The conveyancing procedure can be daunting for non-resident purchasers of South African property, but with expert assistance from an experienced conveyancing firm such as STBB (Smith Tabata Buchanan Boyes), there is nothing to fear. Here are the answers to some frequently asked questions.
For any other questions regarding non-resident ownership of property in South Africa, contact STBB for assistance in all aspects of your transaction, before concluding the deal.
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Non-residents may fund the property acquisition wholly with foreign funds introduced into the country by means of electronic fund transfer. Unfortunately, foreign drawn cheques at a bank in South Africa and similarly, foreign drawn guarantees, are usually not acceptable to secure the payment of the purchase price.
Non-residents may also apply for local mortgage bonds which are limited to 50% (or 75% in limited circumstances) of the purchase price if the non-resident has been granted a permanent resident visa. In such instances, the balance of the purchase price must be paid with foreign funds.
For a property transaction to be processed, various documents will require signature by the seller and purchaser. It is not necessary for a foreigner to be physically present in South Africa to sign their transfer documents but in such instance, it is advisable to prepare and sign a General Power of Attorney in favour of a third party in South Africa, so that the latter can sign the necessary documentation on the foreigner’s behalf.
Otherwise the documents can be signed outside of South Africa provided they are duly authenticated, meaning they must be signed at the offices of a South African embassy or before a Notary Public in that country.
The attorney appointed in the sale agreement to register the transfer of ownership will appear before the Registrar of deeds and sign the title deed whereby ownership is passed. It is not necessary for the non-resident purchaser to be present in South Africa at the time. He will be notified of the registration of the transaction by the attorney.
Non-resident sellers may transfer the full proceeds from the sale of immovable property out of South Africa provided that the following conditions are complied with:
South Africa’s exchange control provisions are quite strict, but the golden rule remains that if the non-resident seller can prove that the funds used to acquire the property was either wholly introduced from a foreign source, or partially from a foreign source with the remainder of the funds secured by way of a local mortgage bond, the non-resident will be allowed to the transfer the full proceeds realised abroad, less a withholding tax ranging from 5% – 10%, which applies when the proceeds per person is in excess of R2million. However, a non-resident practice such as that offered by STTB may assist the non-resident seller to obtain a Tax Directive issued by the South African Revenue Authorities to allow the conveyancers to withhold a lesser amount resulting in more funds being available for repatriation.
It is of critical importance that the following documentation obtained when the property is acquired is retained for the day when the repatriation application is to be submitted for exchange control approval:
STBB offers a fantastic solution in respect of the secure retention of all the required documents through their recently launched E-Vault service. This service stores the most relevant documents pertaining to the transfer as well as the required documents for exchange control purposes, safely in an electronic vault which is accessible to the client at any time. This service eliminates the uncertainty of paper archived documents, which may be destroyed after 5 years, or lost documents.