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Miltons Attorneys
Directors
Miltiadis Koumbatis48 Blaauwberg Road  
Friedrich WilleBloubergrant 7443  
Andrew John MurrayP O Box 11204 Bloubergrant 7443  
Wilhelmus Jacobus KnoetzeTelephone 021-557-6002  
Deon Ridgeley WelzFax 021-557-6511  
  Docex 132 CAPE TOWN  
Consultant: Ian MurrayE-Mail : louisen@miltonsinc.co.za

NON RESIDENTS PURCHASING PROPERTY IN SOUTH AFRICA

Non residents can own property partially or wholly, in their own names or through ownership of an interest in one or other form of legal entity.

Accordingly to South African law, as a foreigner, all such transactions must be routed through the South African Reserve Bank who refers to foreigners as NON RESIDENTS. It may be a natural person or legal entity with domicile, registration or normal place of residence is outside the common monetary area of South Africa.

Non Residents who purchase in South Africa may borrow up to a maximum of 50% of the purchase price in this country, the other 50% of the funds having been brought into the country by the applicant. The total amount that may be borrowed is at the commercial banks discretion. All requests for foreign purchasers of South African property must be routed through an "Authorised Dealer" i.e. a Registered Bank, and not directly to the South African Reserve Bank. It normally takes up to 10 days to process the application. On receipt of the Reserve Bank's approval to utilise bond facilities the non resident must open a non resident account at a South African Commercial bank.

Transfer of funds through the registered South African Banks are secure and guaranteed. Once your money has been transferred, it will be held in trust by the attorneys. This is regulated by the various Law Societies and secured by Attorneys Fidelity Insurance.

Property may be held through individual title, share ownership in companies, in close corporations or trusts. Companies and trusts in South Africa are based on English law and are very similar in nature to those in England. Ask your conveyancer to give you an indication as to how long it may take to form a trust, close corporation or company.

Once an Offer to Purchase is signed by the purchaser and the seller it becomes a valid Deed of Sale - a binding contract. This contract contains the description of the property, the parties involved, the purchase price and all other relevant information. Upon receiving this document, a specialised attorney known as a conveyancer, will register and transfer ownership at the Deeds Registry. One can assume that if all the parties involved in the transaction, perform their function timeously, the entire transaction could be completed within six to eight weeks from the time of receipt of the initial Deed of Sale.

Costs: On signature of the documents at the attorneys offices, the conveyancing attorneys will ask the purchaser to settle the transfer costs. The account which the conveyancer will present will comprise four elements being the following:

  1. The conveyancer's own fee plus VAT thereon -Transfer Fee
  2. The cost of the Valuation Certificate
  3. Transfer duty -- a tax levied by the government on transfer of ownership of fixed property
  4. Deeds office fee
  5. Mortgage costs -- upon raising mortgage finance. These fees include stamp duty. inspection fees etc

Ask your estate agent to give you a breakdown of these fees.

It is important that the purchaser settle these costs at least one month before scheduled date of transfer as the conveyancer is required to pay the transfer duty due to the Receiver of Revenue before one may approach the Deeds Office.

As a Property owner, you have the right to recover rental income from lessees. Rental income is normally taxable in South Africa. Taxation is levied on a sliding scale and therefore it is advisable to ask your Estate agent to assist you with any further questions you may have.

Whilst every care has been taken by us in compiling this information, we reserve the right to correct any possible inaccuracies and cannot be bound by them. Gold bar