22 Jul Transfer Duty, Bond Costs, and Other Hidden Costs When Buying Property
Buying a property is one of the most significant financial decisions you’ll ever make, especially if you’re a first-time buyer. While most people focus on the asking price of the property, many overlook the additional costs involved in the transaction. These costs can affect your budget significantly and even delay the purchase if you’re not financially prepared.
This article breaks down the key expenses, transfer duty, bond costs, legal fees, and other hidden charges that you need to factor into your property buying budget. Understanding these costs can help you plan effectively and avoid unwelcome surprises.
1. Transfer Duty: What It Is and When It Applies
Transfer duty is a government tax levied on the purchase of immovable property. It is paid to the South African Revenue Service (SARS) and applies to properties priced above a certain threshold.
Who pays transfer duty?
The buyer is responsible for paying transfer duty, and it must be paid before the property can be transferred into the buyer’s name.
When is it due?
It must be paid within 6 months of the sale date, or penalties and interest will apply.
Exemption:
No transfer duty applies to properties purchased directly from a registered VAT vendor, like a property developer, if VAT is already included in the purchase price.
2. Bond Registration Costs
If you’re financing your property through a bank loan (mortgage), you will incur bond registration costs. These legal fees are paid to register the bond (the loan agreement) in the Deeds Office.
Components include:
- Bond registration attorney fees (sliding scale depending on bond amount)
- Deeds Office fees
- Postage, petties, and other disbursements
- VAT on attorney services
For example, on a R1.5 million bond, bond registration costs can be approximately R30,000 to R40,000.
Note: These fees are paid upfront, separate from your home loan, and cannot typically be financed as part of the bond.
3. Conveyancing (Transfer) Fees
Conveyancing is the legal process of transferring ownership of property from the seller to the buyer. Conveyancers (typically attorneys appointed by the seller) charge fees according to a recommended tariff scale provided by the Legal Practice Council.
What’s included:
- Transfer attorney fees (based on purchase price)
- Deeds Office fees
- SARS transfer duty submission
- FICA and other administrative charges
- VAT on services
For example, for a R1.8 million property, the conveyancing fee could be in the region of R27,000 to R30,000, excluding transfer duty.
4. Bank Initiation Fee
When your home loan is approved, your bank will charge an initiation fee, which is a once-off administrative charge for processing the loan.
- Typically ranges from R3,000 to R6,000
- Sometimes deducted from your loan; otherwise, it must be paid upfront
Each bank sets its own fee, so check the fine print when applying.
5. Valuation and Inspection Costs
Banks often send a property valuer to assess whether the property value matches the asking price. Some banks cover this cost, while others may charge you:
- Valuation fee: R2,000 – R5,000 (approx.)
- Optional inspections: Structural or pest inspections, ranging from R1,000 – R3,000
Though not legally required, optional inspections can save you thousands in unexpected repairs later.
6. Rates Clearance Certificate
Before a property can be transferred, the municipality must issue a rates clearance certificate confirming that all rates and taxes have been paid in full by the seller. This cost is generally borne by the seller but might be included in the buyer’s invoice depending on the agreement.
7. Homeowners Insurance and Life Cover
Homeowners (buildings) insurance is compulsory if you’re getting a bond, as it protects the structure of your home against damage.
- Annual premiums: R2,000 – R10,000, depending on property size and location
- Life cover: Banks may require that you take out life insurance equivalent to your bond amount, which adds a monthly premium to your budget.
Compare quotes from providers and check if your current life policy can be ceded to the bank instead.
8. Moving Costs and Utility Deposits
Moving expenses are often overlooked in budgeting:
- Moving company fees: R3,000 – R10,000+ (distance and volume dependent)
- Utility deposits: Municipal electricity and water deposits may be required, often R1,000 – R5,000
If the property is in a sectional title or estate, levy clearance certificates and registration fees for residents may also apply.
Tips for First-Time Buyers:
- Use online calculators to estimate transfer and bond costs upfront.
- Save an extra 10–15% of the property value for costs beyond the purchase price.
- Compare banks and bond originators to find the best bond terms and lowest fees.
- Ask your estate agent or conveyancer for a full quote of all upfront costs.
