Understanding property transfer costs in SA

Buying a property is one of the biggest financial commitments most people will ever make. While buyers often focus on the purchase price, there are several additional expenses that must be budgeted for before the property can be transferred into the buyer’s name.

These are collectively known as property transfer costs and can have a significant impact on the total funds required to complete a transaction.

“Understanding the full cost of buying a home is essential for buyers entering the market,” says Adrian Goslett, CEO and regional director of REMAX Southern Africa. “Transfer costs are often overlooked during the early stages of the buying process, but being informed and prepared can help buyers avoid unnecessary delays and financial stress.”

Property transfer costs refer to the fees associated with legally transferring ownership of a property from the seller to the buyer. In SA, these costs are typically paid by the buyer and must be settled before the transfer can be registered at the Deeds Office. They include a range of expenses such as transfer duty, conveyancing attorney fees, and various administrative charges required to complete the transaction.

One of the main components of transfer costs is transfer duty, a tax payable to the South African Revenue Service (SARS) when property ownership changes hands. This tax is calculated on a progressive scale based on the value of the property, meaning that higher-value properties attract higher duty rates. Properties below certain thresholds are exempt from transfer duty, providing some relief for entry-level buyers, with the current threshold set at R 1.21m.

In addition to transfer duty, buyers must also pay conveyancing fees. These are legal fees charged by the conveyancing attorney responsible for managing the transfer process. The conveyancer ensures that all legal requirements are met, prepares documentation, and facilitates the registration of the property in the buyer’s name at the deeds office.

For buyers purchasing with a home loan, additional bond registration costs may apply. These are separate from transfer costs and cover the legal work required to register the bank’s bond over the property. Goslett notes that proper planning is key for a smooth property purchase. “Prospective buyers should always factor transfer costs into their budget when considering a property purchase. Consulting with a property professional can help buyers gain a clearer idea of the kinds of expenses they might need to budget for, and playing around on online calculators can provide a full breakdown of the costs.”

Issued by Kesia Abrahams