Accommodation in South Africa
When moving to a new country, finding the right accommodation in South Africa is one of the major concerns of expatriates. There is a wide variety of housing in South Africa depending on the city and the neighborhood, houses in secure complexes, apartments in buildings, single-family homes, semi-detached houses, etc.
Due to the high crime rate in South Africa, the country has the second largest number of gated communities in the world, second only to the United States, with mixed living, working and entertainment use, i.e., apartments with access control and security in business centers where shopping malls are also located.
Although the cost of living in South Africa, and especially the cost of real estate, is higher in cities than in rural areas, most expatriates choose to live in large cities such as Cape Town, and Johannesburg, or in their close suburbs.
Cape Town: the expat hub
Cape Town attracts the majority of expatriates even though salaries are lower than in Johannesburg and real estate is more expensive. Since the implementation of an urban public transport system in Cape Town, traffic is much more fluid, whereas in Johannesburg, the car is practically the only means of transport, and the traffic during rush hour is terrible. Many people working in Johannesburg choose to live in the suburbs served by Gautrain for this reason.
Whether buying or renting accommodation in South Africa, the criteria for choosing a residence are, first of all, safety and security, as the crime rate varies from city to city and each city has its own areas to avoid, and secondly, the distance from work to home and work to school, taking into account transportation and traffic. Prices are also an important factor. The Western Cape is the most expensive region ahead of KwaZulu-Natal, the Northern Cape and Gauteng.
Renting or buying a property in South Africa?
Many expatriates moving abroad wonder whether it is better for them to rent or buy their home. Several criteria are to be taken into account: the duration of the transfer if you're moving abroad for work, the possibility of having a long-term residence permit, the ease of resale of the property, the taxes on capital gains and the repatriation of the money after the resale of the property, the stability of the local currency, etc.
Renting offers greater mobility and flexibility, but buying a house gives a sense of stability and security.
Being a tenant in South Africa
Anyone can rent a home as long as they have a visa that allows them to stay in South Africa for a certain period of time. Short-term rentals are for a maximum of three months. A long-term lease is for one year, often with an option to renew.
There are different types of housing on the market:
- Bachelor flat, which is a studio in a building
- Granny flat, which is a small apartment in a property (it is basically a small cottage that used to be reserved for guests). Depending on the agreement with the owner, it may be possible to enjoy the pool, the garden, the barbecue, etc.
- Apartments: those built in old buildings are usually very large.
- Individual house.
- Town House: house in a secure complex, usually with about 30 houses, with charges for the maintenance of the common areas that can be high.
- Cluster House: house in a secured complex with common areas, swimming pool, tennis court, clubhouse, etc., but where the maintenance of private exterior areas such as the garden and sometimes the swimming pool are the responsibility of the tenant.
How do I find an apartment in South Africa?
To find a place to rent in South Africa, there are classified ads in the local press, websites such as Private Property, Gumtree and Property24, and real estate agencies such as Remax, Seef, Rawson, Pam Golding, etc. You can also choose to deal directly with the owner.
The tenant usually does not pay a fee to the real estate agency but only a lease drafting fee of approximately R500.
Once the decision is made, and the choice of apartment is made, the real estate agent or landlord will ask the potential tenant for his last three bank statements, his work contract, and sometimes letters of reference from previous landlords and, after verification, will decide if the tenant meets the financial requirements.
The lease in South Africa
The lease in South Africa must include the following:
- The name and address of the owner.
- The bank references of the landlord in order to transfer the rent to them.
- The amount of the deposit and the bank account number to which it will be transferred.
- The amount of the rent and the terms of payment.
- The annual rate of increase in case of tacit renewal.
- The obligations of the owner and the tenant (payment of water and electricity bills, possible repairs, etc.).
- The conditions for terminating the lease. Expatriates can include a termination clause in case of transfer.
- An inventory of fixtures.
Most apartments are equipped with a "pre-paid electricity meter", which is an electricity meter that works with prepaid cards.
