New homebuyers can expect few direct benefits in tomorrow’s budget, according to property commentators. At best further cuts are likely on transfer duty, but not of the same magnitude as last year when the threshold for paying transfer duty was raised from R190 000 to R500 000.
If the threshold for transfer duty is raised, John Loos, property strategist at FNB Commercial Banking, anticipates only a modest adjustment to that of last year, which he believes was probably given some momentum by pending local government elections at that time.
Absa senior economist Jacques du Toit also foresees the probability of further adjustments in transfer duty, but also not of the magnitude of last year’s budget even though interest rates have been increased by 200 basis points since then, further loading the financial burden of home owners.
Saul Geffen, managing director of MortgageSA, says easing the tax burden of purchasing a home is a necessity given that house prices are about 15% higher than this time last year and the price of an average home is now over R800 000.
He notes that last year’s budget was extremely helpful to those not yet on the property ladder, “but clearly, as house prices continue to rise, we hope the minister will further ease the burden of transfer duty to make home ownership more affordable.”
As a result of the significant increases in property prices, Geffen says government can reduce the transfer duty rates and still collect the same amount of taxes. “Therefore we expect the trend of lighter property taxes to continue in the new budget.”
Keith Wakefield, CEO of Wakefields Estate Agents, believes in keeping with the Minister of Finance’s track record it will again be a consumer friendly budget with tax relief for corporates and industry in general, which will in turn be favourable to property owners. He strongly hopes more money will be directed at the police and prison services to stimulate the fight against crime and also allowances given to the fast-tracking development of skills for the building industry.
Wakefield, who is pretty sure the minister will raise the transfer duty threshold, again this year, says though welcome, the adjustments are just a drop in the ocean in opening up ownership in the affordable housing market. More meaningful would be the exemption of Value Added Tax on all newly built homes below R500 000. Such a move would open up the market to the point that if given 1 000 homes in the R200 000 to R400 000 price range he could sell them that same weekend.