Foreigners may purchase and own immovable property in South Africa without any restrictions, as foreigners are generally subject to the same laws as South African nationals. The only foreigners disqualified from owning property in South Africa are foreigners that are here illegally.

It is thus possible for a foreign individual to own property individually, jointly or in undivided shares. Foreign companies and trusts are also permitted to own property in South Africa, provided that they are registered in South Africa as an external company.

What is required as a foreigner purchasing property?

While purchasing property in South Africa as a foreigner has its advantages, it is important to bear the following considerations in mind, namely:

Visa requirements

Non-residents would need to comply with the Immigration Act 13 of 2002 if they intend to stay in their South African property for extended periods. The permit for which they apply would largely depend on their country of origin, the purpose of their visit and how long they intend on staying in South Africa.

Although there is a lengthy list of countries who do not need visas for visits of less than 90 days, foreign nationals from visa-restricted countries will have to apply for the relevant visa.

Capacity to enter into an agreement

Should the foreign purchaser not be in South Africa to sign transfer or bond documents, such purchaser will need to have the documents signed either at a Notary Public, who (depending on the country of signature) may have to have the documents Apostilled; alternatively the purchaser could also sign the necessary documents at a South African embassy.

Additional costs

Foreign nationals are, as is the case with South African residents, liable for any transfer duty, should the value of the property exceed R1,000,000 (one million Rand). Properties purchased from developers, on the other hand, will generally attract Value Added Tax (VAT) as opposed

to transfer duty and which VAT sum will be included in the purchase price. They will also be liable for the ordinary costs of transfer which are payable by purchasers when purchasing property (kindly consult our calculator for an estimate on the property transfer costs).

It is very important to note that foreigners who purchase property in South Africa must register as South African tax payers for their Capital Gains Tax obligation. Should the foreigner wish to sell his property, a withholding tax of a certain percentage on the proceeds of the sale of a property of more than R2,000,000 (two million Rand) becomes payable until clearance is received from the South African Revenue Service from any amount to be paid to the seller or the seller’s agent. This can be avoided if the South African Revenue Service is approached prior to the transfer to obtain a tax directive and in which case only the directed amount (if any) will be withheld.

Financing

South African exchange control regulations determine the extent to which foreign buyers can borrow money locally to fund the purchase. Foreign buyers not working in South Africa will typically not be granted more than half of the purchase price to fund the purchase. The balance must then be paid in cash and this may be cash generated in South Africa, or off-shore funding.

Foreigners who have temporary work permits may be granted more than half of the purchase price, but the loan amount will still depend on the bank’s criteria. A condition of the loan would be that the buyer must reduce the bond to less than half of the registered amount before they leave South Africa to go back abroad. Some institutions would possibly require a work permit of at least four (4) years before they would consider a bond for more than half of the purchase price.

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Due to system downtime and load-shedding, the Department of Home Affairs (DHA) lost nearly 141,000 hours of Smart ID application and production time between the 2019/20 and 2022/23 financial years. Minister Aaron Motsoaledi revealed this figure in a recent response to questions raised in Parliament by Democratic Alliance MP Adrian Roos. Motsoaledi provided a breakdown of smart ID production and application hours lost to technical difficulties and load-shedding per province for each financial year from 2019/2020. These disruptions hit home Affairs offices in the Eastern Cape the hardest, with over 34,000 hours to rotational power cuts and system downtime. Mpumalanga offices lost the next-highest number of hours at 17 V.5313
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