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Guide to buying a property in South Africa

An ideal destination for retirees or semi-retirees to escape the cold UK winters – or move to permanently – South Africa allows the average Brit to enjoy a comfortable European-style lifestyle without breaking the bank.

Anyone arriving to holiday or settle in Cape Town can’t fail to notice legacies of years under British rule (until 1910). The two countries have, amongst other things, similar banking systems, parliaments, property laws, a passion for cricket, rugby and, of course, football. And when you touch down after a 12-hour overnight flight you will have no jet lag, can speak the native tongue and are able to drive on the left.

But there’s one big difference for anyone whose buying power is Sterling based – day-to-day living costs. In South Africa you can enjoy a pint for around 80p and an award-winning wine for a fiver a bottle. The other significant difference is the brighter days and warm weather. South Africa enjoys 8.5 hours of sunshine in an average day, compared to the UK’s 3.8.

And South Africans know how to use those long hours of sunshine. It’s an outdoors-loving culture of sport, barbecues, wildlife and nature.

Property prices have stalled following the boom years of 2000-2006, and despite a brief World-Cup-inspired boost in 2010 are currently rising slightly lower than general inflation, at two to three per cent.

With unemployment high in South Africa, and a large black population understandably determined to bag the white collar jobs, British people have to go through a process of applying for work permits to emigrate to South Africa. The South African embassy can offer a list of approved jobs. There are also investment routes, especially for British people able to provide employment for local people.
 

Property hotspots in South Africa

Cape Town is the main draw for British expats and includes a number of differing neighbourhoods, including the Atlantic Seaboard and Constantia that should appeal to house-hunting Brits. The former is the 15-kilometre des res strip from the Waterfront in the east to Hout Bay in the west. This is prime real estate territory, typified by boutique marina developments and where prices typically start at £500K-plus. That said, shop around and you will find more affordable options close to the famous V&A Waterfront: two-bedroom, two-bathroom apartments in Mouille Point are available for around £198K, and at Green Point, two-bedroom, one-bathroom apartments are currently priced at £154K. Another option in Mouille Point is South Sea, which offers two-bedroom, two-bathroom apartments with mountain and city views from £495,000. Further along, Camps Bay has a tree-lined beach and a cosmopolitan mix of cafés, restaurants and bars.

Constantia is Cape Town’s leafy suburb – a step back from busy city life but still within a few minutes’ drive of the city centre, beaches, the Waterfront and airport, and little less pricey than the Atlantic seaboard.

Further along the Atlantic beyond the Garden Route, the Eastern Cape is a far more economical option, but still very attractive. Jeffrey’s Bay, Cape St Francis, Port Elizabeth, as far east as East London and inland to Grahamstown (“spiritual home of English-speaking South Africa” – Rough Guide) there are a good choice of developments and gated communities with family properties from £70k to £150k. You can get a detached house with ocean views for under £250k, with great access to the beach, the golf courses and the airport.

North along the coast, past the somewhat bleak and wild Transkei, another area with lots to offer is the Lower South Coast of KwaZulu-Natal, which begins 70 kilometres south of Durban at Hibberdene and includes Port Shepstone, Margate and Port Edward. It offers beaches, golf and a lush mountain backdrop. Umtentweni is a popular choice, a village that avoids the mass of tourists and has large comfortable homes lived in by people all year.

Plots there range in size from 2,000-16,000 sq. metres and there are also complexes, which appeal to older buyers concerned about security. Prices start at just under ZAR1 million (£77K) for a 200-square-metre, three-bedroom home, rising to ZAR3-4 million (£230K-£308K) for a luxury villa – so you get more space for your money there than in Cape Town’s hot spots.
 

The process of buying a property in South Africa

The buying process is very similar to the UK but with small differences. Once you have exchanged contracts you cannot pull out without losing your deposit. There are no restrictions on foreign ownership (assuming you have no criminal record) but it is best to use a legal conveyancer who specialises in foreign property transactions.

Transfer and mortgage documents can be signed overseas at a South African embassy or at the offices of a notary public. VAT is only applicable if the seller is a VAT vendor, otherwise transfer duty is applicable. Bear in mind that sellers need to pay agent’s fees which are generally subject to VAT.

Buying costs

Transfer tax is levied on a sliding scale according to the price. No duty is payable on a property costing less than ZAR500K (£38K). Between ZAR500K and ZAR1 million it’s five per cent and from ZAR1 million it’s eight per cent. Some purchases may be subject to VAT, (14 per cent), in lieu of transfer duty. Attorneys charge fees in accordance with a sliding scale. For example, the attorney’s recommended tariff fee for a ZAR1 million purchase is currently ZAR10,000 (plus VAT and other small charges).

Buyer beware

Non-residents of SA who do not have, or wish to acquire, permanent residence may buy property outright for cash and will be granted a 90-day visa, with possible extensions for each visit. Intending immigrants who have already applied for permanent residence and who have funds in transit to SA may qualify for a mortgage of up to 50 per cent of the value of any property they wish to buy.

Bear in mind that it can be tricky getting your money out of South Africa when you want to sell up; also that crime remains a big problem in cities such as Cape Town, whatever people say. Most homes have hefty security gates/grilles and have rapid-response alarm systems linked to the police.
 

 

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