How To Buy Property In South Africa

Guide To Buying Property In SA

Want to know how to buy property in South Africa without making any costly mistakes?

This complete 10 step process of buying a house in South Africa will guide you safely through all the pitfalls until you take transfer and occupation.

Buying property will probably be the biggest investment you ever make so it’s advisable to ensure that you’re comfortable with the process.

The “buying a house in South Africa process” involves a few steps that you need to be fully informed about before signing an offer to purchase.

So, let’s get started with the proper & legal process of how to buy property in South Africa.

Buying a House In South Africa Process – 10 Steps

1. Deposit & Affordability

The first step is to determine how much deposit you can afford to put down and what sort of monthly payments you can afford.

With the stricter lending requirements in South Africa it’s important that you don’t just do a thumb suck as you may not get a home loan.

Use the online calculator here to see the repayments you’ll have to make after selecting your property price and deposit you want to put down.

2. Get Your Credit Report

If you don’t know your credit score, it’s advisable to get your credit report, which you can get for free here, to assess your credit score.

If your credit score is too low, it’s unlikely that you’ll be approved for a home loan.

If it is low, it could be due to errors on your credit report which you should be able to rectify pretty quickly.

These tips to increase your credit score will also help improve it.

3. Additional Property Costs

Don’t forget there will be additional costs to consider which may affect the amount your affordability and deposit.

Some of these extra costs are as follows.

i) Transfer Duty in South Africa

These rates are effective from 1 March 2020 to 28 February 2021

You’ll notice that you’ll be exempt from paying transfer duties on any property priced under R1 million which is useful to bear in mind.

For instance, this spacious 2 bedroom apartment, in an excellent complex comes in at under R1 million.

You can also avoid paying transfer duties and conveyancing fees by buying a property off-plan from a developer as it’ll be a brand new.

Developers normally waive the legal costs, and if the property is new and has not been previously registered, there won’t be transfer duties to pay.

ii) Conveyancing Fees

This may not be a major cost, but it’s good to bear in mind that conveyancing fees that are normally payable by the buyer.

iii) Outstanding Utility Bills

Ensure that during the property transfer, the conveyancer has ensured that any arrears on the municipal bill (electricity, water and rates & taxes) have all been settled by the previous owner.

4. Choose the Right Estate Agent

Choosing an agent that you’ll be comfortable working with is an important part of the property buying process in South Africa.

The property industry has at times come under fire for some of it’s agents whose integrity has been questionable, so go with an agent you feel you can trust.

Also browse your are online for property sales and you’ll soon see which agencies are the most active which could mean that they are the most knowledgeable in the area you want to buy.

Don’t forget to get referrals from friend and family as they’ll only recommend agents they’ve had successful dealings with.

5. Get Pre-Approved For a Mortgage

Once you’ve identified an agent they will be able to recommend the best banks, or home lenders, for your mortgage.

Alternatively, you can source your own or apply for your home loan directly through your current bank and negotiate the best interest rate through them.

Furthermore, there are also bond originators out there who will gladly negotiate, on your behalf, with various bond providers to secure the lowest interest rate for your bond.

Therefore, don’t accept the first home loan offer you get, as you’re almost certain to get a better deal by trying different home loan lenders.

Lastly, you may have the option to have the interest rate fixed or linked.

If you think it’s unlikely to go down in the future, you may want to have it fixed.

On the other hand however, if it’s presently high & likely to go down in future, you should probably opt to have it linked.

6. Start Looking For Your Ideal Home

Now for the fun bit, finding the perfect home to buy.

Not only can you browse in your preferred areas online, but you can give your agent the specifications of your ideal home.

These requirements for your home would include the following;

• Area or suburb
• Price range
• Number of bedrooms & bathrooms
• Size
• Garage/s
• Swimming pool
• Apartment or house
• Complex or free standing house
• Security
• Proximity to schools & shopping centres

I’m sure there are others but you get the idea.

7. Arrange Viewings

Your agent will probably line up a few properties that meet your requirements for you to view.

This will help you narrow down your selection and decide on your favourites.

Once you have a few homes that you think you would be really happy to live in, arrange more viewings to eliminate those that you’re undecided on until you have your favourite.

Once you’ve identified your preferred home you could get a second opinion to view the home to look for structural faults, damp or anything else you may have missed.

8. Make An Offer

Now that you’re absolutely happy with your choice of home to buy, it’s time to make an offer.

By now you’ll probably have an idea as to whether the seller is desperate to sell, or not, or whether it is over priced and so on.

For instance, if they’re desperate to sell & you’ve picked up some issues with the property that need to be fixed, you’ll be in a great position to leverage these factors into offering a much lower price.

After taking these factors into consideration you’ll be able to make an offer that you’ll be happy with.

Other things to take into consideration when you make the offer are the following.

• Date of occupation – this could be as soon as your guarantees have been accepted or on the date of transfer
• Occupational rent – if you take occupation before the transfer has gone through you’ll have to pay occupational rent. Alternatively, if the seller continues occupying the home after transfer, they’ll be liable for occupational rent.
• If the estimated date of transfer suits both you and the seller, it’s probably best to note that occupation is to be on the date of transfer.
• Date of transfer – whilst this is usually an estimated date, your agent will be able to narrow it down to within a week or so
• Deposit – some sellers may require a small deposit with the offer as a demonstration of good faith. If you have a problem producing your guarantees for the property and the deal falls through, you’ll lose this deposit.

9. Get Final Bond Approval

Once your offer’s been accepted get your final bond approval which you will need to produce your guarantees by the date noted in the offer to purchase.

10. Close the Deal

Now’s the time to sign all the legal documents.

The conveyancing attorney, which you may have chosen or was recommended by the agent, will guide you through the process.

You’ll also have to provide all the docs required for FICA.

Once that’s all done the docs will be lodged with the Deeds Office.

From that date, it will take between 6 to 8 weeks for transfer to go through depending on where you live and how busy they are.

Once that’s been completed, all that’s left is for you to move in and enoy living in your new home.

Last Tip On How To Buy a Property In South Africa

This tip is one that you should consider seriously before starting the process of buying a property in South Africa.

Assuming you’ve settled on a particular home you love and you’re happy with the area as well as all the amenities in the neighbourhood, there’s still one last thing you need to check.

And that is to do a thorough check up on the neighbours and other residents close by.

Try and get to meet them and ask them about noise and the general behaviour of other residents in the area.

Don’t be fooled into thinking that just because the area is fairly upmarket that the residents will behave accordingly.

I’ve had neighbours from hell, partying all night, dogs yapping continually and have only managed to resolve it by confronting them, which is never pleasant.

So, before you even start the process to buy that property, do some research on the residents living close by as these days in South Africa, your neighbours could make your life hell.