Final Thoughts
Buying property isn’t just about affording the asking price; it’s about affording the whole process. From government taxes like transfer duty to legal fees, insurance, and moving costs, the additional expenses can easily amount to tens of thousands of rands. Being informed and budgeting wisely can help ensure a smooth, stress-free transition into your new home.
What factors can cause delays in the property transfer process?
As there are many parties involved in the property transfer process, (for example, SARS, Local authorities, Body Corporate, Home Owners Associations, the Banks, the Deeds Office, etc) a number of factors could cause the transfer to be delayed. Buyers may become impatient with lengthy turnaround times, however there is one positive aspect to this:
9 Factors That Could Affect The Timeline Of Your Property Transfer
Inaccurate or incomplete Deed of Sale
If the buyer, seller or real estate agent does not accurately or completely fill out the Deed of Sale, delays may result. Any errors in this document will require modifications since it is essential to any transfer the bond registration process.
Failure to get compliance certificates
Sellers often overlook getting the required Certificates that need to be done before transfer is passed. The transaction won’t be processed if these are not acquired. The seller must provide certain essential certificates, depending upon the nature of the transaction. These certificates must be provided to the Conveyancer prior to the registration of transfer at the Deeds Office.
Failure to give personal information or FICA documentation
The conveyancing attorney must FICA both the buyer and the seller as part of the transfer procedure. If either party fails to furnish the bond and transfer attorneys with the relevant personal information or FICA documents, delays may occur.
Delays in signing bond and transfer documents
The conveyancer should get signatures from both parties, in person or using Bank approved online document signing processes. If the buyer or seller doesn’t sign the pertinent bond and transfer documents as instructed by their conveyancer, it may result in additional delays.
Problems with the original title deed
The seller/Financial institution is required to give the transferring attorney a copy of the property’s original title deed. The original title deed can be at either of these two places: as security at a financial institution, or in your own possession, if your bond has been paid off. If the original is lost by you or the financial institution, it has to be replaced. This process is lengthy (± 3 weeks delay) as certain legal formalities need to be adhered to before replacement can occur.
Cash shortfall
Delays could occur owing to insufficient finances/funds on either the buyer’s or seller’s side for bond registration and transfer costs, or if the selling price is insufficient to settle an outstanding bond. Sometimes the buyer won’t be aware of all the costs involved resulting in delays.
Would you like to find out what your bond or transfer costs could amount to? Use our bond and transfer cost calculator for an estimate: https://awdlaw.co.za/bond-transfer-cost-calculator.
Failure to pay deposit or receive bond approval
If the buyer fails to pay the appropriate deposit amount or does not obtain bond approval, the transfer process may be delayed. Getting pre approved for finance can speed things up significantly, as bond originators can help iron out any red flags early to make the approval process much easier.
Delay in getting Transfer Duty receipt
The South African Revenue Service (SARS) is in charge of issuing certificates for the property’s transfer duty. Only after the transfer attorney has paid the duties and provided proof of payment can SARS move forward. SARS also verifies that both the seller and the buyer are in compliance with tax laws.
Bond cancellation delay
If the Seller still owes his bank money for the bond, it must be cancelled at the same time the transfer is passed to the buyer. In order to cancel an existing bond, the seller may choose to give the bond holder at least 90 days’ notice, which can result in a three-month wait.
How Long Do Property Transfers Take?
In conclusion, as a buyer it’s important to know how long do property transfers take, however you will never get an exact time frame. A crucial component of the transfer process is communication. As soon as a problem arises it must be brought to the Conveyancer’s attention so that it can be promptly addressed, to avoid delays. The property transfers procedure should go well if the Purchaser and Seller cooperate.
AWD Law Conveyancers offer dedication, speed, efficiency, professionalism and excellent communications as part of our conveyancing service. We partner with our clients and other property professionals involved in the conveyancing and property industry, like the estate agents, bond attorneys, bond originators and others. We might not have the answer to how long do property transfers take, but we have the expertise and team that will do its best to fast track the process.
Read more on our conveyancing areas of expertise
Kindly be advised that AWD Law does not enter into litigation on behalf of clients. Our conveyancers specialise exclusively in the development of vacant land, property transfers, bond registrations, administration of deceased estates and notarial practice. Should you require assistance with a litigation, kindly contact The Legal Practice Council.
Contact AWD Law For Professional Property Advice before signing your Offer to Purchase.
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