Buying Property in South Africa-what foreigners need to know.

Buying property in South Africa is no longer a best kept secret – rather, the proven sound investment, glorious weather and wonderful country that it is, has resulted in many foreigners visiting our shores and staying to buy property, either to live here permanently or to reside here for the warmer parts of the year as a swallow, or just as a holiday residence.

South Africa not only offers world class security of tenure but also another great incentive is that foreigners are able to repatriate all their foreign funds on selling their property including the profit, being liable for capital gains tax only.

As a foreign seller of immovable property in South Africa, SARS requires 5% of the sale price to be withheld by the conveyancer and paid over to them within a certain time period after registration of transfer. This is to secure the payment of the capital gains tax prior to departure from the country and any refund is then processed in the next financial year.

We understand that this is onerous for our foreign clients and thus in order to circumvent it we make application to SARS for a tax directive, compiling certain information in order to obtain the exact amount owing, if any, which is paid over on registration without our clients having to worry about waiting for refunds.

It is as simple to sell property in South Africa as it is to purchase property however a good understanding and good property partner is exceptionally worthwhile in making the whole experience a pleasant and uncomplicated one.

Here are a couple of helpful hints to start off with: South Africa has strong contractual principles and if you give a written offer on a property without making it subject to any suspensive conditions, the offer becomes completely binding on acceptance by the seller.

You will not have any opportunity to resile from the agreement of sale without suffering consequences. This is unlike many other countries including the United Kingdom. It goes without saying therefore that you must be sure that you have inspected the property thoroughly before making any offers – we have a saying in South Africa, “buyer beware!” which means the buyer should take full responsibility for the proper and diligent inspection of the product you are about to purchase.

It is easier to negotiate around any defects prior to entering into an agreement of sale than afterwards. There are also companies specializing in home inspections as are commonly utilized abroad although these can be expensive to utilize on a haphazard basis.

Make sure you are represented properly by an expert property estate agent looking after your interests. In order to fund the purchase of your new South African investment, it is possible to borrow local funds and register a mortgage bond over the property, up to a 50% borrowing ratio.

Ordinarily a deposit is be paid and a South African guarantee produced for the balance of the purchase price, alternatively the full cash price can be paid into the trust account of the conveyancing attorney. It is essential that the “deal receipts”, being evidence of the transaction of foreign funds being brought to the country be retained for safe keeping as they will be required on sale of the property to repatriate funds. Once you own property in South Africa you should enter into a South African Will in order to deal with the assets situated here in the most efficient and cost effective manner.

Finally mention should be made of our Immigration laws and permits available in South Africa however this is beyond the scope of this article and we urge you to rather take a look at our website for the various options available to you.

At Caroline Wansbury Attorneys we are sensitive to the needs of our foreign clients both as purchasers and sellers of property and would value assisting you throughout your business and property transactions in this country. Get expert advice before entering into any agreements as it is always easier to process things smoothly from the outset.

Buyer Beware! Best practice tips

Now is the time to buy!

This is the message coming through from the property economists, who advise that with the current prices and lower interest rates, there is no time like the present to enter and enjoy the property market.

Before taking the leap, whether you are a first time property investor or old hand, do obtain expert advice and get a property agent or attorney on your side. Here are some tips to get you started:

1. Be aware of the costs involved in purchasing a property and the timing for payment of the costs. If you are applying for a bond, remember that these funds are only available on registration of the property into your name. So too, if you are selling your property and registering the two simultaneously. You will need to have the transfer duty in cash and available usually about a month before expected registration thus before these funds are available.

2. A seller is obligated to obtain beetle (unless sectional title), electrical, plumbing, gas and electrical fence certification. These certificates are not always as comprehensive as purchasers think they are however. Especially so for the plumbing certificate which relates to the supply of water and does not cover issues such as leaking taps or flushing toilets. Ensure as well that these certificates are valid and in place before registration. They often contain expiry dates.

3. Since the advent of the Consumer Protection Act, many buyers make the mistake of thinking that they will have recourse for any defects or faults with the property even after registration into their name. This is not always the case and there lies with each purchaser the duty to inspect the property thoroughly. Nobody buys a car without test driving it – the same principle applies.

4. Recently the Weekend Argus ran an article regarding the investment of deposits in property transactions –make sure the estate agency or conveyancing attorney invests your funds with the interest accruing to yourself – they will require your written mandate to do so however most professional attorneys will prepare this timeously for you.

5. Check that everything you think is included with the purchase of the property is indeed the case. Include everything in the contract and do not rely on a verbal undertaking or promise – if it is not in the agreement it is almost impossible to prove. If the seller promises to remove some rubble for example–remind him by inserting it in the contract with a date. Don’t see it as an insult to his word but rather a manner in which to make things very clear to all from the very outset.

6. Similarly, insert a clause to ensure that any fixtures or equipment sold with the property are in good working order, for example an irrigation system, kreepy krawly.

Best Advice- Seven pointers when selling your home

So you have decided to sell your house and you’ve contacted some estate agents to market your property. The very next thing to do if you haven’t already, is contact your property attorney. A word of caution here, is that not all attorneys are specialized in property law and you will require a qualified and experienced conveyancer to guide you through the legal process in a manner that anticipates rather than reacts to situations.

Here are seven salient points to get sellers started:

1. Know what costs you are in for. You will be liable for estate agents commission, bond cancellation fees, and the costs of complying with the various compliance certificates such as electrical, beetle, gas and plumbing. In order to obtain rates clearance, the municipality will require a 120 day advance rates payment – although this is refunded ultimately, it can affect cash flow.

2. Give notice to your bank as soon as you intend selling your property. They will then make a note of your intended cancellation so that the penalty period of usually three months can begin ticking. Do this in writing and keep a record, alternatively we will be quite happy to do so on your behalf. Don’t worry as this can be reversed if you change your mind about selling. Bear in mind though that if you are utilizing an access bond you should draw any funds that may be required before putting the bond under cancellation as the funds are then frozen and cannot be accessed.

3. Tell your agent about all the defects relating to your property that you can think of. With the onset of the Consumer Protection Act, the voetstoots clause is coming under pressure and latent defects of which you are aware should be noted. This is to prevent future comeback and while it may not seem so at the time, you will be doing yourself a favour by being as honest and clear as possible. List these defects with the agent so there can be no misunderstanding. Bear in mind that you will also require plans for your buildings as well as any additions.

4. Also make a list of exactly what you are selling or rather, what you are not selling. If you do not intend to sell the lightshade from Italy at the front entrance, make sure that it is excluded from the sale in the agreement. Also check the agreement of sale which usually lists which items are usually included by default –make sure that you are in agreement with the list.

5. It is common to receive an offer which is subject to the sale of the prospective purchaser’s house. There is little harm in this if you ensure a “meet or beat” clause is inserted which allows other potential purchasers to make better offers which will preside if your first purchaser cannot match them. Always make sure that suspensive conditions, such as the sale of the purchaser’s property, have a realistic cutoff date and bear this in mind when setting a transfer date.

6. Always ask for a deposit. You will not get to keep this deposit if the sale falls through due to a suspensive condition not being met, but it undoubtedly acts as a gesture of good faith and intention by the purchaser.

7. It is your right to choose your own conveyancer even through the purchaser pays the conveyancing fees. Choose wisely as the legal leg of the process is very much in the hands of the conveyancer. Even more wise as we mentioned above, would be to get your conveyancer on board as soon as you sign the mandate or receive that first offer.

We are more than happy to guide you through the process even before your house is sold and would be proud to be a key role player alongside you.