Registration and Transfer Costs - Explained

Registration and Transfer Costs - Explained

Private Property South Africa
The Property Guide

Find out the estimated costs of buying a property, when to pay, who to pay, and what the money is used for.

As a rule of thumb, you should allow for between 8% and 10% of the amount of the purchase price of the property for all the other costs involved in purchasing a home. This amount excludes the deposit. These costs are commonly referred to as Transfer Costs or Registration and Transfer Costs and are paid by the purchaser.

  • FYI : The costs incurred by the seller are:
    Estate Agent's Commission;
    Conveyancer's Fees for cancellation of his bond over the property;
    Electrical-, Rates and Taxes/Levy- and Infestation Clearance Certificates.

Disclaimer: The amounts (or estimate amounts) detailed below are quoted according to the announcement made by the Minister of Finance in the budget speech in 2020, conveyancer costs quoted from our legal advisers, and up-to-date literature quoted from various financial institutions. These costs are only an estimated guideline for your convenience, and may vary in reality.


OPTIONAL COST:


The Deposit

  • Description: A Deposit is the initial payment you make to secure the purchase of your property. NB - Your deposit is not there to pay the extra costs involved in purchasing property, i.e. Bond Fees, Transfer Duty, Attorneys Costs, and so on, it is a cost on its own.

  • Estimated Amount: The amount of your Deposit depends partially, on how much money you have available (savings) to put down. However, in recent years, the banks have changed their lending criteria and you may not be able to obtain bank finance without a Deposit of at least 20-30% of the purchase price.

    Remember: The bigger the Deposit, the smaller the home loan repayment.

  • When to pay: Once off, upfront.

  • Who to pay: The Transferring Attorneys.

  • Who the money is for: The Transferring Attorneys hold the Deposit in an interest bearing trust account, until the day your bond (home loan) is registered and the property is transferred into your name.

    The money is then paid over to the bank, (or directly to the seller if you are not taking out a home loan to purchase the property).

    The interest accrued on this amount while being in the trust account, is paid back to you.


BOND REGISTRATION COSTS:

Attorneys Fees are always subject to VAT being added. The examples exclude VAT.


Conveyancer's Fee - Bond Registration

  • Description: Registering (Bond) Conveyancer's Fees are for the service the Registering (Bond) Attorneys provide to get your bond registered over the title deeds.

  • Estimated Amount: The amount varies according to your home loan amount. The fee is based on tariffs recommended by the Law Society, but may differ slightly from one law firm to another.
    Examples:

    • On a bond of
      R 650 000.00
      the fee is approximately
      R 12 700.00 excl. VAT.
    • On a bond of
      R 2 000 000.00
      the fee is approximately
      R 26 560.00 excl. VAT.
  • When to pay: Once off, before registration of your bond.

  • Who to pay: The Registering (Bond) Attorneys.

  • Who the money is for: The Registering (Bond) Attorneys.


Sundries / Postage & Petties - Bond Registration

  • Description: The Registering (Bond) Attorneys charge a levy to cover small things like posting documents to other conveyancers, the bank, the estate agent, the Deeds Office, to you, etc.).

  • Estimated Amount: The amount is usually fixed. Each different law firm has it's own rates. We have taken an average from several conveyancers, at
    R 1 150.00, excl. VAT per bond.

  • When to pay: Once off, before registration of your bond.

  • Who to pay: The Registering (Bond) Attorneys.

  • Who the money is for: The Registering (Bond) Attorneys.


Deeds Office Registry Fee - Bond Registration

  • Description: This fee is charged by the Deeds Office for the legal registration of your mortgage bond.

  • Estimated Amount: The amount is fixed according to the amount of your home loan.
    Examples:

    • R 600 000.01 -
      R 800 000.00 the fee is
      R 852.00.
    • R 1 000 000.01 -
      R 2 000 000.00 the fee is
      R 1098.00.
    • R 4 000 000.01 -
      R 6 000 000.00 the fee is
      R 1 846.00.
    • R 10 000 000.01 -
      R 15 000 000.00 the fee is
      R 3 057.00.
  • When to pay: Once off, before registration of your bond.

  • Who to pay: The Registering (Bond) Attorneys.

