An Easier Way to Buy South African Property
Buying property abroad means venturing into the unknown. You will come accross different processes and regulations and find yourself on unfamiliar ground.
It is for these reasons we have written the below guide on 4 THINGS YOU NEED TO KNOW to discover an easier way to buy South African property.
Buying a South African property will be very different to the process of purchasing property in your home country.
Below we take you through 4 essential points that you need to know:
- When your offer to buy a property becomes formal and legally binding.
- How much you may borrow as a non resident towards your purchase.
- The role of guarantees.
- An easier way to buy South African property.
If you are considering property purchase in South Africa - keep reading. This is important information that will both aid your purchase and help you to avoid basic mistakes.
1. When your offer to buy a property becomes formal and legally binding.
In most countries the buying process goes something like this:
South Africa is very different:
Key here...
Your offer to purchase (where you agree the price) is legally binding when signed and includes the terms and conditions relating to the sale. There is (with only very few exceptions) no cooling off period either.
2. How much you may borrow as a non resident towards your purchase.
Within this offer to purchase you will have to state how you are paying for the property - cash or part cash and part loan.
Foreign exchange controls dictate how much you may borrow as a non resident. The maximum you may borrow is 50% of the total purchase price. As an example if you make a purchase for ZAR 5 million you may only borrow ZAR 2.5 million.
Continuing with this example you would therefore need to:
- Provide a bank guarantee for the ZAR 2.5 million, and
- Provide a bank agreement offering you a bond (property loan) for the remaining ZAR 2.5 million.
These two items will typically be time bound and need to be produced in around a 7 - 14 day period of time of your offer to purchase or your offer will be null and void.
Key here...
You may only borrow 50% of the purchase price as a maximum and will need to produce a bank guarantee for the cash element of your purchase, as well as the bond for the balance, within a tight time frame
3. The role of guarantees.
As discussed above you will need to make a cash payment of at least 50% of your purchase price. Producing a bank statement or merely 'vouching' that you have the funds available will not suffice.
The following important points about guarantees should be noted:
- The guarantee will normally have to be produced within 7 - 14 days.
- Foreign bank guarantees are not normally accepted so you will need to transfer the money into a South African bank first and get the guarantee from this South African bank.
You should also note:
- You will not be able to open a South African bank account unless you are here in South Africa. To see how we can help you with this see the below section on 'An easier way to buy South African property'.
- Sending all the funds to an estate agent's account is not considered best practice.
- Depositing all the funds in a South African attorney's trust account will likely result in them charging you a fee - this can be as much as 3.5% interest on the money held. This means if attorney holds your funds for 10 weeks (typical purchase time) a ZAR 5 million cash purchase could loose ZAR 40,000 in interest.
Key here...
A bank guarantee will be needed very early in the process and this can be a costly exercise, unless you have local banking sorted out.
4. An easier way to buy South African property.
Incompass has been dealing with foreign buyers of South African property for over a decade. In this time we have perfected the easiest and most cost efficient way for you to secure your new home.
Introducing our cash account and money transfer service
Our foreign buyers service provides you with the following benefits:
- We are able to open an Investec Bank cash account for you even if you are abroad.
- The account is interest bearing with competitive money market rates.
- Your money transfer into South Africa can be made into your new Investec account where the funds remain in your control.
- We ensure that your funds get registered correctly when reaching South Africa to ensure repatriation later on, should this become necessary.
- On your instruction, we are able to make third party payments on your behalf. This means if a deposit needs to be paid, or attorney fees and other bills, you do not need to stress about making these payments from abroad.
- You will benefit from lower exchange rates meaning you buy more rand with your foreign currency.
- There is no charges - such as the attorney's charge - as the account is yours.
- We are able to issue the bank guarantee for you.
- The whole process can be done in 3 - 5 working days.
- Funds for any purpose can be sent to your Investec account meaning you can continue to make future transfers into the account and earn excellent interest rates when you keep funds in it.
- You can can continue to use the account for transfers back out of South Africa if the need arises in the future.
Make your next SA property purchase a great experience.
Our guarantees
- Market leading forex rates.
- No administration fees.
- ISO 9001 accredited service levels.
- ISO 27001 accredited security levels.
- 100% transparency on all money transfers.
- Tailored services to meet your money transfer needs.
More info
Incompass offers advice to foreign property buyers on:
- Bringing money into South Africa
- Transferring property proceeds
- Understanding personal allowances
- A guide to our money transfer process
- The role of our cash account
