Extra costs to consider when buying a house in South Africa

 ·26 May 2024

Buying a house is a major investment, and there are certain hidden costs that buyers should prepare for,

According to Bradd Bendall, CEO (interim) of BetterBond, once you find your dream home and the offer to purchase has been accepted and signed, you must consider several additional costs.

Firstly, a transfer duty will be payable to SARS everytime each time a property changes ownership.

“The threshold is now R1.1 million, which means that there is no transfer duty payable on homes valued at up to this amount. There is also no transfer duty payable on a new development. However, VAT is included in the purchase price,” said Bendall.

Transfer costs are also payable to the transferring attorneys, which are calculated on a sliding scale based on the purchase price.

Occupational rent is also payable if you move into a home before it is registered in your name.

The seller will be liable for occupational rent if they remain in the house once the property has been transferred to the buyer.

The occupational rent should be specified in the offer to purchase. 

Furthermore, bond registration fees are payable to the bond attorneys who register a bond at the Deeds Office.

These vary from firm to firm (but based on recommended tariffs) and will depend on the home loan amount.

Bond initiation fees will also be payable to the bank for processing your home loan application.

This can be included in the bond or paid to the bond attorneys along with your bond registration fees. 

Variable costs will also apply, as one will need to pay FICA fees, electronic instruction fees, and courier costs for documents related to the sale.

The owner will also be responsible for municipal rates and taxes, such as water, electricity, and even fibre.

“You should also budget monthly for any repairs or maintenance that need to be done.  If you are in a sectional title property, there will be a levy for services, which covers costs such as building insurance, security, water and sewage collection,” said Bendall.

Early cancellation penalty fees will also have to be paid if the seller does not give their bank three months’ notice when cancelling your bond.

The seller will also need to obtain compliance certificates for electrical, gas, the electric fence, water or plumbing and beetle. “If anything needs to be repaired to obtain these certificates, you will need to carry the cost.”

The seller will also need to prove that they have home insurance before the property can be registered. The cost of the cover is not based on the market value of the home but rather its replacement value.

“Remember to also set aside some budget for moving expenses. A good tip is to try and move in the middle of the month, as it is cheaper than moving at month-end,” said Bendall. 

“And, while you may want to live in your new space for a few months to get a feel for it before deciding if and how you’d like to redecorate, such as painting walls in a fresh new colour, set aside some money in your new home move-in budget for items such as light bulbs, sink plugs and a new set of house keys or door locks. Although miscellaneous, they’re necessary and can quickly add up to a hefty amount.”

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