Important advice for home buyers

I was speaking to a prospective buyer the other day, who was looking to buy a bargain holiday home in Jeffreys Bay, writes David Barkes of IPC Jeffreys Bay.

He was under the impression that a house selling for less than R600, 000 avoided all duty and fees and I had to explain to him that the only exemption was the Government Transfer Duty Tax and that all other costs were still applicable.

I showed him the recent Greyvensteins October Newsletter which stated the following:

1. Transfer duty and Transfer fees

There is a general misconception that this is the same thing. Transfer Duty is payable to the South African Revenue Services in accordance with the Transfer Duty Act and Transfer fees are payable to the transferring attorneys for attending to the transfer of the property. Transfer Duty is tax that the government levies against the purchase price which is calculated on a sliding scale. Properties bought at a price not exceeding R600 000 are exempt. (Despite the fact that it is exempt, the conveyancer must still obtain a transfer duty receipt / exemption for Deeds Office purposes.) Transfer fees are payable to the transferring attorneys and are regulated by the Law Society. A different sliding scale is applicable, but there are no exemptions.

This means that even though the transaction is exempt from transfer duty, there will always be transfer fees payable.

2. Two Separate accounts for transfer and bond registrations

Irrespective of whether or not the same attorneys attend to the transfer and bond registration, there will be two different accounts as this entails two totally separate conveyancing procedures or registrations that must take place.

3. Bank initiation fees

All banks charge an initiation fee when the bond is granted. This amount varies from bank to bank and also depends on the amount of the loan. Also, depending on the bank, this must either be paid upfront (which will then be added to the bond registration statement of account) or will be included in the loan. The maximum amount that the banks can charge is R5 700.00.

4. Discount on Transfer and Bond Registration Costs

Agents cannot promise discount on conveyancing costs to the Purchaser. As all conveyancing costs are regulated by the Law Society and invoiced by the conveyancer, any discount granted to the Purchaser by the conveyancer is purely discretionary.

5. Rates

All the rates must be paid up until the end of the financial year of the municipality (30 June) by the purchaser before the local authority will issue a rates clearance certificate to the conveyancer for Deeds Office purposes. On registration, the rates will be apportioned between the Seller and Purchaser. The Seller is liable for all outstanding rates until date of registration and the Purchaser is liable from date of registration until the end of the financial year of the municipality