Many of us have been totally unaware of the cost implications of buying a property in the past. We all just look at the purchase price and think that that is the final amount. Boy was I shocked when I bought my first-ever property! I paid R740 ,000 for my first property many years ago. It was a repossessed house that I got for a “bargain”. It was literally just a shell with a big garden in a good area. I had to scrimp and scrape to get the required 20% deposit together that the bank required in order for them to grant me the 80% loan amount. This included borrowing money from my then-girlfriend’s (now wife) Grandmother. So when I purchased the property I sighed with relief because I had only just been able to get to the R148,000 deposit. I sighed a few weeks later again (but not with relief) when I received a bill from the conveyancer saying I owed another R40,000.
R40,000 extra!! What on earth could that be for I asked? “Oh dear”, the conveyancer said to me, “you have to pay transfer duty, conveyancing fees, bond registration, and then a few more for petties.” I was flabbergasted. But what could I do except pay? So back to my girlfriend’s granny, we went. For the next 6 months, we had a leaking roof, no kitchen, windows without glass, and the previous owner’s dog named Jonah that kept bursting into the house unannounced in the middle of the night through one of the many missing panes of glass in the cottage style French doors. We had no money to do any renovations because the money all went to the BUYING COSTS! As a rule of thumb, you should always allow for between 8% and 10% of the amount of the purchase price of the property for all the other costs involved in purchasing a home.
Anyway, we survived to live another day, and from that hard lesson, I learnt all about the hidden costs. And here they are: (as of 01 March 2021)
Transfer Duty
Conveyancing Fees
Bond Registration and Initiation Fees
Petties (Deeds Office Fees, Deeds Office Search, Postage, Document Fee)
Transfer Duty
For properties with a purchase price of up to R1,00,000, there is NO Transfer Duty.
From R1,000,001 to R1,375,000, Transfer Duty is calculated at 3% on the value above R1,000,000 (So, you don’t pay Transfer Duty on the first R1,000,000.)
From R 1,375,001 to R1,925,000, Transfer Duty is calculated at 6% on the value above R1,375,000 PLUS a flat rate of R11,250.
From R1,925,001 to R2,475,000, Transfer Duty is calculated at 8% on the value above R1,925,000 PLUS a flat rate of R44,250.
From R 2,475,001 to R11,000,000, Transfer Duty is calculated at 11% of the value above R2,475,000 PLUS R88,250.
And for those of you with lots of money: From R11,000,001 and above, Transfer Duty is calculated at 13% of the value exceeding R10,000,000 Plus R1,026,000.
Conveyancing Fees
On a purchase price of R900,000 the fee is approximately R19,500.
On a purchase price of R1,250,000 the fee is approximately R23,200.
On a purchase price of R 2,000,000 the fee is approximately R29,100.
Bond Registration and Initiation Fees
Bond registration fees will be almost the same as Conveyancing Fees.
Bond initiation fees: Some banks work on a base fee plus a percentage of the loan amount, whereas other banks charge a flat rate. But the maximum initiation fee charged will not exceed R5,985.
Petties
About R4,000 for all of these costs for a purchase price of R900,000.
About R6,000 for all of these costs for a purchase price of R1,250,000.
About R8,000 for all of these costs for a purchase price of R2,000,000.
TOTAL PAYMENT on a purchase price of R900,000.
Transfer Costs = R0
Bond Costs = R20,000
TOTAL PAYMENT on a purchase price of R1,250,000.
Transfer Costs = R34,737
Bond Costs = R23,527
TOTAL PAYMENT on a purchase price of R2,000,000.
Transfer Costs = R89,924
Bond Costs = R28,714
Please make sure you allow for all these extra costs (unlike me) as they are substantial amounts. I would hate for you to not be able to make payment of these amounts after you have purchased your house.
Feel free to contact me if you would like more information or help on the above.
