It all adds up

All buyers, especially first-time buyers, need to be aware of all the costs that are associated with a purchase before even considering the idea of becoming a home-owner.

According to Richard Gray, CEO of Harcourts Real Estate, “Before purchasing property a potential buyer needs to seriously consider the impact that the purchase will have on their finances. It may be advised in circumstances where the buyer is wanting to start a family, is in the midst of paying off debt, starting their own business or a new job to wait until their financial future is more secure and stable before becoming a homeowner.”

He continues, “It is important to establish in advance all hidden costs, in doing so it will determine whether a potential buyer is financially ready to take the next step. Examples of extra costs that the buyer is responsible for include transfer duties, conveyancing fees and bond costs. These expenses, and others, can amount to thousands of Rands.”

Transfer duties are a costly expense, however, in an effort to promote home ownership, February 2011 saw the lowering of transfer duties with the introduction of a new transfer duty structure. This is a tax that is paid to the South African Revenue Service (SARS) for the transfer of the property into the new owner’s name. There is no fixed cost; rather it is worked out on a sliding scale. This essentially means that the more expensive the property, the higher the transfer duty. However, property under R600 000 does not warrant this fee.

Conveyancing fees need to be paid to specialised attorneys (conveyancers) who assist in the registration of property into a new owner’s name. Conveyancers are also needed for bond registration.  This fee is generally dependent on the appointed conveyancer and sliding scale. The same conveyancers are not necessarily used in the two different processes.

Other important costs to factor in to the equation are bank charges. If financing through a home loan, costs would include the Valuation Fee (fee for bank appointed property assessor sent to inspect the property before a home loan is granted) and a Bond Initiation Fee which covers the bank’s administration costs. Home Owners Insurance is generally insisted upon by banks in order for a home loan to be approved, with Life Insurance also suggested - both adding additional expenses.

Gray concludes, “To top it all off, moving costs such as the hiring of delivery vans, general maintenance or repairs (painting, new security system, new carpets, etc), connection costs for telephone and electricity to the new property are additional costs that are often not accounted for in the budget. Avoid financial strain down the road by calculating far in advance exactly what it will cost you to buy a property.”  


  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 19 Feb 2018
      Situated approximately halfway between Johannesburg and Pretoria, Midrand was established in 1981 and forms part of the City of Johannesburg Metropolitan Municipality. It has become one of the major business hubs in the country with major pharmaceutical, textile, telecommunication and motoring giants situated within its boundaries.
    • 19 Feb 2018
      The PayProp Rental Index Annual Review of 2017 shows that the rental market suffered from much volatility during the year. It kicked off with rental growth spiking in January with weighted year-on-year growth (YoY) growth peaking at 8.3% before dropping to 6.34% in July, dipping down to less than 5% in November and then experiencing a slight uptick at 5.75% in December.
    • 19 Feb 2018
      While most homes in cluster complexes, estates and other gated communities come with at least one garage or carport, residents would often like additional permanent parking or storage areas for things like trailers, bikes, boats and caravans.
    • 16 Feb 2018
      Whether you own a property in a sectional title complex or are looking to invest in one, the financial standing of the body corporate is the single most important thing that can affect your investment or your buying decision.
    • 15 Feb 2018
      One positive consequence of the financial crash in 2008 was the rise in consumerism, especially in the property market, where buyers have steadily become more knowledgeable and more value conscious.
    • 15 Feb 2018
      While most homeowners will take the agent’s commission into consideration when they are trying to determine what the will get out from the sale of their property, many often forget to factor in the other costs involved in a home sale, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
    • 14 Feb 2018
      The forecast for the national rental market in 2018 remains a mixed bag of good news and bad news. Although rentals are expected to rise slowly as the challenges of home affordability and tighter lending criteria tighten their grip, it’s a double-edged sword as the market also will come under increasing pressure from factors like declining disposable income levels.
    • 14 Feb 2018
      While you may not have intended to place your home on the market, what do you do if you receive an unexpected offer on your home? In areas where demand outweighs the current supply of homes available to buyers, it is not unheard of to have buyers make offers on homes that aren’t on the market, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us