The hidden costs of buying a house in South Africa can take many potential homeowners by surprise, and often thwart the entire purchase. So, it goes without saying that doing additional research and knowledge is vital before putting in an offer to purchase property in South Africa.
Property experts estimate that the hidden costs of buying a house can result in an additional 10% onto the stipulated purchase price. What’s more, many people usually don’t know that seeking the help of a lawyer could be very beneficial and result in the saving of some hard-earned cash (more on that later). Essentially, it is all about being clued up and acquiring a sense of buyer confidence that will serve you well in the long run.
Research all of the “hidden” administrative costs
First-time home buyers might not know that the price mentioned on the property advertisement isn’t the full amount required to own property legally. There are a variety of administrative fees that need to be considered. These are usually: the deposit, transfer duty tax, transfer attorney costs, bond attorney costs and bond administration fees.
Let’s take a closer look:
A deposit – is an amount you should’ve saved up for as an initial payment for your home. It’s doubtful that a financial lending institution or bank will grant a 100% bond, so it is best to start saving ASAP. Do note: the deposit isn’t considered as part of the 10% of hidden costs, but it is worth taking into account.
The transfer duty tax – is a government tax levied to transfer property from the seller to the buyer’s name. This amount is calculated using a table created by The South African Revenue Services. There is no transfer duty on properties under R900000.
Transfer attorney costs – are the legal fees due to the conveyancers who transfer the ownership of the property into your name. These will also include fees for the Deeds Office registration, postage and disbursements charged by the conveyancers.
Bond attorney costs – due to the attorneys who handle the registration of your bond and includes postage and disbursements incurred.
Bond initiation and administration fees – these are costs charged by the lending institution for the initiation and ongoing administration of the bond.
Conduct a detailed check for any structural issues
While sellers are obligated to submit a report on all the structural problems the property might have, it is best to conduct your own inspection by enlisting the help of a construction expert. To avoid any legal and financial headaches regarding leaks, cracks, mould etc., make sure the report is in writing and signed. It might be worth getting an attorney to sign it as well.
Purchasing an apartment in a complex
If you are buying a flat in a building complex, be sure to contact the body corporate and get as much information as possible. Specifically, request a copy of the building’s latest financial report to see what the body corporate spends money on and ask for an update on any special levies because, unless otherwise specified, construction alterations will have to come out of your pocket.
Get LAW FOR ALL on your side
LAW FOR ALL offers discounted transfer fees, ranging from 35% to 60% depending on which policy you take out. To get in touch, feel free to contact us telephonically or pop into any of our nationwide offices.