If you are considering buying property online, you need to be absolutely certain of the credentials of the agent or developer you are buying from. Check the Estate Agency Affairs Board website (www.eaab.org.za) for verification that the agent is registered and has a current fidelity fund certificate.
In any sectional title scheme or complex managed by a homeowners’ association, many of the maintenance and repair tasks are carried out by the body corporate or HOA. You will be required to pay a monthly levy for this, in addition to being responsible for municipal rates and utility bills. Buying a unit in a new development also has the advantage of not requiring maintenance and repairs for the first few years, so this is an excellent option for owners who are not on the spot to deal with issues that may arise.
If you are buying a unit off-plan in a new development, check the National Home Builders Registration Council website (www.nhbrc.org.za) to ensure that the developer is registered and in good standing. The NHBRC provides a vehicle for complaints against developers and building contractors who contravene the council regulations, so if you have any complaints about the construction of your unit, the NHBRC will intervene on your behalf.
As for any absentee landlord, expatriate buyers would be well-advised to appoint a really trustworthy agent who is capable of selecting and managing tenants, ensuring that they pay their rent timeously and handling all the necessary outgoing payments on rates, taxes, services and body corporate levies, where applicable. Agents must also be able to maintain the property in good condition, keeping the accounts for the owner’s regular inspection.
As with estate agents whose business is selling property, rental agents are required to be registered with the EAAB and to have current fidelity fund certificates. It would also be prudent to ask for references from existing clients, who will be able to reassure you that the agent you are appointing is reliable and trustworthy and knowledgeable about all aspects of managing your investment property.
Expatriate buyers and sellers also need to be aware of the tax requirements for non-residents selling property in South Africa. Section 35A of the Income Tax Act is designed to prevent non-resident sellers of immovable property from disposing of their properties without paying capital gains tax due to the South African Revenue Services (SARS). Section 35A states that a buyer of property from a non-resident seller must withhold funds from the amount due to the non-resident seller and pay the funds to SARS. These funds are used by SARS to pay the seller’s tax due on capital gains of more than R2 million.
For expatriates, this means that if they decide to sell their property in South Africa while still resident overseas, the buyer must retain a portion of the purchase price to defray the seller’s taxes due to SARS. The reference to a seller in S35A (14) means the individual joint owner of a property. This means that if two or more individual expatriates jointly own a property, the threshold exemption of R2 million will apply to each joint owner and not to the total amount payable to all joint owners.
All things considered, buying property in South Africa can still be a good choice for expatriates who are prepared to do their homework and invest for the long term.