NAVIGATING FOREIGN PROPERTY OWNERSHIP IN SOUTH AFRICA

by Taryn Davies Stevens • 2 MIN • 475 Words

The South African residential property market has become increasingly attractive to foreign investors, offering promising returns. This blog delves into the complexities surrounding foreign ownership of property in South Africa, addressing legal requirements and financial aspects that foreign buyers should consider.

LEGAL REQUIREMENTS: CAPACITY AND COMPLIANCE

The Immigration Act 23 of 2002 defines foreigners as individuals who are not South African residents. While non-residents are indeed allowed to buy property in South Africa, it's essential to understand that property ownership doesn't grant unrestricted access to the country. Foreigners must comply with the Immigration Act, which entails obtaining a valid Visa, work, or residence permit, and holding a valid Passport. This aligns with the Financial Intelligence Centre Act's requirements for verifying client information and identity.

If a foreigner lacks a valid Passport or Visa, they may be prevented from purchasing property in South Africa. For those wishing to acquire property under a foreign company's name rather than in their individual capacity, it's crucial to note that the company must be registered as a foreign external company in accordance with the South African Companies Act 71 of 2008.

Strict adherence to these legal requirements is crucial, as Conveyancing Attorneys are prohibited from transferring immovable property to a foreigner who hasn't complied with the aforementioned regulations.

LEGAL REQUIREMENTS: TRANSFER DOCUMENT SIGNING

Once an Agreement of Sale is in place, and the purchase price secured, the Foreign Purchaser needs to sign various Transfer and Mortgage Bond Documentation for the transfer to proceed. If the Foreign Purchaser is not in South Africa, they must sign the documentation in the presence of an Official at a South African Embassy or a Notary Public, which may incur additional costs. This process ensures proper attestation of the foreign purchaser's identity.

FINANCING AND COSTS

Foreign purchasers have various financing options, such as Mortgage Bond Applications or cash payments from South African or offshore bank accounts. It's essential to note that mortgaging a South African property through a foreign bank is not possible. A trustworthy Conveyancing Attorney should be consulted to navigate this process, ensuring the necessary deal receipt is obtained. This receipt is required if the Foreign Purchaser decides to sell the property in the future, facilitating the repatriation of funds overseas.

Regarding costs, a Foreign Purchaser is liable to pay Transfer Duty to SARS if the property's purchase price exceeds R1,100,000. Additionally, the Foreign Purchaser is responsible for Transferring Attorney costs and Mortgage Bond Registration costs (if applicable), based on the property's purchase price.

Foreign investors must appoint a reputable conveyancing attorney knowledgeable about foreign investment in South Africa. Such attorneys possess the necessary resources to guide the transfer process effectively. By understanding the legal intricacies and partnering with experienced professionals, foreign investors can confidently navigate the South African property market.

Intro Real Estate, it’s the right choice.
www.introrealestate.co.za // 011 422 3922

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