Professional Real Estate Associations in South Africa
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Financing a Property
Most property purchases are financed with assistance from commercial banks, which offer a range of loan products for this purpose. A purchaser can approach the banks directly, or use a loan origination company as intermediary. Many estate agency firms are affiliated with the loan originators. Typically, a loan will be advanced against security of a mortgage bond which pledges the property as security for the loan. The bond is registered with the title deed in the Deeds Office to secure the lender’s claim, and thereafter ownership of the property cannot be transferred until the bond has been cancelled by the lender.
A loan, plus interest, is usually repayable in monthly installments over twenty years. If the borrower defaults, the lender can have the property attached by the Court and sold by public auction to recover the outstanding balance.
For additional resources on financing property in South Africa consult a member of ICREA’s member association, IEASA. For a full roster of members operating throughout South Africa, click here (link to the ICREA Member Directory)
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Buying a Property
There are no restrictions for foreign ownership of property in South Africa. There has been significant foreign investment in South African residential property since the mid-1990s. The most popular areas appear to be the Western Cape, and the KwaZulu-Natal coastal region.
Non-resident investors should note that they will have to pay Capital Gains Tax when they later sell their properties. Under the present rules, introduced in September 2007, the purchaser of the property will be required to deduct a prescribed percentage from the proceeds of the sale and remit it directly to the South African Revenue Service before paying the balance to the seller.
The underlying purchasing process in South Africa is fairly straightforward. A tentative or preliminary contract is entered into by the buyer and seller. A deposit negotiated between the parties is put down on the property and the conditions upon which the deposit may be returned are outlined specifically in the preliminary contract. Following the execution of the preliminary contract, the buyer seeks financing. There are many mortgage lenders within South Africa who deal regularly with foreign investors. That said, it is also permissible for a foreign national to obtain mortgage finance from his or her own country of origin. The government of South Africa is flexible as to where a person obtains his or her financing.
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. When the agreement is duly executed, ownership is transferred from the seller to the buyer and a new title to the real estate is registered immediately with the government authorities.
For detailed information and professional advice about buying a property in South Africa, consult a member of ICREA’s member association, IEASA. For a full roster of IEASA members operating throughout South Africa, click here (link to ICREA Member Directory).
Other Industry Sources
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Government regulatory authorities
Other government services
Institute of Estate Agents of South Africa :http://www.ieasa.org.za National Association of Managing Agents : http:// www.namasa.co.za South African Institute of Valuers :http://www.saiv.org.za South African Property Owners’ Association :http://www.sapoa.org.za