Budget reaction – Trafalgar – budget will help investors

News > news - 16 Feb 2006
Trevor Manuel’s dramatic reduction of transfer duties was aimed at lower income home owners, but it could rapidly broaden the investor market too, says Trafalgar Chairman Neville Schaefer

“For the first time in decades, the transaction cost of buying and selling property is getting close to international norms,” he adds.

“It wipes out transfer duty on the average investment flat and the cost of a R1m property drops from R28 200 to R25 000. With agent’s commissions also falling – to an average of 5% -- the transaction cost of a R500 000 flat falls to about R30 000 from over R60 000 last year.

“That’s still too high but investors will be increasingly willing to move in and out of properties as they do internationally. It will mean better strategic management of property investments and growing asset management skills by ordinary South Africans”

The rise in the threshold for stamp duty from R200 (or a rental income of R40 000 for the year – residential leases are usually annual) to R500 (R100 000) also simplifies the life of most residential investors.
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