A deposit (usually 10% of the gross purchase price) to the estate agent or conveyancer payable usually on signature of the deed of sale by both parties or within 7 to 14 days from signature (if applicable).
The balance of the purchase price is lodged with the conveyancer prior to transfer, or is secured by way of a bank guarantee. Over and above the purchase price, the purchaser should have the cash available to cover the transfer costs (if this is not included in the bond) and the bond registration costs as follows:
TRANSFER COSTS
Transfer duty – calculated on a sliding scale between 0% to 13% of the gross purchase price, is payable to SARS. (R0 to R1 000 000 is exempt).
If the seller is a VAT vendor, then VAT is payable at 15% of the purchase price from 1 April 2018. As the seller is liable for payment, it is important to add the VAT to the purchase price, and to state clearly whether the agreed purchase price includes or excludes VAT. If nothing is stated, it is deemed to be inclusive of VAT, and the seller will be liable for VAT at the “tax fraction” (which equates to 13.04% of the gross price).
The transaction may be zero-rated only when an income generating entity, which is also a going concern, is sold from a VAT vendor to a VAT vendor.
Conveyancing fees – of the transferring attorney, may vary slightly according to rates set by the conveyancer who attends to the transfer, but are based on recommended fee guidelines from the law society (plus VAT).
Bond registration costs – the purchaser normally pays the transfer and bond registration costs (plus VAT).
Other costs – the bank may also charge a bond initiation fee – usually a base fee plus % of the loan amount, which is usually debited off home loan account. A homeowners insurance policy (to cover property and structures on it against natural disasters), home loan protection assurance (death, disability), moving costs, and telephone and internet connection costs may also need to be taken into account.
Deeds office /registration fees – a fee which varies dependent on purchase price /value of property.
Sundry charges – may include posts and petties payable to the transferring attorney, valuation certificates – a disbursement to the local authority to obtain valuation and rates clearance certificate – which varies depending on the local authority, electronic documentation generation fee costs, e-VAULT fees, deeds office search fees, a home‑owners consent fee, FICA costs, and a transactional billing fee.
Occupational rental – where the buyer takes occupation before registration of transfer of the property takes place, occupational rental is payable as per agreement and usually prior to and adjusted on registration of transfer.
TYPICAL COSTS OF SELLING
Estate agent’s commission – Commission rates are calculated as a % of the gross purchase price and should be negotiated upfront with the agent. Sellers need to establish very clearly what commission an agent proposes to charge before awarding a mandate and to ensure that the % agreed upon after any negotiation is written into the mandate document (where applicable) and establish whether such % includes VAT.
Beetle inspection, electrical inspection, plumbing and gas certificates – the seller will be responsible for any repairs required before such a clearance certificate can be issued. The beetle inspection certificate may be required by inclusion in the contract of sale (KZN and Cape Provinces). The electrical inspection certificate is required to be obtained by the seller in terms of legislation – the Occupational Health and Safety Act (85 of 1993) – all provinces.
Bond cancellation fees – to cancel an existing bond. Sellers should be aware that they need to give their financial institution 90 days notice of their intent to sell and in turn cancel their bond finance to avoid early termination penalties.
Rates and taxes – the seller is normally liable to pay rates and taxes and utilities (levied by the local authority) up to the date of transfer. This may involve paying a 60 days rates in advance (Cape Town), payable to obtain clearance before registration of transfer (can vary from agreement to agreement). The seller may then claim a refund from council for any amount overpaid, covering the period after registration of transfer.
Electrical System Fence Certificate – Usually this will be provided for in sale agreements concluded after 1 October 2012, which in most cases, will require the seller to bear the cost of ensuring compliance with specifications, together with the cost of obtaining the compliance certificate.
