f you are looking to invest in an overseas residential property or simply searching for that dream holiday home abroad then buying property in South Africa could be just what you’ve been looking for. South Africa, or to give its formal title the Republic of South Africa lies at southernmost tip of the African continent, and boasts over 2,700km of incredible coastline on to both the Indian Ocean and South Atlantic. On land it is bordered by several countries including Zimbabwe, Botswana, Namibia, Mozambique and Swaziland.
South Africa, in comparison to popular European destinations such as Spain and Portugal, is not renowned for luring hordes of would-be foreign property investors to its shores. However, that may soon change.
According to recent figures, more people than ever before are taking an interest in South Africa from a residential property perspective – and who can blame them?
It certainly has all the charm and potential to become one of the finest countries in the world.
Investment Property Partners overseas property buyers guide covers a number of important issues that you will need to consider if you are considering buying property in South Africa either as a residential investment or as a holiday home abroad.
Getting to Grips with South Africa
As always, the wonderful weather in South Africa is a big attraction for many, and if you add the rich variety of scenery, from mountain backdrops to crystal clear waters and soft white sand, it is little wonder that more and more people are beginning to sit up and take notice of what South Africa has to offer both residents and tourists.
And there’s more! As well as the beautiful beaches you have safari parks, multi-cultural cities with fantastic eateries and a rich culture and heritage that is simply asking to be embraced.
This is not to sweep the country’s problems under the carpet though.
For many years South Africa has been associated with poverty and high levels of crime, and this double draw-back has by no means been completely eradicated.
Having said that though, big improvements have been made and South Africa is a much better place in that respect, and the prospects of future investment and further growth in the tourist sector has brought about much more optimism.
With such optimism and positivity for the future, the property market in South Africa is just begging to be explored once again.
Prior to the global economic downturn, the country was seeing spectacular growth and now, after a slump brought about by the recession, there has been recent signs of recovery which suggest that now, with prices still low but likely to rise, is a good time to consider buying property in South Africa.
What about South African Property?
If you are buying property in South Africa you’ll soon be aware that there are many different types of residential property throughout South Africa from which to choose.
There are the villas and apartments of the sought-after coastal regions, and the condos and new builds of central Cape Town that offer the additional lure of culture, restaurants and a plethora of top class amenities.
Irrespective of what you want from a holiday home or property investment, South Africa more than ticks the boxes.
Can Foreigners Buy Property in South Africa?
The Land Holdings Bill which has been debated long and hard throughout South Africa is set to shake-up the property holdings landscape across the country and is likely to place some restrictions on what type of South African property foreigners can own.
The good news is that it is expected that the Land Holdings Bill will apply to agricultural land only, and will not affect foreigners planning to buy homes in South Africa.
It is also anticipated that the bill will include a 12,000-hectare limit on the size of land which one individual can own.
Buying Property in South Africa
Before you get over-excited about buying property in South Africa you should recognise that there is plenty of research to be done first if you are to be successful and find yourself that dream property.
You’ll need to identify where it is you’d like to buy, get to grips with property prices, and understand thoroughly South African property laws and the process of making a property purchase.
Research, research… and more research is key to minimising your investment risk and achieving a successful outcome.
You also have to be aware that buying property abroad is often completely different to purchasing in the UK, so you will need to be familiar with what is involved if you are to avoid getting bogged down with complicated legal issues or getting stung with unexpected costs.
The first thing to note about South Africa is the fact that most costs are typically quite high, so make sure you bear this in mind and budget accordingly.
On the positive side however, there is a lot of investment potential in the country, especially from a long term perspective, so this is certainly something to keep at the forefront of your thoughts.
In terms of rental yields, apartments in Cape Town and other internationally popular areas in particular are well worthy of consideration… in fact, Cape Town is one of the best places of all in which to invest right now.
Always Get Good Professional Advice
As ever, when buying property in a foreign country, it is always best that you seek out reputable, English speaking representatives (legal, property, engineering etc.) to help guide you through the buying process because there can be major sticking points that can trip you up further down the line, and while South Africa is not the minefield it can be in other countries, you are still advised to exercise caution.
However, on the plus side the legal system in South Africa is based on English law and will be familiar to many of us Brits; it is also quite transparent, easy to understand and well-regulated.
What about the Property Buying Process in South Africa?
Once you have set your heart on buying a property in South Africa you will find that you have to stump up a deposit of ten per cent of the property price.
This deposit for the property will be payable straight away and a fixed time period that identifies the completion date will be written into the contract.
After this, checks will then need to be made and then the transfer documentation contract will be lodged at the regional Deeds Registry.
Typically, a local South African solicitor will need to be involved at this stage, although if you feel more comfortable you are allowed to use your own UK solicitor to look after your interests… make sure however that they have experience of dealing with property transactions in South Africa.
If you don’t have a solicitor appointed to act for you, you could ask other property investors for recommendations or you could go online for a substantial list of recommended and regulated professional conveyancing solicitors.
What about Fees & Acquisition Costs?
As a rough guideline, you should in addition to the purchase price of the property budget for up to 12 per cent for all additional purchase costs and professional and other fees.
If you bear this figure in mind, you should not go far wrong.
It is also worth bearing in mind that non-residents are liable for Capital Gains Tax (CGT) when selling property in South Africa.
Capital Gains Tax and other tax issues can be complicated and we strongly recommend you speak with a specialist tax advisor.
Financing your Property Purchase
If you are seriously considering buying property in South Africa then you’ll need to understand South Africa’s property finance markets.
One thing you should be aware of is that non-residents buying property in South Africa currently may borrow a maximum of 50 per cent of the purchase price in the country.
With this in mind, you may wish to contemplate raising equity in the UK to fund your South African property dream home.