  • Who the money is for: The Deeds Office.


PROPERTY TRANSFER COSTS:

Attorneys Fees are always subject to VAT being added. The examples exclude VAT.


Transfer Duty

  • Description: Transfer Duty is a Government Tax levied to transfer the property from the seller's name into the buyer's name. It generally constitutes the major portion of the costs involved.

    NB - If the seller is registered as a VAT vendor, no Transfer Duty is payable. In such a case, the seller must have included VAT in the purchase price. This is usually the case when buying property in a new development – the developer is generally VAT registered.

    The Transfer Duty rates applicable have changed as per the 2019 Budget. These are the updated Transfer Duty rates applicable on property acquired on or after 1 March 2019.

    • There is no Transfer Duty on property under
      R 1 000 000.

    • From R 1 000 001 to
      R 1 357 000, transfer duty is calculated at 3% of the value above
      R 1 000 000. (You don't pay transfer duty on the first
      R 1 000 000).

    • From R 1 375 001 to
      R 1 925 000, Transfer Duty is calculated at 6% on the value above
      R 1 375 000.00 PLUS a flat rate of
      R 11 250.

    • From R 1 925 001 to
      R 2 475 000 , Transfer Duty is calculated at 8% on the value above
      R 1 925 000, PLUS a flat rate of
      R 44 250.

    • From R 2 475 001 to
      R 11 000 000, Transfer Duty is calculated at 11% of the value above
      R 2 475 000
      PLUS R 88 250.

    • From R 11 000 001 and above, Transfer Duty is calculated at 13% of the value exceeding
      R 11 000 000 Plus
      R 1 026 000.

    • No transfer duty is payable if the transaction is subject to VAT.

  • When to pay: Once off, before transfer of the property.

  • Who to pay: The Transferring Attorneys.

  • Who the money is for: South African Revenue Services.

    Please Note:

    • Transfer duty is levied when a buyer resells a property prior to taking transfer of the property.
    • A purchaser who buys property on behalf of a nominee must nominate the nominee within 24 hours, so as to avoid paying Transfer Duty.


Conveyancers Fee - Property Transfer

  • Description: Transferring Conveyancer's Fees are for the service the Transferring Attorneys provide to get your new home transferred from its old owner to you, and to get the property registered in your name.

  • Estimated Amount: The amount varies according to the purchase price of the property. The fee is based on tariffs recommended by the Law Society, but may differ slightly from one law firm to another.
    Examples:

    • On a purchase price of
      R 650 000.00 the fee is approximately
      R 14 240.00 Excl. VAT.
    • On a purchase price of
      R 2 000 000.00 the fee is approximately
      R 26 560.00 Excl. VAT.
  • When to pay: Once off, before transfer of the property.

  • Who to pay: The Transferring Attorneys.

  • Who the money is for: The Transferring Attorneys.


Sundries / Postage & Petties - Property Transfer

  • Description: The Transferring Attorneys charge a levy to cover small things like posting documents to other conveyancers, the bank, the estate agent, the Deeds Office, to you, etc.).

  • Estimated Amount: The amount is usually fixed. Each different law firm has it's own rates. We have taken an average from several conveyancers, at
    R 1 150.00 excl. VAT per bond.

  • When to pay: Once off, before transfer of the property.

  • Who to pay: The Transferring Attorneys.

  • Who the money is for: The Transferring Attorneys.


Deeds Office Registry Fee - Property Transfer

  • Description: This fee as charged by the Deeds Office for the Title Deed and legal transfer and registration of your new home into your name.

  • Estimated Amount: The amount is fixed according to the amount of your home loan.
    On a bond of:

    • R 600 000.01 -
      R 800 000.00 the fee is
      R 889.00.
    • R 1 000 000.01 -
      R 2 000 000.00 the fee is
      R 1 020.00.
    • R 4 000 000.01 -
      R 6 000 000.00 the fee is
      R 1 588.00.
    • R 10 000 000.01 -
      R 15 000 000.00 the fee is
      R 2 680.00.
  • When to pay: Once off, before transfer of the property.

  • Who to pay: The Transferring Attorneys.

  • Who the money is for: The Deeds Office.


