Guide to Buying Property in South Africa
The South African Property Market
There are no restrictions on foreign nationals investing or buying
real estate in South Africa. Indeed, for generations, foreign nationals have
been very active in the real estate market in South Africa.
As will be discussed more fully later,
property in South Africa actually is known as or termed immovable property
Investment Property in South Africa
The investment real estate market in South Africa has been profitable for foreign
nationals for years. There were some tentative times directly after the end of Apartheid
in that country. However, as time has marched on from the period of transition,
foreign nationals have carried forth in their investment in South African real estate
-- immovable property -- on many fronts.
By way of example, foreign nationals play a significant role in the ownership of
real estate or immovable property in the commercial sector. Foreign nationals own
everything from office buildings to hotels and resorts.
There are no restrictions on the types of real estate that a foreign national can
invest in within South Africa
Residential Real Estate in South Africa - Single Family Properties
Many foreign nationals have taken to purchasing some fairly high cost
properties in South Africa. These men and woman have purchased these costly
residences to be used as second homes and for holiday or vacation purposes. Many
people -- including a significant number of Europeans -- regularly take extended
holidays in South Africa. Since the end of Apartheid, a greater number of people
from across the globe are taking to spending extended holidays in South Africa. This includes an ever growing
number of North Americans, Canadians and U.S. citizens alike.
The single family dwelling market is fast moving and brisk in many different areas
of the country. Not only can foreign nationals be found investing in these types
of residences in the more urban centers in the country, but they are making purchase
of these types of property in rural areas as well. As will be discussed, many foreign
nationals enjoy making an extended holiday stay in South Africa (and have done so
for many years). Thus, many of these foreign nationals have been interested and
continue to be interested in buying single family residences -- and at times very
substantial properties -- in urban and in rural regions of the country where they
can live for a portion of the year.
Residential Real Estate in South Africa - Apartments
Because of the high rate of foreign investment in all sectors of the South African
economy, many foreign nationals regularly can be found purchasing apartments in
the major urban centers in that country. These foreign nationals find themselves
in country for more extended periods of time. These men and women find the purchase
of apartments to be an economical manner in which they can provide themselves housing
during their time in South Africa on business.
There has also been a brisk business in the buying of apartments in resort communities
by foreign nationals. Many foreign nationals are taking a two-pronged approach to
buying apartments in resort venues. First, they are using these properties for their
own holiday purposes. Second, they are letting out these premises to other foreign
nationals when they are not personally using the property. Many foreign nationals
have found that they can make a tidy sum by renting or leasing an apartment in a
resort locale during that part of the year when they are not personally in residence
in the resort community apartment.
Holiday Property in South Africa
For generations, Europeans and men and women from other countries the world over
have made South Africa a holiday destination. Indeed, the history of people from
Europe and elsewhere around the world making long and extended holiday stays within
South Africa is long and legendary. As a consequence, the market in vacation or
holiday property in South Africa
For the foreign national interested in purchasing vacation or holiday property in
South Africa, the options and opportunities in regard to such property is extensive
and varied. A foreign national has the ability to purchase anything from a high
priced villa in a trendy resort community to a snug and tidy apartment in a sprawling
urban setting to a lovely chateau in a rural area in the country.
A number of foreign nationals have taken to investing in different holiday and resort
properties. Indeed, foreign nationals have been active in the development of hotels,
apartments and free standing dwellings that are leased or rented to people who have
traveled to South Africa on holiday. Overall, this type of investment has proven
to be very lucrative for many foreign nationals from different countries the world
over.
South African Mortgage Options
When considering the options for a mortgage on your overseas property there are a
couple of choices to consider:
- Do you consider raising finance on your existing property in the UK to cover the
whole cost of your purchase abroad? A good idea if the interest rate in the country
in question is a lot higher than it is here in the UK as you will pay a lot less
in monthly repayments.
