Can a Foreigner Buy Property in South Africa? Legal Requirements and Costs | Barter McKellar

South Africa is an attractive destination for foreign investors, expatriates, and international buyers looking to purchase property. Whether for residential, commercial, or investment purposes, the good news is that foreigners can buy property in South Africa with relatively few restrictions. However, there are legal requirements, tax considerations, and financial regulations that buyers must comply with.

At Barter McKellar, we specialize in property law and conveyancing, helping foreign buyers navigate the legal process of acquiring property in South Africa. In this guide, we break down everything non-residents need to know about buying property in South Africa, including legal requirements, financing options and associated costs.

1. Can Foreigners Buy Property in South Africa?

Yes, foreigners (non-residents) can legally buy, own, and sell property in South Africa, with very few restrictions. South African law does not prevent non-residents from acquiring residential or commercial real estate, making it a favorable market for international investors.

However, there are key legal and financial considerations that foreign buyers must comply with, including:
✔ Compliance with South African exchange control regulations
✔ Legal property ownership structures (individual vs. corporate ownership)
✔ Restrictions on financing and home loans for non-residents
✔ Tax implications, including capital gains tax and transfer duty

While the process is straightforward, working with an experienced conveyancing attorney ensures a smooth, legally compliant property transaction.

2. Legal Requirements for Foreign Buyers

Foreign buyers must meet certain legal requirements when purchasing property in South Africa, including:

A. Exchange Control Regulations (South African Reserve Bank Rules)

Since South Africa has exchange control laws, foreign buyers must comply with the South African Reserve Bank (SARB) regulations when transferring funds for property purchases.

Key Exchange Control Rules:

• All funds for the property purchase must be transferred from a foreign bank account into South Africa via an authorized South African bank.

• The bank issues a "Deal Receipt" (also known as a Bank Introduced Receipt or BIR), which is required for repatriation of funds when selling the property in the future.

• If the purchase is financed, non-residents may only borrow up to 50% of the purchase price, with the remaining 50% paid in cash from offshore funds.

Tip: Foreign buyers should keep detailed records of all foreign currency transfers to prove their right to repatriate funds upon resale of the property.

B. Property Ownership Structures for Foreign Buyers

Foreign buyers can purchase property in their personal capacity, jointly with a South African citizen, or through a foreign or local company or trust.

• Individual Ownership – The simplest and most common method.

• Company or Trust Ownership – Often used for tax structuring and investment purposes, but subject to additional compliance requirements.

• Joint Ownership – If a foreigner co-owns a property with a South African resident, financing may be more accessible.

Tip: Foreign buyers should consult with a property lawyer and tax expert to determine the best ownership structure for their investment.

C. Financing a Property as a Foreign Buyer

Foreign buyers can purchase property in South Africa using cash or apply for a local mortgage bond.

Home Loan (Mortgage) Rules for Foreigners:

• South African banks will typically finance up to 50% of the property value.

• The remaining 50% must be paid in cash from foreign funds.

• Foreign buyers must provide proof of income and financial stability to qualify for a home loan.

• Loan approvals are subject to exchange control approval from the South African Reserve Bank.

Tip: If financing is needed, foreign buyers should pre-qualify with a South African bank before signing an Offer to Purchase to avoid delays.

3. Costs Involved in Buying Property in South Africa as a Foreigner

Foreign buyers must budget for several costs beyond the purchase price, including:

A. Transfer Duty (Tax Payable to SARS)

Transfer duty is a property tax payable to the South African Revenue Service (SARS) when buying property valued over R1,100,000.

• Properties under R1,100,000 – No transfer duty applies.

• Properties over R1,100,000 – Transfer duty is calculated on a sliding scale (from 3% to 13% based on the property value).

• If buying from a VAT-registered seller (such as a developer), VAT (15%) may apply instead of transfer duty.

Tip: Always confirm whether VAT or transfer duty applies before finalizing a property purchase.

B. Conveyancing Fees (Legal Fees for Property Transfer)

A conveyancing attorney must handle the legal transfer of property ownership. The buyer is responsible for paying the conveyancing fees, which vary based on the purchase price.

Tip: The conveyancer will provide a detailed cost estimate before initiating the transfer process.

C. Bond Registration Fees (If Applying for a Home Loan)

If a foreign buyer is financing the purchase through a South African bank, they must pay bond registration fees. These fees cover:

• Legal work for registering the mortgage bond with the Deeds Office.

• Bank initiation fees for processing the loan application.

Tip: If purchasing with cash, bond registration fees do not apply.

D. Other Costs to Consider

• Municipal Rates & Levies – Paid to the local municipality for property taxes, water, and electricity.

• Insurance & Maintenance Costs – Essential for protecting the investment.

• Estate Agent Commission (If Applicable) – Typically paid by the seller, but some buyers factor it into negotiations.

4. The Property Transfer Process for Foreign Buyers

1️⃣ Find a Property & Sign an Offer to Purchase – A legally binding contract is signed between the buyer and seller.
2️⃣ Appoint a Conveyancer – A property attorney handles the transfer process.
3️⃣ Transfer Funds via a South African Bank – Foreign funds must be introduced through a local bank for compliance with exchange control regulations.
4️⃣ Obtain Financing (If Needed) – If applying for a home loan, approvals must be secured from a South African bank.
5️⃣ Pay Transfer Duty & Legal Fees – Required before the property transfer is lodged at the Deeds Office.
6️⃣ Register the Property at the Deeds Office – The buyer officially becomes the legal owner once the transfer is completed.
7️⃣ Take Ownership & Final Handover – The keys are handed over, and the buyer takes possession of the property.

Why Choose Barter McKellar for Your Property Purchase?

At Barter McKellar, we provide specialized legal services to assist foreign buyers with their property purchases in South Africa. Our expert conveyancing team ensures:

✔ Exchange control compliance to protect your investment.
✔ Efficient property transfer process with minimal delays.
✔ Clear guidance on legal & tax requirements for foreign buyers.
✔ Seamless communication with banks, SARS, and the Deeds Office.

Whether you're buying a holiday home, investment property or commercial real estate, we offer personalized legal support to simplify the process.