INITIAL HOME LOAN CHARGES:


Home Loan Initiation Fee

  • Description: A Home Loan Initiation Fee is charged by the bank for the processing of the home loan application.
    This amount is usually still payable even if the home loan is rejected by the bank.

  • Estimated Amount: Some banks work on a base fee + a percentage of the loan amount, other banks charge a flat rate, but the maximum initiation fee charged will not exceed
    R 6 037.00 (Incl. VAT). It will be in your best interest to budget for this amount.

  • When to pay: Once off, on registration of your bond.

  • Who to pay: The amount will most likely be debited to your home loan account (added to your outstanding balance).

  • Who the money is for: The bank.


ONGOING HOME LOAN CHARGES:


Administration Fee

  • Description: The Administration Fee is charged by the bank to administer the home loan account.

  • Estimated Amount: You can expect to pay around
    R 69.00 Monthly Service Fees, depending on whether you have taken out the bank’s in-house homeowners insurance. The Service Fee will be a lesser amount if you make use of the bank’s insurance.

  • When to pay: Monthly.

  • Who to pay: The amount will most likely be debited to your home loan account.

  • Who the money is for: The bank.


Homeowner's Insurance

  • Description: The bank will insist that you take out a Homeowner's Insurance Policy to cover the property and the permanent structures on it, against natural disasters like fire or storm damage.

  • Estimated Amount: The amount will vary depending on the value of your property.

  • When to pay: Monthly.

  • Who to pay: The amount will most likely be debited to your home loan account.

  • Who the money is for: The Insurance Company.


Home Loan Protection Assurance

  • Description: If you don't already have a Life Assurance Policy to cede as security, you need to take out Home Loan Protection Assurance, i.e.:

    • Death Only
    • Disability Only
    • Retrenchment Only
    • Death & Disability
    • Death & Retrenchment
    • Disability & Retrenchment
    • Death, Disability & Retrenchment
  • Estimated Amount: The amount depends on the outstanding balance of your home loan.

  • When to pay: Monthly.

  • Who to pay: The amount will most likely be debited to your home loan account.

  • Who the money is for: The Assurance Company.

Depending on the home loan package, some of the costs mentioned above can be absorbed into the mortgage loan. Speak to your banker or financial adviser for more information and to double check these costs.


OTHER INITIAL COSTS:


Municipal Provision for Rates and Taxes

  • Description: This charge covers all rates and taxes that need to be paid in advance by the buyer.

  • Estimated Amount: The amount payable for rates and taxes vary from one local authority to another, in accordance with the valuation of the property. Make provision for approximately
    R 7 500.00 per property.

  • When to pay: Once off, before transfer of the property.

  • Who to pay: The Transferring Attorneys OR Directly to the Local Authority.

  • Who the money is for: The Local Authority.


More unexpected initial costs

  • Moving Costs
    Estimated Amount: Contact a Removal Company for a quotation.
    When to pay: Once off.
    Who to pay: The Removal Company.
    Who the money is for: The Removal Company.

  • Telephone/Web Connection & Deposit
    Estimated Amount: Contact a Telkom Office near you for their rates.
    When to pay: Once off.
    Who to pay: Telkom SA & Web Host.
    Who the money is for: Telkom SA & Web Host.

  • Water & Electricity Deposit
    Estimated Amount: Contact your local municipality to find out what the amount is.
    When to pay: Once off.
    Who to pay: The Local Authority.
    Who the money is for: The Local Authority.


OTHER ONGOING COSTS:


Occupational Interest (Occupational Rent)

  • Description: Occupational Interest is payable if you take occupation of the property before the actual transfer of the property into your name has been registered.

  • Estimated Amount: The amount of Occupational Interest due to the seller should be stipulated in the Offer to Purchase Agreement. It can either be a fixed amount (usually calculated as either the amount of the seller's mortgage loan repayment on the property or 1% of the purchase price) or an amount subject to an escalation if registration of transfer has not taken place within a certain period (this may apply when the occupational interest amount is less than the seller's bond repayments).

  • When to pay: Monthly, in advance.

  • Who to pay: Either the Estate Agent or the Registering (Bond) Attorneys or directly to the Seller.

  • Who the money is for: The Seller.


This article originally appeared in THE PROPERTY GUIDE.
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