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What it actually costs to buy a home in South Africa
Most first time buyers budget for the deposit and the bond repayment, then get a bill for the costs of transfer that nobody mentioned. Here is the whole list, with the current figures.
7 minute read
The purchase price is not the amount you need. On top of it sit four separate costs, three of them paid to attorneys and the taxman rather than to the seller, and all of them due before the property is registered in your name. None of them can be added to the bond.
Transfer duty, paid to SARS
Transfer duty is a tax on the purchase, and it is the largest of the costs on anything above the threshold. It is charged on a sliding scale, so only the portion of the price inside each band is taxed at that band's rate. These are the bands for the current tax year.
| Purchase price | Duty payable |
|---|---|
| Up to R 1 210 000 | No transfer duty |
| R 1 210 001 to R 1 663 800 | 3 percent of the value above R 1 210 000 |
| R 1 663 801 to R 2 329 300 | R 13 614 plus 6 percent of the value above R 1 663 800 |
| R 2 329 301 to R 2 994 800 | R 53 544 plus 8 percent of the value above R 2 329 300 |
| R 2 994 801 to R 13 310 000 | R 106 784 plus 11 percent of the value above R 2 994 800 |
| R 13 310 001 and above | R 1 241 456 plus 13 percent of the value above R 13 310 000 |
One exception catches people out. If you buy from a seller who is registered for VAT, and the sale is part of that seller's enterprise, the price includes VAT and no transfer duty is payable. This is common on new developments. Ask the agent which applies before you calculate anything.
Bond registration costs
The bank appoints an attorney to register the bond, and you pay that attorney. The fee is set on a published tariff and rises with the size of the bond, not the price of the house. Expect the bond registration bill to include the attorney's fee, the Deeds Office lodgement fee, and small charges for searches and postage.
Transfer costs
A second attorney, the conveyancer, is appointed by the seller to transfer ownership. You pay this one too. The fee again follows a tariff based on the purchase price, and the same Deeds Office and search charges apply.
Two attorneys on one purchase surprises people, but the roles are genuinely separate. The bond attorney protects the bank's security. The transferring attorney moves the title. On a bonded purchase you will always pay both.
The deposit
A hundred percent bond is available to buyers with a clean record and stable income, so a deposit is not always required. It still does two things worth having. It reduces the amount you borrow, and it improves the rate the bank offers, because a bank carrying less of the risk prices the loan better.
The smaller items
- Rates and levies in advance. The municipality and the body corporate both want a few months up front before they will issue a clearance certificate.
- Occupational rent, if you move in before registration. Agreed in the offer, payable monthly to the seller.
- Compliance certificates. Electrical, gas, plumbing, electric fence and beetle where applicable. These are the seller's cost in most standard offers, so check the wording.
- Homeowner's insurance. Every bank requires cover on the building from the date of registration, and will not release funds without it.
Working out your own number
The bond and transfer calculators on this site take a purchase price and return the full set of figures, using the current duty table and the published attorney tariffs. Run your price through it before you sign an offer to purchase, not after.
Common questions
Can I add the transfer costs to my bond?
Not to the bond itself, because the bond can only be registered once the property is transferred, and the costs are due before that happens. Some banks will approve a bond larger than the purchase price where the valuation supports it, which frees up cash for the costs, but you are then paying interest on them for twenty years. Saving them separately is cheaper.
Who chooses the attorneys?
The seller nominates the transferring attorney and the bank nominates the bond attorney. You pay both but you choose neither, which is why the tariffs are published and fixed rather than negotiated.
How long before registration do I need the money?
The attorneys will ask for their costs early in the process, usually within a few weeks of the offer being accepted, because the Deeds Office will not lodge without them. Treat the money as needed at the point the offer is signed, not at transfer.
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