You are currently viewing Selling Your Property To a Non-Resident

Selling Your Property To a Non-Resident

Can a non-resident buy your house? YES!

South Africa is an attractive overseas property market, with our world-class style, depreciated Rand, strong property registration system, and minimal restrictions against non-resident property owners, which is of course great news for property sellers in any area popular with foreign investors.

Unlike many other countries, South Africa imposes few restrictions on non-resident property buyers.  Only “illegal aliens” (foreigners unlawfully in South Africa) are totally barred from ownership.

There are however some aspects that both you and your prospective buyer should be aware of –

  • As an upfront note, remember that as the Seller it is your right to choose the conveyancing attorney.  Do not ever give up that right, and as always, sign nothing without first taking specific legal advice.
  • South African legal and regulatory requirements apply and non-residents should take local professional advice on anything they aren’t sure of to avoid unnecessary delay and to ensure a smooth sale and transfer process.
  • A Buyer can buy an entity, but specific rules and tax considerations apply when an entity like a trust or a company is the purchaser – professional advice is essential, and as a Seller, be aware of possible delays in the transfer process.
  • The sale agreement itself can be signed anywhere and is valid so long as it is in writing and physically signed.  However, when it comes to the signing of transfer documents for the Deeds Office and bond documents for the bank (if a bond is applied for) the Buyer should if possible sign in South Africa.  If that isn’t possible, the Buyer can either appoint a local trusted representative via a Power of Attorney, or sign documents overseas with proper authentication (normally by a notary public or embassy/consular official, but the requirements vary by country).
  • Overseas buyers should understand what costs are payable by them and should consider in particular items like transfer duty (or VAT if applicable).  Your conveyancer can help the prospective Buyer with a cost estimate to avoid any cash flow issues and delays during the transfer process.
  • South African banks offer bond finance to non-residents, generally subject to both their normal criteria relating to affordability and so on, and to a “50/50” limit – the amount of the loan must be matched by an equal cash payment (usually by import of foreign funds).  Note that this limit only applies to non-residents, so foreign nationals who are legally resident in the country may, and this varies from bank to bank, qualify for larger bonds of up to 75%, perhaps more in some cases.  Compliance with FICA (the Financial Intelligence Centre Act) will require identification of the buyer and proof of residential address.
  • When the non-resident eventually resells, they can repatriate the imported foreign funds and any proportional profit.  It is essential for the Buyer to keep all records relating to the original purchase and the “deal receipt” proving import of funds.
  •  If the property is rented out, rentals are subject to local income tax. On resale, CGT (Capital Gains Tax) applies.

Leave a Reply