There are no restrictions to foreigners owning property in South Africa. South Africa has a sophisticated land registration system. Freehold and sectional title are common whilst leasehold is a lesser used concept for residential properties.

Properties fall within cadastral registration offices and title is absolute. You are advised to check for land claims by persons who were previously disadvantaged during the Apartheid era. You are also advised to ensure that the title deed is endorsed to the effect that the land has been purchased by a foreigner. This greatly assists with repatriation of funds. Please note that due to Exchange Control regulations, foreigners generally have to contribute 50% of the purchase price by way of a deposit and the balance may be obtained by way of a local mortgage. Mortgages are straightforward to obtain. Peregrinelaw has a vast experience in South African law and will guide you through the process.

The buying process is fairly straightforward and you could purchase as an individual or set up a company.

Once you have found a property, you will make a written Offer to Purchase or Deed of Sale. Either form is acceptable and both are legally binding but usually conditional suspensively upon the obtaining of finance and will outline a date for registration (completion). Most contracts contain a voetstoots clause, which means that you buy the property as you see it. Anything found to be wrong after registration becomes the responsibility of the buyer.

At this point, a deposit is paid of usually 10%. You are advised to check that the agent or the solicitor (property lawyers are specially qualified and are called conveyancers) receiving the deposit is reputable and caries a valid Fidelity Fund certificate. PeregrineLaw will obviously check this as part of our diligence. When purchasing off-plan, it is sometimes advisable to check that the developer has issued a guarantee for the provision of services to the local authority.

The balance of the purchase price is credited to the conveyancer prior to  registration at which point,  title is transferred in to the new owner’s name.

Fees and Taxes:

•    Transfer tax varies up to 8% on a sliding scale – the first R150 000 (₤13,600) of the purchase price is exempt. If buying through a company, a flat rate of 10% transfer tax applies.
•    Local taxes are also applicable, but these vary depending on the region.
•    Agents’ fees are usually around 5% excl VAT and are paid by the seller.
•    Legal fees tend to amount to 1 -2 % of the purchase price and are paid according to a tariff which is related to the purchase price. PeregrineLaw will use its network of contacts to negotiate a discount on these fees, whilst ensuring the best possible level of service for you.
•    Capital Gains Tax is levied at 25% for individuals and 50% for companies. The first R1 million (₤87,000) is exempt if the property is a primary residence.