Few things are as exciting as being handed the keys to your new home! It’s a space that you not only can transform to express who you are; it’s also a worthy investment that you can keep in the family for generations. Not to mention, if you are a home flipper in the making, you will be more than thrilled to have acquired a new asset to spruce up and sell for a profit. But, the hidden costs of buying a house in South Africa can take many potential homeowners by surprise, and often thwart the entire purchase. So, doing additional research and gaining knowledge is vital before putting in an offer to purchase. LAW FOR ALL is in your corner with expert legal guidance on essential considerations, as well as the potential hidden costs of buying a house in South Africa. Essentially, it is all about being clued up and acquiring a sense of buyer confidence that will serve you well in the long run.  

On the (house) hunt: 8 top tips for buying a house in South Africa

Purchasing a house should not be taken lightly – it’s a massive financial commitment and administrative undertaking. This handy checklist will give you a thorough idea of what to look out for and consider before signing on the proverbial dotted line.” 

Tip #1: Check your finances.

Be sure to check in with your bank to see if you qualify for a home loan. You will want to get an idea of just how much you are eligible for as that will help you determine whether or not you can keep up with the bond repayments (and rates, taxes and levies associated with the property). Always stick to your budget!

What’s more, there are other administrative or “hidden” costs of buying a house in South Africa you may not be aware of (we’ll cover these a little later).

Tip #2: Make it a bonding experience.

Remember, you don’t have to accept the first option you receive; you can shop around and try to find the bond that gives you the best deal.  As PrivateProperty.co.za says, “ Mortgage originators are, in our opinion, one of the best things to ever happen to the South African property sector. Fill in the paperwork, sit back and let the experts find you the best deal.”

Tip #3: Do some homework.

Before you walk through the doors of potential homes, decide on the area you want to live in and think about how it adds to your life.  If you have children, you may want to consider the property’s proximity to schools, and if you have an office job, you will want to factor in what your commute will look like (no one likes traffic, right?). 

Tip #4: Put your inspector’s hat on.

Once you’ve narrowed your list of potential purchases down, it’s time to take a closer look… a much closer look! Your first and most crucial point of inspection should be the house’s foundation. As Sandy Geffen, Executive Director of Sotheby’s International Realty South Africa, mentions in an article on Property 24, “The foundation of a house is arguably the most important part of the entire structure, and also one of the most costly to repair should the need arise”. Geffen also says that large cracks, compromised door frames and black mould patches are all signs of serious structural issues.  You are also entitled to ask for a structural survey if you are uncertain about what to look out for. 

Sidenote: While doing your comprehensive inspection, be sure to look out for patches of fresh paint or newly painted walls/ceilings. While new coats of colour are great ways to spruce up a home, you will want to be sure that it isn’t done to cover up damp or mould. 

Tip #5: Don’t get tangled up.

Another crucial aspect that is often overlooked is the state of the electrical wiring. If you are considering an older home, be sure to ask about the power supply to the property.  In some cases, the previous tenants may have tried their hands at some DIY and accidentally left electrical wires exposed, which is incredibly dangerous.  Only qualified electricians should fix these problems. 

Tip #6: Checking out an apartment in a complex?

You will want to contact the apartment block’s 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.

Tip #7: Get the paperwork.

Even after your visit and inspection, if you are seriously considering the property, you must ask the seller or agent for the following documents: 

  •  copies of the title deed and diagram; 
  • any existing lease agreements; 
  • approved building plans; 
  • zoning, town planning or municipality requirements. 

Tip #8: Ready, set, negotiate…

If you are set on your potential new home (how exciting?), you then have to meet up with the seller and agent to discuss the terms and conditions of the sale (based on your findings during the inspection phase, there might be some wiggle room on the property price!) “There are two essential documents that potential homeowners need to know about at this stage: the offer to purchase and the sale agreement. Both need to be in writing and signed by you (the buyer) and the seller,” says Tom Smith, a legal adviser at LAW FOR ALL.

BUT WAIT… what about transfer fees and other hidden costs of buying a house in South Africa?

First-time home buyers, take note! The price mentioned on the property advertisement isn’t the full amount required to own property legally. Yes, there are more “hidden” costs or fees to factor into your budget. Let’s take a closer look!

1. Deposit

 A deposit is an amount that is highly recommended you save up for as an initial payment for your home. Financial lending institutions or banks are unlikely to 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 still a worthy tip to keep in mind.

2. Transfer Duty

The transfer duty tax is a government tax levied to transfer a property from the seller to the buyer’s name.  This amount is calculated using a table created by The South African Revenue Services.  If you are looking at a property that is under R900 000, there will be no transfer duties.

3. Attorney Costs

  • Transfer attorney costs or transfer fees are the legal fees due to the conveyancers who transfer the ownership of the property into your name. These will also include expenditures for the Deeds Office registration, postage and disbursements charged by the conveyancers.
  • Bond attorney costs are due to the attorneys who handle the registration of your bond and includes postage and disbursements incurred.

4. Other Expenses

Bond initiation and administration fees are costs charged by the lending institution for the initiation and ongoing administration of the bond.

How can LAW FOR ALL help?

If you are a LAW FOR ALL policyholder, you will enjoy comprehensive benefits that will significantly reduce the stress of buying a property in South Africa. Our legal experts can give you advice on what your legal rights are and review any contracts and documentation associated with purchasing a home. What’s more, policyholders will receive a significant discount on the transfer fees mentioned above! The amount you will save depends on the policy you take out with us but ranges from 35% to 60% off the transfer fees. The benefits don’t stop there! LAW FOR ALL can also point you in the direction of professional conveyancing attorneys to assist with the transfer.