Many buyers who are preparing to take the step towards homeownership may be looking at what they can afford in terms of bond repayments. “However,” says Adrian Goslett, CEO of RE/MAX of Southern Africa, “while this is a major consideration, there are a number of costs that the buyer will have to consider and be prepared for, before signing on the dotted line.”

According to Goslett, a buyer will be responsible for the costs of registering their new bond on the property purchased, as well as the transfer costs. These transfer costs will include both conveyancing fees and transfer duty, which is calculated on a percentage of the purchase price. The percentage charged for transfer duty can vary depending on the buyer’s legal status. The buyer is also liable for an initiation fee on the bond and the cost of having the property inspected.
“Very often these costs are overlooked when buyers are assessing the amount they require to purchase a property, especially when the buyer is purchasing their first home. These costs must be taken into consideration as they will affect the total financial outlay that needs to be made by the buyer. It is essential for buyers to understand what they are liable for and how much it will cost upfront, so that they are not caught unaware in a situation where they will need to find thousand’s of rands at short notice. A good real estate professional will provide the buyer with a schedule of costs they can expect to pay.”

Goslett gives costs that buyers must consider:

For a buyer to qualify for finance they will in most cases need to provide a deposit of between 10% and 30% of the purchase price. Interest can be earned on this money if kept in an attorney trust account until the property is transferred into the buyer’s name. The deposit amount will be stated in the offer to purchase presented to the seller.

Registration Costs
This is the amount charged by the bank to register the bond. On a bond of R540 000, the registration cost will be in the region of R6 986, excluding transfer costs.

Transfer Costs and Duties
The South African Government levies a tax on property transactions that is paid when a property bought and transferred into a buyer’s name. If purchasing vacant land, the transfer duty is based on the value of the land. However, transfer duty on an existing home will be based on the value of the land and building. Transfer will not be charged on homes under R600 000.
If the property is purchased in the name of a CC, company or a trust, a standard transfer duty of 10% of the purchase price will be charged. Should a property be bought from a developer, a VAT portion will be paid rather than the transfer duty on the purchase price.

Conveyancing Fees
These are the fees paid to the conveyance attorneys to register the property into the buyer’s name and for the bank appointed conveyance attorneys to register the bond over the property. Recommended tariffs for conveyancing fees have been set by the Law Society and these costs are once again dependant on the property’s purchase price. The higher the purchase price, the higher the fees.

Deeds Office Registration Fees
The deeds office will complete all that is required to register the bond into the buyer’s name, a fixed fee is payable for this service. Deeds office registration is the final step and takes approximately 15 days.

Revenue Stamp Fees and Admin Fees
This is a stamp duty, which is a state government tax payable by the purchaser when a property is sold. There will also be sundry costs payable to attorneys for postage and other items.
“Saving up and being prepared for all of the costs associated with a property purchase will help buyers to avoid any surprises and make the process of purchasing their home a far simpler one,” Goslett concludes.


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