- Do you secure a mortgage against the property from a local bank in the country of
purchase? This can be a wise option especially if the interest rate is lower than
our current UK interest rate. Most overseas mortgage / bank lenders will require
upto 30% deposit on mortgages. However, you will need to give some thought to how
you will service your mortgage payments each month especially if you are not living
or earning in that country as you may well lose out on exchanging money each time
to cover monthly expenses. Check out our
Foreign Currency page to see how you can save money in this example
- Some Builders and developers may well offer their own mortgage facilities on their
properties for sale. This can be beneficial to both parties depending on the logistics
of the mortgage or loan facility. Always check and compare with the two options
above before making your final descision.
For more details on Mortgages
in South Africa visit our Mortgage page in the South Africa section.
Specific steps to Buying Real Estate Property in South Africa
In South Africa, the laws governing the buying and selling of real estate actually
are called laws governing the buying and selling of immovable property or land.
At the present time, there are no restrictions on a foreign national buying and
owning real estate in South Africa.
Indeed, foreign nationals have bought and owned real estate -- immovable property
-- in South Africa for generations.
Generally speaking, the buying and selling of immovable property or real estate
in South Africa is governed by decisions of the courts of that country. The one
area in which statutory law does play a role when it comes to buying and selling
real estate/immovable property in South Africa is in the area of the ownership of
mineral rights. When it comes to mineral interests that might be underneath the
surface of a particular piece of property, that interest as a general rule belongs
to the "people of South Africa." In other words, even though a foreign national
may be able to buy real estate in that country, more often than not a foreign national
will not be able to easily purchase a right to extract minerals from that real estate.
(Of course, a contract can be entered into with the government that will grant an
individual of business the right and the ability to withdraw minerals from underneath
the surface of land.)
Because there are some tribes that exercise some degree of local autonomy in South
Africa, some foreign nationals wonder what impact these more or less autonomous
governing authorities might have on their ability to purchase real estate. Historically,
local, tribal or customary law had little impact on the buying and selling of property in South Africa. However,
in recent years, the national government has given some recognition to parallel
lines of authority within the country. Therefore, if a foreign national is interested
in buying immovable property in an area that is included within an autonomous, that
foreign national will need to make certain that he or she understands the particular
regulations in that area that might have an impact on the purchase of real estate
in that area. Because there are so many different local variants that might come
into play depending on what region of the country a person is considering investing
in real estate in, it is impossible to detail them all in this limited space. Therefore,
a foreign national who is interested in purchasing real estate in South Africa will
want to make certain that he or she has access to very capable legal representation.
The underlying real estate purchasing process in South Africa is simple when all
is said and done. A tentative or preliminary contract is entered into between the
buyer and seller. As in many other countries around the world, a deposit is made
upon the property by the purchaser. The amount of the deposit is negotiated between
the parties. Additionally, the terms of under what conditions a deposit might be
returned are also negotiated between the parties to the agreement.
Following the execution of this preliminary contract, the buyer will embark on his
or her efforts to find appropriate financing for the real estate. There are many
different mortgage lenders within South Africa that deal regularly with a foreign
clientele. With that said, it is also perfectly permissible for a foreign national
to obtain mortgage financing from a firm located in that person's country of origin.
The government of South Africa is flexible as to where a person obtains his or her
financing to fund a real estate or immovable property purchase in that country.
Once all of the requirements of the initial agreement have been satisfied, a final
agreement of sale and transfer of immovable property is executed between the parties.
It is at this juncture, when this agreement is duly executed, that ownership of
the immovable property is transferred from the seller to the buyer. With this conveyance,
a new title to the real estate is registered immediately with governmental authorities.
Again, it is important to keep in mind that there might be some slight variances
in this procedure in some of the more autonomous regions of the country. However,
with the assistance of capable legal counsel, a foreign purchaser of immovable property
or real estate in South Africa will be able to maneuver through the legal requirements
.
Property Abroad always recommends using a
Solicitor or Lawyer
Further Reading on South Africa