select
|

Managing the finances when purchasing a property

The full costs of buying a property (apart from the property price itself) are often underestimated as they are not just the prescribed conveyancing fees for the registration of transfer, but other items such as the costs of levy clearance certificates, bond registration or occupational rent.

If one goes through a step by step checklist of what will need to be paid at certain points of the transfer process, the chance of “losing control” of the finances will be minimised, says Anne Porter, head of Knight Frank Residential SA.

The first payment likely to be called for is the deposit, which will have to be paid within a specified time frame once the purchase agreement is signed. Buyers must be aware that this is usually asked for within seven days of signing and shows a willingness and commitment from the buyer’s side, says Porter.

Conveyancing fees will be calculated in proportion to the purchase price of the property, which will be payable to the conveyancing attorneys. In addition to this is the transfer duty, which is payable to SARS. The transfer duty is usually included in the statement of account from the attorneys, who then pays the necessary amounts over to SARS. The transfer duty payable on a property is reviewed annually and is calculated on a sliding scale, except for properties worth R750 000 or less, which are exempt.

Some buyers might think that the transfer duty is only payable on transfer of the property into their name, but this is not so. It is payable shortly after signing an offer to purchase and the lodgement and transfer in the Deeds Office will not go through unless the full amount due to SARS is paid and a transfer duty receipt issued.

Another mistake buyers sometimes make is confusing the conveyancing fees (often referred to as transfer fees) and transfer duty (which is the amount that SARS requires). Even if there is no duty payable to SARS, there will still be a fee charged by the conveyancing attorney – as this is their fee for attending to the registration of the transfer.

If the unit being transferred is a sectional title property, the purchaser will become responsible for levies as soon as it is transferred into his name. The body corporate will have to issue a levy clearance certificate confirming that the current owner’s levies are up to date, and this will usually cost between R500 to R1 500. This is something often forgotten on the list of purchaser’s payable items, said Porter.

If the buyer is applying for a bond, there will be bond registration costs added as well as a bond initiation fee. If the loan is R1 million, the costs could be in the region of R22 000, and this must be factored in.

Lastly, because it is often very difficult to time the registration of transfer to coincide perfectly with the occupation date, the buyer and seller will sometimes agree on a specific date of occupation, with the agreement that the buyer will pay a market related rental for the time that he is living in the home while waiting for transfer to take place. Sellers will sometimes want to include rates, levies, water and electricity in this amount, so some discussion might have to take place as to what is an agreeable amount, she said.

If all payments are budgeted for and made on time, the transfer into the buyer’s name will often be a smooth process, said Porter. The glitches and delays with transfers are often related to the finances required, so these should be calculated and thought through carefully before signing an offer to purchase.


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 22 Nov 2017
      Most people know of the Community Schemes Ombud Service (CSOS) and that levies must to paid to fund its operations. In this article the experts at Paddocks will address some of the issues that are causing confusion.
    • 22 Nov 2017
      While sales have noticeably slowed in most sectors in most Cape town suburbs, the security estate sector in Constantiaberg has bucked the trend by remaining buoyant, with sales by August this year already surpassing total sales in 2016.
    • 22 Nov 2017
      The end of the year is fast approaching, and so are all the travellers, tourists and holidaymakers. For those who live near or own a property in a holiday-hotspot, the festive season also brings with it an abundance of short-term rental opportunities. Its a great way for property owners to make a few extra rand for their own holidays or to put towards their savings.
    • 21 Nov 2017
      The buying process is over, and the moving truck has delivered your household goods to your new property. Now it’s time to unpack and turn your new house into a home.
    • 21 Nov 2017
      When an offer to purchase a property is signed by both buyer and seller, this constitutes a binding agreement or “Deed of Sale” between the two parties. However, in most cases the “standard contract” might not be enough to cover all the specifics pertaining to the sale. The agreement may require some additions or alterations to clauses, which needs an expert hand in the drafting of such
    • 21 Nov 2017
      As more and more South Africans look to invest in property abroad, Spain is offering them one of the best deals in global real estate.
    • 20 Nov 2017
      Since 2012, sectional title complexes have been leading the South African property market, not only in terms of price growth, but sales volumes as well. Remaining relatively strong, even in the face of 2017’s political and economic turmoil, experts say this market segment could offer valuable insight into South Africans’ property purchase priorities.
    • 20 Nov 2017
      Regardless of whether you are purchasing your first start-up home, downsizing or moving in with roommates, finding ways to maximise small spaces can be a big advantage, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK