Moving to SA? Then you’ll want to read this guide to buying and renting a property in South Africa.
We discuss each process in detail, including the costs involved, and share average rental and property prices.
Let’s start with the basics first:
The types of property in South Africa
When going through South African property listings, you’ll see these types of properties are typically available:
- Bachelor flat: This type of flat has a kitchen, bathroom, and all-in-one lounge and bedroom.
- Flat: Flats, or apartments, come in 1-bedroom, 2-bedroom or 3-bedroom varieties.
- Semi-detached house: Semi-detached houses share an adjoining wall with a house next to it.
- Townhouses: Townhouses are found in small to mid-sized apartment complexes and are semi- or duplex properties. Semi-properties only have one floor, while duplex properties are across two floors.
- House: Houses are freestanding, family-sized properties.
You’ll find that properties in the suburbs are usually larger and more affordable than those close to or in the city. Therefore, many South African families choose to live in the suburbs.
Now let’s move on to the finer details of renting and buying property in South Africa.
1. Buying property in South Africa
What do you do when you want to get the facts? You go to the experts.
That’s precisely why we asked Marco Garuti of SAHomeBuyers what he thinks foreigners should be aware of when buying property in South Africa.
Here’s what he had to say:
- Anyone, including non-residents and temporary residents, may purchase property in South Africa.
- Standard sale agreements generally provide the buyer with little protection against risks like subsidence, structural problems, leaks, dampness, wood rot and third-party rights over the property.
- It’s recommended to get a qualified inspector to provide professional comments on the property’s condition.
- There is usually only one attorney involved in the process, paid for by the purchaser but acting for the seller.
- The buyer should appoint an independent attorney to obtain a legal opinion of the title-holding restrictions.
- Once the buyer and seller sign an Offer to Purchase, the terms are binding, and it is impossible to withdraw from the sale.
Now let’s look at some specific factors to be aware of when buying a property in South Africa.
The property buying process:
Buying property happens in four stages:
- Finding an ideal property and making an offer: Once you’ve found a property you like, you’ll make an offer to purchase. The agent will request a formal letter confirming the details and then send it to the seller for approval. If the seller accepts your offer, both parties will sign the document.
- Transfer and bond registration: The property is transferred into your name by a conveyancing attorney. The transfer occurs after your home loan is approved if you buy the property with a home loan (bond). In the meantime, a bond attorney registers the home loan in your name.
- Title deed registration: The title deed is registered in your name to confirm your property ownership. If you have a bond, the bank will keep the title deed until you’ve paid off the home loan. You can request copies of the title deed from the Deeds Office at any time.
- Moving in: With all the paperwork behind you, it’s to move in and make your new place a home.
South Africa’s average property prices:
You can expect to spend at least a million rand when buying property in South Africa.
According to the RE/MAX National Housing Report Q1 2023, the Free State is the most affordable province to buy a home. The Western Cape has the most expensive properties:
- North West: R1,295,000
- Free State: R1,260,000
- Mpumalanga: R1,500,000
- Limpopo: R1,595,000
- Gauteng: R1,399,000
- Eastern Cape: R1,599,000
- Northern Cape: R1,695,000
- KwaZulu-Natal: R1,650,000
- Western Cape: R2,550,000
When buying property in South Africa, the standard costs are a deposit, bond initiation fee, bond registration costs, transfer duty, and other transfer costs.
- Deposit: You’ll pay a deposit to the bank if you’re buying a property with a home loan. The deposit amount will depend on the size of the home loan.
- Bond initiation fee: You can expect to pay a bond initiation fee, which is paid to the bank to process your home loan application. You can pay this upfront as a once-off fee or over the period of your home loan.
- Bond registration costs: You’ll pay bond registration costs to register the home loan over the property’s title deeds. Other costs of this process are levies charged by registering attorneys for their services and a Deeds Office registry fee to cover the legal registration of your home loan.
- Transfer duty: Transfer duty is a government tax levied on properties valued at more than R1,100,000, although some exemptions apply. The amount is calculated according to these guidelines:
|Value of property||Rate|
|R1 – R1,100,000||0%|
|R1,100,001 – R1,512,500||3% of the value above R1,100,000|
|R1,512,501 – R2,117,500||R12,375 + 6% of the value above R 1,512,500|
|R2,117,501 – R2,722,500||R48,675 + 8% of the value above R 2,117,500|
|R2,722,501 – R12,100,000||R97,075 +11% of the value above R2,722,500|
|R12,100,001 and above||R1,128,600 + 13% of the value exceeding R12,100,000|
- Other transfer costs: You’ll pay a transferring attorney to register property ownership with the Deeds Office. On top of this fee, you’ll also pay for sundries, postage, petties, and a Deeds Office registry fee.
