Property FAQ

Is it possible for foreigners to buy property in South Africa?

Yes, it is. The law only prevents illegal immigrants from owning land in South Africa. Foreigners are subject to the same laws as locals, which makes it perfectly safe to own property. The only catch is that non-residents are only able to finance a maximum of 50% of the purchase price through a South African bank. Normally, a 10% deposit is required on purchase, with the balance (40%) to be paid in cash or financed through another mechanism (cash, mortgage or personal finance) from abroad.

Should I invest in commercial or residential property?

Commercial holdings generally offer good, stable long-term returns, whereas residential properties are a little more risky. If you already own a home, then investing in commercial property is probably a good idea. However, if you don't own a home then it would be best to invest in residential property, as South Africa has a capital gains tax waiver on primary residences.

How do I qualify for a home loan?

You can qualify for a home loan if you don't have a bad credit record; your bank account is well managed; your general accounts and hire-purchase or bond payments are not in arrears; and your property or furniture has not been repossessed due to non-payment.

What documents do I need to apply for a home loan?

- Your latest salary slip, or if you're self-employed, your latest bank statement certified by an accountant, or a letter from an accountant or auditor to confirm your income;
- Your marriage certificate;
- Identification documents for both you and your spouse;
- Bond statements for the last 6 months, or the title deed;
- Bank statements for the last 6 months.

What kind of security do I need for a home loan?

The loan amout should not exceed 80% of the market value of the property. You can't use the municipal valuation or the market replacement value. R75 000 is the minimum market value of the house allowed. The property should also be insurable, which means that it should be well maintained and in a good state. Monthly repayment should not exceed 30% of your gross income.

What else do I need for a home loan?

When you purchase a home, you should ideally have some extra cash. This should be around 8 - 10% of the home loan amount, excluding the deposit. Be aware that there are many hidden costs that go into buying a new home so it's best to be prepared. The banks also require you to take out a house insurance policy in case of natural disasters like storms or fire. It's also advisable to take out a life assurance policy so that the bond payments can be covered in the untimely event of your death.

There are a range of property-related issues that are bound to arise when you buy or sell a home. If you have a property-related question and would like an answer from an expert, please feel free to join our Property Forum and make a posting.

If you'd like to buy property in South Africa, visit http://www.sahometraders.co.za/.