skip to Main Content
Can Foreigners Buy Property In South Africa?

Can Foreigners Buy Property In South Africa?

So you have decided to purchase property in South Africa; well done! That’s an excellent decision.

Did you know that when you purchase immovable property in South Africa, you are actually buying the land and everything built on the land? Except when you purchase a property in a Sectional Title Scheme, but that’s a story for another article. 

In this article, we provide you with a brief overview of what a non-resident may expect when purchasing land in South Africa.

Our country has one of the best Deeds Registry systems in the world. Because of its strict processes, transparency and accuracy – fraudulent transactions are minimised. 

Purchasing immovable property as a foreign national in South Africa is similar to buying immovable property as a South African national. You will only be disqualified from owning property in South Africa if you are here illegally. 

Our Common Law governs the purchase and sale of property in South Africa.

In terms of our Common Law, any person (foreign/ South African) with full legal capacity may enter into contracts in South Africa without any restriction. In fact, foreign nationals enter into contracts on a daily basis in SA. 

Example:  A foreign tourist who books accommodation or a flight, or purchasing a souvenir, purchasing a car, or an offshore company wishing to conduct business in South Africa and entering into a contract for the purchase of South African goods. 

If a foreigner (i.e. non-resident) wishes to make an offer on a property, a standard sale agreement for the purchase and sale of immovable property may be used. The agreement will be binding and valid, provided that the non-resident has full legal capacity to conclude such a contract. 

Wait A Minute, What Does Legal Capacity Mean?

One of the requirements for the conclusion of a valid contract, is that the parties to the contract must have legal capacity to enter into the contract. 

There are a number of factors that affect a person’s legal capacity to conclude a contract, such as age, mental state and marital status. 

A person under the age of 18 may not enter into a contract for the sale and purchase of land without the consent/ and or assistance of their legal guardian. Likewise, a mentally impaired person may not purchase immovable property unless their curator does so on their behalf. 

The legal capacity of married persons to enter into contracts is governed by the Matrimonial Property Act. 

However, the Act does not apply to foreign marriages, and the legal regime that determines the legal capacity of such persons to conclude contracts for the sale of land, are the laws of the husband’s domicile (living) at the time of their marriage. 

Our courts and Deeds Office cannot take cognisance of and apply foreign law automatically, as they would South African law.

Therefore, the Deeds Office will not accept documentation signed by a married person in terms of foreign law. Unless that person’s spouse had consented to such a sale and was party to the transaction, you better keep that spouse happy! 

Hooray! I’ve signed the sale agreement; this means I own a property in South Africa, Whoop, Whoop! 

Relax Susan!

The fact that you have signed and entered into a valid and binding sale agreement, does not mean that you own the land, nor does it mean that the bank will automatically grant you a loan to secure the purchase price, darn it!  

In order for you to become the registered owner of the land, registration of transfer of the land must take place at the Deeds Office, and in the case of a mortgage bond, to secure the purchase price of the said land, a mortgage bond needs to be registered over the property simultaneously with the transfer of ownership of the land. 

Concerning foreign marriages, both spouses are required to sign all transfer and bond documents to be registered at the Deeds Office. 

However, where a foreigner purchases a property for cash, then the assistance of the other spouse is not required. 

Estate agents are advised to obtain the signature of both spouses in the event of a foreign marriage. This should apply regardless of whether or not the person is a resident or non-resident. 

Advice: Make enquiries with your foreign buyer and establish upfront if you are going to run into any problems; if so, your foreign buyer may purchase the property through a South African registered company in which spousal consent may not be required.

But what if I’m not in South Africa? How will I sign the documents? 

You would think that in 2022, you’d be able to do a Zoom/Skype video call with the conveyancer and courier the documents to South Africa; hahaha, wouldn’t that be nice.

Unfortunately, South African law has not kept up with technology, and sadly the process is a bit more complex.

In the event that you as a foreigner, or your spouse, or both of you are not in South Africa at the time when transfer and bond documents are required to be signed, the documents may be signed abroad, provided the signatures on such documents are sufficiently authenticated for use in South Africa. Told you, complex.

The authentication of the signatures will depend on in which country the documents are being signed, and whether or not that county is party to the Hague Apostille Convention, the what now?

It’s actually called The Hague Convention Abolishing the Requirement of Legalisation for Foreign Public Documents, which is an international treaty to avoid a long process to authenticate signatures on a document to be used in another country that’s party to the convention. 

If the country is party to The Hague Apostille Convention, then the parties have an option to sign the documents before a Notary Public in that country, and the Notary Public will arrange for the document to be apostilled. This may be time consuming and expensive. 

However, the documents may also be signed at the South African embassy in that country irrespective of whether the country is party to the Hague Apostille Convention or not. But, sometimes the embassy is a distance away and travelling there may cost more than signing the documents with a Notary. 

If the country is not a party to the Hague Apostille Convention, the documents will have to be signed at the South African Embassy. 

It is advisable to have a Special Power of Attorney drawn up authorising someone in South Africa, to sign the bond and transfer documents on your behalf, as sometimes there may be amendments required on the documents, and instead of revisiting the Notary Public or Embassy (which will cost time and money), the authorised person may just sign on your behalf. 

So where must I get the moola to finance the transaction?

South African exchange control regulations govern how non-residents can borrow money in South Africa to fund the purchase of land. 

If you are a non-resident, who does not work in South Africa, you may not be granted finance for more than 50% of the purchase price. However, if you have a work permit, the bank has the discretion to loan you more than 50% of the Purchase Price. 

Suppose you, as a non-resident, introduce cash into South Africa with the intention to purchase a property. In that case, you may repatriate it, together with any profits made, provided that you have brought the funds through the proper channels. 

So what are the tax implications for non-residents? 

Non-residents will have to register as a South African taxpayer for purposes of capital gains tax. 

In the event of a non-resident selling a property for a purchase price of more than R 2 million, the conveyancers are obligated to withhold 5 % of the purchase price, which will be paid over to the South African Revenue services upon registration transfer. 

We hope that this article was insightful and that you are now keen and ready to invest in property in South Africa. 

Should you have any further queries, contact AMC Hunter Inc, and we will gladly assist. 

Back To Top