More advice from SAHomeBuyers
“An intimate understanding of every location is considered critical in making a good buying decision”, says Marco Garuti of SAHomeBuyers.
You want to draw up a list of priorities, like proximity to schools, and use it to decide on the most suitable city and neighbourhood for your family.
Garuti also recommends an independent price guidance supported by a valuation report to understand the market value of the property considered. It’s the best way to establish whether you’re about to pay a fair price for the property.
To see how SAHomeBuyers can help you with this, visit their website.
2. Renting property
Renting is great if you don’t want to make a long-term financial commitment. You might also choose to rent first to find your feet before settling on a permanent home.
In South Africa, you’ll find that you can sign long-term leases, usually for one year or short-term leases. Short-term leases are typically for three months or six months at a time.
No matter the type of lease you sign, you’ll be able to renew or end it at the end of the lease period. Rental agreements have a notice period built in for the latter. The norm in South Africa is one or two months, which means you must give your landlord either a month or two months’ notice if you want to move out.
Let’s look at more of the basics of renting a property in South Africa you must know:
South Africa’s average rent:
According to PayProp’s latest Rental Index, South African rental prices increased by an average of 4.2% during 2023’s first quarter.
The North West has the most affordable average monthly rent, while the Western Cape has the highest average rental prices:
- Eastern Cape: R6,650/month
- Free State: R6,358/month
- Gauteng: R8,641/month
- KwaZulu-Natal: R8,801/month
- Limpopo: R7,657/month
- Mpumalanga: R8,268 /month
- North West: R5,738/month
- Northern Cape: R9,248/month
- Western Cape: R9,872/month
The rental process:
Once you’ve found a place that you like, you’ll deal with either the property owner or a rental agent to finalise a lease.
Rental agents might request more paperwork than owners, as their process is more formalised, but usually, you’ll have to submit these documents:
- Identification, such as a copy of your passport
- Copy of your latest payslip
- Last three months’ bank statements
Once the lease is approved, you’ll sign the rental agreement and pay the deposit. We’ll discuss these parts of the rental process in detail further on.
Insist on an inspection of the property with the agent or owner before you move in! You could be liable for damage to the property that wasn’t noted when you first moved in.
The costs involved when renting a property include the following:
- The deposit: You’ll have to pay a deposit when you first sign a lease. In South Africa, rental deposits usually equal one or two months’ rent. The owner or rental agent will hold the deposit until the end of your lease. If it’s necessary to do any repairs or cleaning after you move out, the deposit will cover the costs. You’ll get the remainder of the deposit if funds are left. However, if the flat is in perfect condition, the owner or rental agent must refund your deposit within seven days or a calendar week.
- Running costs: You can expect landlords to include water and rates in your rent, but you’ll probably have to pay separately for electricity and an internet connection. You’ll also have to insure your household goods yourself. South Africa has plenty of insurers that offer affordable rates.
You’ll find that most rental agreements include the following basic information:
- The landlord’s personal information
- The rental agent’s details, if one is involved
- Your personal information
- The address details of the property
- The rental amount and due date
- The owner and tenant’s obligations, for example, who is responsible for maintenance
- Any pre-agreed rent increase when the lease gets renewed, for example, 10% in 12 months
- Rules of the apartment block or estate, if applicable
- The notice period and allowances for both parties for giving notice
You can also negotiate other stipulations you’d like to include in the rental agreement.
Recapping buying and renting property in South Africa
The South African property market offers properties ranging from bachelor flats to freestanding houses.
Rental costs are the lowest in the Free state while the North West have the most affordable properties for sale. The Western Cape is the most expensive province to rent and buy in.
The most important thing to know when buying a property is that the Offer to Purchase is a binding document. You could make life easier by working with a property buyers’ agent who’ll guide you through the buying process.
When it comes to renting, get everything in writing, ensure you know what you’re responsible for and what the owner is responsible for, and insist on an inspection when you move in. You’ll be glad you did when the time comes to move out!