Budget to buy

Budget to buy

Private Property South Africa
Press

Finally found your dream house and want to make an offer? Concerned about the costs that you need to take into account? Here’s what you should be budgeting for.

Broadly speaking there are “once-off costs” and “regular monthly costs” that need to be considered. Conveyancing fees are the first “once-off cost” item on the list. The seller usually nominates the transferring attorney and the bank will appoint the bond attorney. Accordingly, there will be two separate accounts payable, which fall to the buyer to settle.

Apart from the fees for registering the transfer and the bond, which are calculated according to a prescribed sliding scale, the following items are also included in the accounts of the conveyancers:

  • Transfer duty (a tax payable to the South African Revenue Service) in the event of a transfer where the purchase price exceeds R900 000

  • +

VAT on the transaction if the seller is registered as a VAT vendor

  • Postage and petties

  • +

Fee for obtaining a rates clearance certificate from the municipality

  • Fee for obtaining the transfer duty receipt via E-filing

  • +

Registrar of Deeds registration fee

  • Fee for FICA verification

  • +

Diverse disbursements, which may include: deeds searches, a law-deed tracking fee, costs for copies of the title deed, courier costs, and so forth

  • A fee for the services of the conveyancer

Looking at other “once-off costs” you should take into account the facts as well as your personal circumstances and needs. These costs, depending on your circumstances, could include:

  • A deposit on the new house

  • +

Occupational rental, if you are planning to take occupation before the date of registration

  • Municipal deposits for electricity and water

  • +

A deposit for land phone and data lines

  • The cost of relocation and moving

  • +

The cost of new curtains or blinds

  • The cost of new appliances, such as a stove, dishwasher or washing machine etc

  • +

The cost for the installation of satellite TV

  • The cost of a new security system, particularly when required by your insurance company

  • +

A home loan initiation fee, which is payable to the bank

  • A home inspection fee, should you wish to utilise the services of a professional home inspector prior to the sale

  • +

House repairs or refurbishments to upgrade critical areas

  • The cost of new furniture, particularly if you are moving from a smaller to a larger home

“Regular monthly costs” should also be carefully considered as these can have a tremendous impact on your monthly cash flow. Some of the most important monthly expenses are:

  • Bond instalments

  • +

Homeowners’ insurance

  • Municipal rates and taxes

  • +

Monthly water and electricity costs

  • The monthly levy if you are buying in a sectional title unit

  • +

The cost of pool maintenance if applicable

  • Increases in your fuel budget if your new home is further way from amenities

  • +

Ongoing maintenance of the property (0.5% to 1% of the value of the property on regular maintenance)

  • Increases in your life insurance premium to take into account the bond amount

When you are ready to make an offer on a property, contact your attorney to discuss the offer you want to present to the seller. Your attorney can assist you with drafting your offer to purchase, provide you with an estimation of the conveyancing fees and explain the different cost items you may face. Also ask your attorney whether or not you need to update your Will with the details of your new home.

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