Planning to get a property? There are extra costs when buying a house in South Africa. To be safe, before signing the preliminary contract, make a rigid examination regarding the average closing costs for buyer and other fees to be paid. Once done, confirmed all the details in the form of writing.
Additionally, the associated fees with home buying runs depending on the costs. Here are the costs associated with it;
- Property taxes
- Contents Insurance
- Utility charges
- Community fees
- Pool and garden maintenance fees
- Management fees when leaving the property
The average running costs annually almost around 2-4% of the property costs. The details below are explained that could help in your house hunting.
1. Transfer Duty
The tax levied when it comes to transfer of fixed property ownership is called transfer duty. When buying a property as a legal entity like close corporation or a company, the tax levied on the transfer duty is at 10% of the price of the property.
However, if buying as an individual or as a natural person, the transfer duty is computed like this: When planning to buy a house in South Africa, the transfer of duty is being paid depending on the value of the property more than R500,000. The transfer duty is being levied at 5% if the property value is between R5000,000 – R1,000,000 and at 8% if the value is more than R1,000,000.
Remember, the costs of buying a home to the property developer is subject to Value Added Tax (VAT) and not as a transfer duty.
2. Conveyancing Fees or Legal Fees
Conveyancing is called a legal procedure in which the immovable properties in South Africa are transferred to another party and also related aspects like mortgage registration bonds. The immovable property includes dwelling, farm, house, and sectional title unit. the transaction mostly involves several steps which starts with the Deed of Sale. The process continues to the transfer of ownership and its registration of mortgage bonds.
Conveyancing fees are computed on the sliding scale and the amount between 1-2% of the property’s price but depends on the property value.
3. Bank and Mortgage Fees
The mortgage and bank fees are at 0.2% of the property’s valuation. The arrangement fee for the mortgage is at 1-1.5% of the total amount of loan.
4. Utility Costs
When buying a new property, you have to pay for the water and electricity connections and sometimes gas. However, gas is seldom used in South Africa. It is better to ask the builder or perhaps the developer to give you the estimated costs of these connections and the services in the form of writing. However, if you purchase resale properties, you have to pay for the new contract costs especially the water costs.
5. Other Fees
Other costs involve inspection fees, surveyor’s fees, architect’s fees, and moving costs. Take note that the stamp duty was already eliminated in year 2004 budget. However, the stamp duty is still mentioned in some other sites that deals property buying in this country.
So, consider the extra costs when buying a house in South Africa and all your worries will be eliminated.