The deposit
The deposit, normally corresponding to one month's rent, is deposited in a South African savings account, and the interest generated is returned to the tenant when they leave the apartment. After an inventory of fixtures at the end of the rental period and if there is no damage, the owner has seven days to return the deposit. In case of damage, the tenant must reimburse the deposit minus the amount of the repairs within fourteen days. In case of disagreement, it is always possible to appeal to the Rental Housing Tribunal.
Notice period
The notice period is one year after the end of the initial lease year. If the tenant terminates the lease before the end of the first year, the landlord is entitled to claim compensation for the time the unit remains vacant until a new tenant moves in. If the lease is terminated before the end of the first year, it is preferable that the departing tenant finds a replacement who meets the selection criteria.
Buying property in South Africa
Some expatriates choose to buy property in South Africa. Foreigners can do this on the condition that they are in the country on a visa, even if it is a tourist visa.
Buying property in South Africa can be a very good investment as property prices are constantly rising, and the devaluation of the Rand in recent years is favorable to people buying in foreign currency. In addition, when transferring funds to South Africa, the account holder has one month to accept the payment, which allows them to choose the best exchange day.
Buying a property in South Africa is much simpler and faster than in many European countries: no promise of sale, no compromise, no delay of retraction, etc.
Most sales are made through real estate agencies. In large cities, some agencies specialize in selling property to foreigners. Visits to properties are made on Sunday afternoons (show house). Agency fees are paid by the seller, while transfer duty (5 to 8%) and conveyance fees (calculated according to a government scale) are paid by the buyer.
Foreigners may also obtain mortgage financing up to a maximum of 50% of the purchase price of the property, but all loans to residents and non-residents must be approved by the Reserve Bank of South Africa. Interest rates on bank loans are very high (around 7%).
Once a property is found, an offer to purchase must be made by letter stating the desired date for the property and the proposed price, as well as other details if necessary. If the seller accepts, both parties sign the document, which is equivalent to an agreement to sell. The seller must provide a copy of their identity card (as if they are not South African, they will have to pay additional taxes), an electrical compliance certificate, proof that all municipal taxes are paid (clearance certificate) and a borer beetle certificate (proof that there are no woodworms in the house).
A security deposit of 10% of the purchase price must be placed in an escrow account.
Once all these formalities have been completed, the notary presents all the documents to the Land Registry Office (Office Deeds), which registers them, and the transaction is completed.
The transfer of ownership usually takes one month.
Ways of buying property in South Africa
There are two ways to buy a property in South Africa: either in your own name or by creating a company (Pty), and you buy the property in the name of the company, which allows you to lower the transfer taxes.
If the buyer is married, it is preferable to buy in their own name and in the name of their spouse in order to avoid paying transfer duty in the event of the death of one of the two.
As laws and procedures change regularly, it is best to be assisted by a lawyer specializing in the acquisition of property by foreigners or by a real estate consultant buyer.
Resale of property in South Africa
In the case of the resale of a property in South Africa, foreigners can repatriate the initial capital invested, as well as the capital gain realized after having paid the capital gains tax of 33.30% on which certain expenses can be deducted. If a foreign owner decides to keep his property as an investment and decides to rent it out, he has every right to do so. Rental income is subject to income tax.
The South Africa guide includes a series of articles about accommodation, including "Accommodation in Johannesburg", "Accommodation in Durban" and "Accommodation in Pretoria". These will help you better understand the different neighborhoods and suburbs of these cities as well as their property prices.
People who do not have to live near these large cities for professional reasons can move to medium-sized cities such as Bloemfontein, a city of 520,000 inhabitants and capital of the Free State Province, or East London, the sixth largest city in the country along the Indian Ocean in the Eastern Cape Province, or Port Elizabeth, also in the Eastern Cape Province, with its 40 kilometers of beaches. Real estate is less expensive there than in the big cities.
There are also charming small towns in the more rural areas, such as Clarens on the border of the Free State and KwaZulu-Natal, Nottingham in the heart of the Midlands, and Wilderness on the Garden Route, where it is good to live far from the hustle and bustle of the cities.
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Last update on 06 November 2022 12:51:59