Hidden costs when buying a house in South Africa
Transfer Duty:
This is a tax payable to the government upon the transfer of a property. The amount is based on the purchase price and is typically the buyer's responsibility. If the Seller is a VAT vendor, VAT will be applicable to the transaction instead. It will always be either/or, never both.
Conveyancing Fees:
These are the legal fees charged for the transfer of the property from the seller to the buyer and these are typically for the purchaser's account. The conveyancer can provide a quote upfront on request.
Bond Registration Costs:
If you are obtaining a mortgage bond, there are fees associated with registering the bond, these will be for the purchaser's account. This includes the bond attorney's fees for handling the registration process. In a case where a mortgage bond is registered, you will have two sets of attorneys to the transaction, the conveyancing attorneys as well as the bond attorneys.
Home Inspection Costs:
While not exactly hidden, some buyers might overlook the importance of a home inspection. Paying for a professional inspection can uncover potential issues that may incur additional costs down the line.
Homeowners Association Fees or Levies:
If the property is in a development with a homeowner's association or within a sectional title park, there may be monthly or annual fees or levies for the maintenance of communal areas and services.
Municipal Rates and Taxes:
These are ongoing expenses that homeowners need to cover for services such as water, electricity, and waste removal. It's important to budget for these recurring costs.
Insurance Costs:
Home insurance is essential to protect your investment. This cost can vary, so it's crucial to obtain insurance quotes and factor them into your budget.
Utilities Connection Fees:
When moving into a new property, there may be fees associated with connecting services such as water, electricity, and gas.
Repairs and Renovations:
After purchasing a property, you might discover the need for repairs or renovations that were not immediately apparent during the buying process. Budgeting for potential repairs and improvements is wise.
Capital Gains Tax (CGT):
If you sell the property in the future and make a profit, you may be subject to CGT. It's important to understand the tax implications and plan accordingly.