It is anticipated that there will be renewed interest in the purchase of property in South Africa after the World Cup.
There are virtually no restrictions on the purchase of property by foreigners, and the terms of a sale agreement would be no different. Foreigners may not, however, in terms of exchange control legislation, take out a bond for more than 50 percent of the purchase price, i.e. borrow more than 50 percent of the purchase price from a local bank.
Upon resale, funds introduced into the country with a view to purchasing the property can also be transmitted to its source, together with the profits made upon resale.
It is advisable that both spouses sign a sale agreement in the event of a foreign marriage, as our Deeds Office will not register a transfer unless both spouses sign the transfer documents. This may lead to an anomaly in our law, as in terms of their foreign marriage, the one party may conclude a perfectly valid sale agreement yet be unable to take transfer of the property without the other spouse's consent.
This situation often leads to delays or even a cancellation of the sale, as spouses are not always resident in South Africa, and in many instances, spouses are estranged. In such instance, it may be advisable for the foreigner to purchase the property in the name of a company to be formed, and to take transfer of the property in the name of the company rather than in his/her personal name.
Transfer documents must either be signed by a notary public or at the South African embassy of that country and this may cause delays.
A withholding tax of 5 percent will also be payable upon transfer of a property for a price exceeding R2million in respect of Capital Gains Tax.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
