Conveyancing Knowledgebase



There are various issues involved in purchasing immovable property in a foreign country which extend beyond the mere signing of contracts and documents and paying of money of which the average non-resident interested in purchasing property is unaware, or would like to know, but is perhaps unsure who to ask.


To this end, we have put together a selection of questions frequently asked by non-residents that we trust will assist in clarifying these issues.

Are there any restrictions on non-residents buying property in South Africa?

The answer to this is a resounding NO, save for a prohibition on illegal aliens owning immovable prop¬erty in South Africa. Non-residents will of course be subject to the same laws and regulations as South Africans and it is compliance with these that ensure the efficiency of the S.A. land registration system and security of tenure.

Should the non-resident not wish to purchase the property in his or her own name but rather in the name of an entity, such an entity must be locally registered and meet the requirements inherent in registration of the chosen entity, such as those con-tained in the Companies Act. For example, the non-resident may decide to own the property through share ownership in a company, membership in a close corporation (unique to South Africa) or as a beneficiary in a trust. In the event of a non-resident acquiring property in the name of an entity, funds brought into the country will represent a loan to the local entity and will require Exchange Control approval.

For the most part however, property is registered in the name of the purchaser as an individual. There may be specific reasons for taking transfer in the name of an entity and for a brief overview of these, kindly consult our Purchaser’s Guide to Alternate Entities for Acquiring Ownership Of Immovable Property.

Note that purchasers, will have to finalise their choice of vehicle for purchasing the property prior to signing any Offer to Purchase or Agreement of Sale, as no changes can be made at a later date without the possibility of penalties being imposed and result¬ant delays in the transaction.

Finally, a non-resident can purchase South African property over the internet without entering the country. However, should the prospective purchaser intend residing in the property for any length of time, he or she will need to comply with the requirements of the Immigration Act and either have a valid permit to temporarily remain in the country or be in possession of a permanent residency permit.

How can foreign funds be brought into SA for a property acquisition?

Foreign funds can be paid into any nominated bank account in South Africa. This account will usually be the trust account of the estate agent or transferring attorneys into which the deposit for the property and the balance of the purchase price is paid. These funds will be invested for the non-resident’s benefit and the non-resident can rest assured that such a transfer is secure and guaranteed, as the operation of these trust accounts is regulated by the professional boards overseeing the operations of both attorneys and estate agents.

When a non-resident transfers funds from a foreign source into a South African bank account, a record known as a “deal receipt� is kept of the foreign funds received by the South African bank. This is an impor¬tant document which must be retained for purposes of repatriation of the funds.

 Can money be borrowed in SA to purchase property?

The South African Reserve Bank will adjudge all foreigners not having their domicile in South Africa as non-residents. This however does not include foreigners with South African work permits who will be con¬sidered to be residents for the duration of their work permit. What this means is that non-residents are restricted in their borrowing ratio to 50% of the pur¬chase price, while the remaining 50% must be brought into the country in cash from a foreign bank. In order to qualify for a South African mortgage bond, the non-resident will need to provide proof of earnings and comply with the Financial Intelligence Centre Act, which, in simple terms, pertains to identification of the non-resident for money laundering purposes, and involves the production of certain documents such as a passport and proof of residential address.


Who chooses which attorneys will attend to the transfer and whose interests are the attorneys protecting?

It is customary in South Africa for the seller of immovable property to nominate the attorneys who will attend to the transfer. Such attorneys then act for the seller and on his or her instructions. Consequently, in the event of a dispute between the seller and pur¬chaser, the purchaser would have to seek independent legal advice. Note that whilst the seller selects the attorneys, the purchaser pays the transfer costs.

 Can transfer and bond documents be signed overseas and if so, what is the procedure?

Yes. However, there are certain formalities that must be complied with. Documents can either be signed before a Notary Public or at the South African Embassy in that country, but this can be costly and time consuming. If a seller or purchaser is in South Africa at the time of the transaction but returning overseas shortly thereafter, it is advisable if at all possible to sign a special or general power of attorney in favour of a local friend or family member who will then be able to act on their behalf.


Other than the purchase price, are there any other costs for which the purchaser will be liable?

Yes. The purchaser is usually liable for the following costs:

  • transfer duty, which is a tax levied on property and based on the purchase price, (this is not payable if the seller is VAT registered);
  • transfer fees;
  • Deeds Office levies, pro-rata rates and taxes/ sectional title levies;
  • the cost of obtaining a rates/levy clearance certificate.

Most of these costs are determined according to the purchase price of the property.

Further costs, including the attorney’s fees and bank charges such as the initiation and valuation fee, will be incurred if the purchaser registers a mortgage bond.

Once the purchaser takes transfer of the property or assumes the risk therein, he or she will be liable for all costs and associated risks. If the property is not bonded, it is in the purchaser’s best interests to obtain insurance. This is compulsory if the property is bonded and is normally arranged by the bank concerned.

On sale of the property, can the money be taken out the country?

Understandably, this is without doubt the number one concern of non-residents considering investing in South Africa. The answer to this question is simply, yes. Money from a foreign source together with any profit, proportionate to that non-residents share holding in the property, may be repatriated in due course in terms of S.A. Exchange Control Regulations. If the non-resident owns property together with a S.A. resident, only his portion may be repatriated.

On transfer of the property to the non-resident purchaser, the title deed will be endorsed “non-resident� and /or a deal receipt retained by the banking institution when the foreign funds were originally introduced into the country. This facilitates the repatriation of the funds and profit on sale of the property, provided the bankers are satisfied that such profit is reasonable and market related. Obviously if the purchase was partially financed by funds borrowed in South Africa, that portion of the purchase price cannot be repatriated unless the bond has been settled in full.

Furthermore, if a foreigner takes up permanent residency in South Africa and signs a Declaration and Undertaking at a South African bank (namely declaring whether they are in possession of foreign funds and undertaking not to place same at the disposal of anyone resident in the Republic), they will be considered a resident for Exchange Control purposes and accordingly will only able to repatriate funds within five years of their immigration. Thereafter they will be considered to be a South African citizen and subject to the same regulations and limitations.

Finally, the repatriation of funds will be subject to capital gains tax and this will be discussed more fully in due course.


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