Know The Costs Involved

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It is important for home buyers to understand the total costs involved in a property transaction and also to know when such payments are due before an offer is put on the table in order to ensure that the necessary funds are available. A purchaser must know exactly what the upfront cash requirement as well as the total recurring monthly commitment is.Following is a broad outline of the costs involved: 

Purchaser

Transfer and bond registration costs 

A Transfer duty and other transfer costs

B Bond registration costs or bank guarantee cost (if applicable)

C Bank initiation fee

A + B + C = Total costs

Total cash required upfront

Deposit, if applicable, plus costs A + B


Seller

The seller needs to consider the bond cancellation fee as well as any outstanding amounts payable in respect of an estate/sectional title levy and/or municipal services fees. It is important for the seller to submit notice to the bank for the cancellation of the bond. Three months’ notice is required to avoid penalties.

In addition, the seller is responsible for all costs involved in order to obtain valid compliance certificates e.g. electrical and gas certificates.


Other important notes:

  • The South African law stipulates that transfer duty (i.e. the tax on a property transaction) becomes payable as soon as a sale agreement is signed. The agreement will in most cases state that the costs (which include the transfer duty and the attorneys’ fees and disbursements) are payable on demand by the conveyancer.

  • Where a buyer is caught by surprise by the timing of the payment of transfer duty, it is often possible to arrange bridging finance or a loan. Your agent or an attorney would be able to introduce you to those capable of granting such monies.

  • Ask your agent for an indication of the bond registration costs involved.


Also consider...

  • Municipal deposits for water and electricity

  • Cost of moving, new curtains, carpets, furniture and so on