Expatriates guide to buying property in South Africa

Expatriates guide to buying property in South Africa

Are you considering expanding your property portfolio? One of the best ways to diversify your property portfolio is by investing in overseas real estate. In recent years Africa has emerged as one of the top investment destinations with high returns. Compared to other countries in the African continent, the potential attractiveness of South Africa is high. Buying a house in South Africa for expatriates has several advantages, including a huge potential for return on investment. South Africa is a premier real estate market for investors, with a wide range of properties for sale, including residences and luxury properties. This expatriates guide to buying property in South Africa will help you prepare for the house buying process.

Real estate market in South Africa

If you’re interested in buying a home in South Africa, there are no prohibitions on foreigners purchasing property in the country, though mortgage limits are often lower. You can buy a home cheaply in South Africa, but it’s important to be aware of the potential extra fees. This guide explains the process of buying a property in South Africa and how to find houses for sale in the country.

Expatriates guide to buying property in South Africa

Types of property ownership

The two most common types of property ownership in South Africa are freehold and sectional title.

1. Freehold

When you own a freehold property, you own the land as well as any permanent or temporary structures on the property. This generally refers to a freestanding home in a residential area. Freehold tenure refers to your legal right to own a piece of property and/or land without limitations on its use. You have complete freedom to enlarge and remodel any structure, both on the outside and the inside, as you see fit.

2. Sectional title

Sectional title describes the separate ownership of a unit within a group-owned complex or development. The owner of the unit automatically becomes part of the body corporate, which is the legal entity that owns and controls the common property in the sectional title scheme.

Should you buy a house in South Africa?

Buying a house in South Africa can make a lot of financial sense; rental costs can be expensive, especially in large cities. Exchange rates are another issue to consider. With the depreciation of the Rand (ZAR) in recent years, purchasing a home in South Africa is now substantially less expensive than it was previously. Although it is possible to buy cheaply in South Africa, individuals who plan to stay for a short period should consider capital gains tax. In South Africa, this tax is relatively substantial, and it can cut into profits on short-term investments.

Finding houses for sale

In South Africa, most property is sold through real estate agents, and private sales are uncommon. Real estate agents are required to register with the Estate Agency Affairs Board with agents being given a certificate annually stating that they have followed the code of conduct. You can also find real estate agents that specialise in selling in a particular area or are focused on foreign buyers. This is particularly the case in more popular areas such as Cape Town, Pretoria, Durban, and Johannesburg.

Buying property in South Africa

Once you’ve found the perfect home in South Africa, you’ll need to make an offer, which you’ll normally do through an estate agency. A formal letter verifying the details of your offer is requested by the agent. This then goes to the seller for approval. If the seller accepts the offer, both parties sign the document, which acts as a sale agreement. The seller will now engage a conveyancer to handle the transaction’s legal issues. The seller normally gets to choose the conveyancer, but the buyer is responsible for paying the fees. The legal process, as in other countries, can be lengthy, taking anywhere from six to eight weeks.

Funding a purchase

If you’re a non-resident foreign buyer, you’ll normally need a deposit of at least 50% of the property’s purchase price. Foreign nationals living in South Africa or investors may be able to loan more at the bank’s discretion. The Reserve Bank of South Africa must normally approve all loans to foreign nationals. As with mortgages in other countries, the lender conducts a property valuation before lending you the money. Lenders often provide both fixed-rate and variable-rate mortgages, though fixed-rate loans are less popular right now since banks are offering uncompetitive rates.

Considerations when buying property in South Africa

Location

Location is one of the most important factors to consider when investing in South African real estate. In certain cases, this entails reducing the size or quality of the home in favour of a better location.

Security

Once you’ve picked the neighbourhood you want to buy in, consult with the residents and local law enforcement agencies regarding the crime rate in the area. Read about the top five safest places to live in South Africa.

Facilities

Take note of the existence (or absence) of schools, libraries, shopping malls, and other amenities in the area that you might require.

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