If you are tempted by homes for sale in South Africa, there are no restrictions on foreigners buying a property in South Africa, although lower mortgage limits usually apply.
You can buy a house cheaply in South Africa, but it is important to be aware of possible additional charges. This guide explains the process of buying a property in South Africa and how to find a house for sale in South Africa.
Real estate market in South Africa
Home prices in South Africa remain relatively stable, with about 60% of the population owning a home.
The average national value for an entry-level home (80–140 sqm) is about 9,37,000, with the average medium-sized house in Java having about 1,255,000. Despite continued growth over the past year, property prices in South Africa remain relatively low.
Foreign buyers can purchase property independently. However, mortgage options top-out for non-resident buyers at just 50% of the property purchase price.
Should You Buy Property in South Africa?
Homes for sale in South Africa can make economic sense; Rental costs can be costly, especially in great cities.
Currency is another contributing factor. With the devaluation of the Rand (ZAR) in recent years, it is now significantly cheaper for foreign exchange buyers to buy homes in South Africa.
Although you can buy cheaply, those planning to stay small in South Africa should consider capital gains tax. This tax is relatively high in South Africa and can make a profit on a short-term investment. After deducting certain expenses, sellers are generally liable to pay a capital gains tax of 33.3% on their profits.
How to find homes for sale in South Africa
Property for sale in South Africa usually goes through real estate agents, and private sales are relatively rare. Estate agents in South Africa must be registered with the Board of Estate Agency Affairs.
Agents receive a certificate stating that they abide by the code of conduct. You can find a list of housing services and real estate agents in South Africa.
You can also find real estate agents who specialize in selling in a particular area or are focused on foreign buyers.
A traditional method of sourcing assets is possibly filing your preferences with many agents in the area and hoping that they are sufficiently diligent to find you the right home.
You will find many sites advertising property, which can be a quick way to measure potential areas, prices, and properties.
Build your home in South Africa
Building your home in South Africa is a viable option, although the financial benefits of doing so are open to debate.
Unlike some countries, there is no government incentive for people to make their homes. While the land is relatively inexpensive, so are the existing properties.
If you choose to build your own house, other than buying a plot of land, you will have to design property and a builder to turn your plans into reality.
Buying Property in South Africa
Once you find your ideal property in South Africa, you need to make an offer – usually through an estate agent. The estate agent requests a formal letter confirming the details of your offer. It then goes to the seller for approval. If the seller agrees to the offer, both parties sign the document; This effectively works as a sales agreement.
The seller will now appoint a carrier to deal with the legal aspects of the transaction. While the seller typically gets to choose the conveyancer, the buyer pays his fees.
You will then be required to submit identification documents to the Deeds Registry so that you can officially register as the new owner. Like other countries, the legal process can be time-consuming, often lasting six to eight weeks.
Once you officially become the new owner, you will have to pay the remaining amount. The messenger then distributes the title deed.
A Purchase Fund: Deposits and Mortgages
As a foreign buyer, if you are a non-resident, you will usually have to deposit at least 50% of the purchase price of the property.
Foreign nationals or investors residing in South Africa may offer more loans at the discretion of the bank. All loans to foreign nationals are generally subject to approval from the South African Reserve Bank.
Some banks will require you to set up a South African bank account so that your mortgage payments can be debated, although this is not always necessary as the payment can be made from an international bank in some cases.
As in mortgages in other countries, the lender performs a property appraisal before lending you money. They sometimes base the amount lent on their valuation instead of the purchase price.
Lenders offer both fixed-rate and variable types of mortgages, although fixed-rate deals are currently less popular because banks offer unpredictable rates. While mortgages with terms of up to 30 years are available, it is more common to take out a 20-year mortgage. As a result, your loan will usually be repaid by the age of 70. Most mortgage products in South Africa do not come with an initial loan penalty.
As part of the home buying process, you will also need to obtain building insurance. Read about insurance in South Africa.
Cost of buying a property in South Africa
When you buy property in South Africa, you usually pay a transfer fee and a registration fee, and a conversion fee.
The transfer fee is not applicable in all property sales, as it depends on the value of the property:
- 0%: up to ZAR 750,000
- 3%: ZAR 750,000–1,250,000
- 5%: ZAR 1,250,000–1,750,000
- 8%: ZAR 1,750,000-2,250,000
- 11%: ZAR 2,250,000+
Assistance when buying a home in South Africa
There are currently no home-buying schemes available to foreign nationals living in South Africa, but government assistance in the form of a one-time grant is available to South African citizens with a reduced grant.
This is not particularly useful for those who have just moved to the area, however, as you usually live in South Africa for five years before applying for citizenship.
Where to buy in South Africa?
Everyone knows that the most important point to buy a property is the area where it is located. This essentially means that it is sometimes advisable to decline the size or quality of the house in favor of a better area.
Once you identify the area you want to buy, consult residents and the police station about the crime rate in the area. Watch for open tracks of land and development in neighborhoods, which may promote incidents of criminal activity.
Also, beware of the presence (or lack thereof) of schools, libraries, shopping centers, and other facilities that you will need in the area.
Tips and advice when buying a South African property
It is essential to avoid common pitfalls when purchasing a property, especially considering purchasing a property in your home or abroad, which is one of the biggest purchases in your lifetime. To ensure the purchase of your property in South Africa, it is necessary to consider the following:
Deposits: Foreign buyers are usually required to pay half of their property purchases, this is important to establish the amount of deposit you have as a deposit in your bond.
Bond Amount: Establish the monthly payment amount you will bear. You can spend more by reducing your monthly income (joint income if you are married). Banks usually offer a maximum bond, where repayment does not exceed 25% of your gross monthly salary which should not exceed the amount you calculated above, otherwise you may be overcommitted.
Transfer cost: Don’t forget to include the cost of transfer duty tax and conveyancing fees which are usually yer.
Bond approval: Not only has banking changed dramatically in past years, but the new credit act has also made it more difficult to get bonds approved, so get good advice and assistance about home loans and bond finance.