- Deposit
The deposit is an upfront payment, usually between 10% and 20% of the purchase price, but varies from purchaser to purchaser. The transferring attorney is obliged to open a separate trust account for each transaction at the highest possible interest rate.
- Transfer Fees – payable by the Purchaser
This is a general term that encompasses the transferring attorney costs and transfer duty (tax).
- Transfer Duty
Transfer duty is the tax that the buyer is obliged to pay the Receiver of Revenue to have the property registered in their name. The buyer will pay the transfer duty to the transferring attorney, who will, in turn, pay it to the Receiver of Revenue. The amount of the transfer duty is calculated on the purchase price at the rate set by SARS. Conveyancing costs are for services rendered by the transferring attorney.
Transfer duty is currently calculated as follows:
| Value of the property (R) | Rate |
| 0 – 900 000 | 0% |
| 900 001 – 1 250 000 | 3% of the value above R900 000 |
| 1 250 001 – 1 750 000 | R10 500 + 6% of the value above R 1 250 000 |
| 1 750 001 – 2 250 000 | R40 500 + 8% of the value above R 1 750 000 |
| 2 250 001 – 10 000 000 | R80 500 +11% of the value above R2 250 000 |
| 10 000 001 and above | R933 000 + 13% of the value exceeding R10 000 000 |
No transfer duty is payable if the transaction is subject to VAT—it’s either duty or VAT, never both.
- Bond Registration Fees – Payable by the Purchaser
Bond registration fees are payable to the attorneys who have been appointed by the bank to register the bond. These costs include attorney’s fees, various expenses, deeds office fees, and VAT. The fee amount is calculated on the bond amount as per the recommendation laid out by the Legal Board. Therefore, bond costs are only payable if there is a bond.
- Bond Cancellation Fees – Payable by the Seller
Bond cancellation costs are charged by the attorney appointed to cancel the existing bond over the property. The cancellation of an existing bond is done simultaneously with the registration of a new bond. This will only be applicable if there is a bond over the property, and the standard rates are approximately R3,000 – R6,000 per bond registered. This does vary, though, depending on the outstanding amount.
- Bond Cancellation Penalties – Payable by the Seller
This is the fee that the bank charges the bondholder to cancel the bond before the end of the loan term. These penalties are calculated on the monthly interest payable but are subject to various conditions, e.g.:
– If the bond is less than 3-5 years, the bank will charge up to 3 months’ interest as penalties.
– Most banks will refund this penalty payment if the bondholder takes out another bond with the same bank within a certain period (typically a year).
– Penalties will be calculated pro-rata provided that the seller has notified the bank of their intent to cancel the bond early. This is dependent on the bank and varies between 90 – 180 days.
Note: It is imperative to find out from the Seller if they have notified their bank of their intention as soon as the property goes on the market, and if the property has not sold within 90 days, to inform the bank again.
- Bank Valuation Fees – Payable by the Purchaser
Initiation fee: This is a once-off fee paid to the bank for opening and processing a home loan account. This amount is a standard R6,300 (subject to yearly increases) and includes admin fees, property valuation, FICA, various expenses, and VAT. This cost is not included in the loan amount unless the purchaser requests it. See the National Credit Act for further notes on this.
- Occupational Rent – Payable by either the Seller or Purchaser
This refers to the monthly rent as determined in the OTP, payable by either party either before registration or in the case of a Seller if they remain in occupation.
- Homeowner’s Comprehensive Insurance – Payable by the Purchaser
This is compulsory cover that provides for loss or damage to the structure, fittings, and permanent fixtures of your house (it excludes household contents) in the event of fire, lightning, storms, floods, and earthquakes. The premium is usually debited to the home loan account monthly and is included as part of the home loan monthly instalment. No bond will be granted unless this insurance is in place. The Purchaser may, however, change policies once the property has been registered in their name.
- Life Assurance Premium – Payable by the Purchaser
The banks will require this to cover the outstanding balance on the home loan account in the event of death. Retrenchment and disability options can also be added to the cover. This monthly premium can be included in the home loan monthly instalments or debited to another account of choice.
- Rates – Payable by the Purchaser and Seller
The local municipality will charge monthly rates and taxes. This amount is calculated on the municipal value of the improvements. Note, therefore, that you may have a property on the market being charged R500/month in rates based on a value of R1 million. If the property sells for R2 million, the municipality will automatically adjust rates for the new owner upon registration.
For the transferring attorney to register a property, they would need to obtain a rates clearance certificate. Before this can be issued, the municipality will require:
– Settlement of all existing rates and utility accounts plus three months in advance. This is in case the Seller stops paying their account before registration. Any refund owing to the Seller will be refunded within three months of registration.
– Three months’ average rates payable in advance by the Purchaser. This is to cover any costs during the transfer of accounts from one owner to the next. This amount usually gets ‘lost’ in the system, and the onus is on the Purchaser to ensure that this amount is credited to their account.
Deposit for Lights, Water – Payable by the Purchaser
The municipality will require not only a deposit on rates (paid via the attorney) but also a deposit for electricity and water. If the property has a pre-paid meter, then this deposit is not applicable. This deposit varies between R3,000 – R5,000 depending on the average consumption of the previous owner. Again, this deposit often gets ‘lost’ in the system, and the onus is on the Purchaser to ensure that this amount is reflected on their account. This amount cannot be used to pay a monthly bill but can be used to settle final rates clearance if and when the property gets sold.
Monthly Levies – Payable by the Seller and Purchaser
Levies are payable on all sectional title units. This levy amount is calculated based on the square metres of the unit; for example, a 60 sqm unit will pay less levy than an 80 sqm unit (within the same complex—levies vary from complex to complex).
Levies typically will include water, refuse removal, homeowners’ insurance, garden service, security, management fee, and other services. In some cases, electricity for common areas can be included, but this usage is usually split between all owners monthly.
As with rates clearance, before registration, the attorney will require a rates clearance certificate. To obtain one, the seller will need to settle all outstanding levies and also pay three months in advance. The Purchaser will also be required to pay levies for three months in advance, which will be credited to their account.