates that illegal aliens cannot own immovable property in South Africa. Aside from this restriction, legal aliens can purchase property in property and there is a whole process that needs to be complied with to allow the sale to be legalized.
Financing for Foreigners. The only existing restriction regarding financing for foreigners is the ceiling of allowing a loan on 50% of the value of the property. The specific guideline stipulates that a non-resident can only borrow up to a maximum amount invested by the non-resident in the purchase of the property. Furthermore, these loans need to be approved by the South Africa Reserve Bank since it would be foreign currency denominated, through the commercial banks operating in South Africa. Once approvals are made, the financing for the property purchase would not be an issue.
Costs of Purchase. There are many costs included in purchasing property in South Africa. The following are some of the costs included in the property purchase:
a) Broker's fee. This is often paid when the seller engages the services of a real estate agent. This is stipulated by law.
b) Compliance Certificates Cost. This is for the account of the seller to show that the property has passed regulatory requirements for use and occupancy.
c) Transfer Costs. This is for the account of the buyer and these are taxes for the purchase of the property. The value of the payable tax depends upon the purchase price for the property. One of these taxes is called the Capital Gains Tax. This tax is imposable upon South African residents when property is sold. For non-residents can also be liable for the tax when immovable property, or any right or interest over it, located in South Africa is sold to a third party.
e) Accessory Costs. There are many accessory costs such as mortgage fees, if a loan is taken out. Other charges include Registry of Deeds charges and interest on the loans.
f) Attorney's Costs. When doing the paperwork as well as registration of the property deeds, one would need to engage the services of a duly accredited South African lawyer. This part would mean paying for their legal services for the property transfer.
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