The Costs of Buying a Property

The deposit

Depending on your financial position and the amount you wish to borrow, the Bank may require you to pay a deposit. For example, you qualify for a loan to the value of 80 % of the property value and need to pay 20% deposit.

Occupational rent

When you occupy your new property before registration has taken place. The Seller could insist on the payment of occupational rent – this agreement need to be stipulated in the Offer to Purchase.

Transfer costs (duty)

It is tax paid to the Receiver of Revenue when buying property and transferring it to your name. When buying vacant land you will pay transfer duty only on the vacant land. If you buy an existing home you will pay transfer duty on the value of the land and building. It is charged on a sliding scale:

For individuals: No duty on the first R 190 000 of the purchase price Five percent of the amount between R190 001 and R330 000 or R7000, plus eight percent of the amount that exceeds R 330 000

If you buy property in the name of a close corporation, company or trust, you will be charged transfer duty at a flat rate of 10 percent of the purchase price. If you buy property from a developer who is registered for VAT, you will pay VAT rather than transfer duty on the purchase price.

Conveyance fees (Attorney fees) are recommended tariffs by Law Society

The registering attorney, who registers the property in your name, will charge you a registration fee. The higher the purchase price the higher the fee. The registration fee on a bond of R 480 000 will be approximately R 6000 (excluding VAT). The registration fee for R 1 million is approximately R 10 000 (excluding VAT)

The bond registration attorney, appointed by the bank to register a bond over your property, will charge you a bond registration fee. This fee is based on a sliding scale from R 1 800 on a R60 000 bond and R14 000 for a R2 million bond.

In addition conveyance’s charge postage of about R 250 (excluding VAT) and sundry expenses incured in registering the property in your name.

Deed Office levies and fees

Charges by the Deeds Office to register the transfer of a property are based on a sliding scale depending on the purchase price of the property:

Fees for registering a Home Loan also varies depending on the size of the bond.

Municipal rates and body corporate levies

Transfer of property cannot be done until the rates due to the local authority have been paid in full for the financial year. The Seller is liable for rates only for the part of year during which he/she occupies the property In addition the buyer will be charged for a clearance certificate and the fee charged for that is about R 300.

If buying a sectional title unit, expect to pay levy up to the end of the Body Corporate’s financial year as well for a clearance certificate from the body corporate. This can cost you between R 400 and R800

Bank charges (subject to change due to the new Consumer’s Act)

Make provision for a Valuation fee and inspection or assessment fee of a bank-appointed property assessor, who determines whether or not the property you want to buy has sufficient value in relation with the loan or further loan amount for which you have applied. These fees range from about R1000 to R3000.

Interim interest

On the day the bond is registered, the bank releases the loan amount and charges interest from that day until the day on which the first bond instalment is due. This Interim interest is normally added to the loan amount.

Bond initiation fee (subject to change due to the new Consumers’s Act)

A once-off fee charged by the bank ranging from about R200- R1250 to cover administration costs.

Monthly Administration fee

This is added to your instalment and should be reflected as a separate item on your home loan statement. Some banks charge R 22.80 (excluding VAT) for bonds over R500 000.

(All these costs are subject to change, but gives you a good estimate what to expect)