If you are a potential foreign investor and want to purchase property in South Africa, you will benefit from the assistance and guidance that an experienced property lawyer can provide.
If your firm also wants to acquire immovable assets in the country, then you first need to register it as an external company according to the requirements of the Companies Act of 2008, with which an accountant or mercantile law attorney can help.
Even if you are an individual hoping to purchase a house in the country from abroad, you need to obtain Reserve Bank approval before the transfer can take place. To this end, it is highly recommended to work with an experienced property lawyer, familiar with the conveyancing process. Currently, no restrictions are in place for proceeds of sale remittance, as long as the purchase price is paid from abroad. This means that if you are not a resident of South Africa when you purchase a house in the country, your investment is not subject to South African tax. It is, however, essential to have the title deed of the house or building endorsed to show non-resident ownership.
You must invest within the legal framework of South Africa. A property lawyer in the country is familiar with all the relevant laws, and can thus help you to avoid pitfalls during the buying and selling processes.
Foreign buyers can obtain home loans, but specific conditions must be met. In many instances, banks provide for up to 50% mortgage on immovable assets to non-resident investors or buyers. This implies that you will need to transfer the remainder of the purchase price to South Africa. Note that the Reserve Bank of South Africa must approve the loan from the bank if you are not a resident of the country.
Where you are required to pay a deposit to secure the purchase, such money is kept in a trust account at the conveyancing lawyer or the realtor. It is an interest-bearing account, but keep in mind that an administration fee is charged, which is deducted from the interest earned. The capital investment is safe, and nothing is deducted from the amount.
Rental prices for upmarket houses in South Africa are quite high, especially in urban areas, such as Cape Town and Pretoria. However, with the rand under pressure and the exchange rate quite favourable for foreign investment, it may be cheaper to buy a house in the country than in your country. If you visit South Africa for prolonged periods, owning the home rather than having to rent it can also make financial sense. In this regard, we recommend making use of our conveyancing and realty law experience. Get in touch with our property lawyer team to help you get started.
Disclaimer: This article is for information purposes only and does not constitute legal advice. Call on our attorneys for legal advice, rather than relying on the information herein to make any decisions. The information is relevant to the date of publishing.