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Property registration costs

When purchasing property, it is important to understand the property registration costs associated to the purchase #BuildALegacy

In Build a Legacy we take an in-depth look at all costs involved in property purchases.

Below is a detailed summary of the steps, time and cost involved in registering property in South Africa. It assumes a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute.

Agency: Conveyancer’s office

A conveyancer prepares the deed of sale and drafts the transfer deed. He obtains the power of attorney, appointing him to appear before the Registrar. The service of an attorney / conveyancer is mandatory for the registration of the land. A conveyancer is an attorney who is permitted in terms of the Attorneys Act to perform specialized duties with regard to the conveyance of immovable property. The Deeds Registries Act empowers only conveyancers to prepare deeds of transfer and in doing so, assumes responsibility for certain facts set out in the deed and documents. Conveyancing fees are set by the Law Society for different property values.
Time to complete: 1 day
Associated cost: Transfer fee: ZAR 24,750 for a property of this value.
Agency: Conveyancer’s office

Obtain a rates clearance certificate from the local authority 

The transferring conveyancer obtains a rates (taxes) clearance certificate from the local authority, on behalf of the seller only if in Johannesburg. Section 118 of the Local Municipality Act states that any act of transferring property must be accompanied by a rates clearance from the local authority. However, the local authority will only check the last 24 months–this is sufficient for the transfer to legally take place. If any taxes are owed from previous years, the seller is not exonerated–the taxes will still have to be paid by either the seller or the new owner as per agreement.
Time to Complete: 1 to 2 weeks (simultaneous with procedures 3, 4 and 5)
Associated Costs: Included in Procedure 1
Agency: Municipality

The conveyancer prepares and collects all the required documentation 

The conveyancer, before lodging the documentation with the deeds registry to transfer the property to the new company, must also conduct a company search at the Companies and Intellectual Property Commission Office to ascertain the directors of both companies. All conveyancers are linked by internet to this authority and can perform the check online. Usually conveyancers will also ask clients to present them with such documents anyway. In so doing, the conveyancer will: Peruse the memorandum and articles of association of the companies to confirm the powers to acquire and alienate immovable property. The founding documents of the seller will be the Memorandum and Articles of Association. If the buyer company was formed before 1 May 2011, its Memorandum and Articles of Association will be perused. If the buyer company was formed after 1 May 2011, its Memorandum of Incorporation will be perused. Peruse the necessary resolutions. Ensure compliance with the Financial Intelligence Center Act by obtaining proof from the companies of the physical/business address and Tax/VAT registration number with the South African Revenue Services. The conveyancer will also request this information from the clients before proceeding, and the check is done automatically at the time of paying transfer duty (Procedure 3)–if a company does not have or quotes an incorrect Tax/VAT number, it will not be possible to pay transfer duty and the process will halt. Section 115 of the Companies Act 71 2008 states that a company may not dispose of all or the greater part of its assets except through a special resolution
Time to Complete: 10 days (simultaneous with Procedures 2 and 4)
Associated Costs: Included in Procedure 1
Agency: Companies and Intellectual Property Commission

Obtain an electrical compliance certificate 

This certificate is not required by the land registry. The Health and Environment Act of 1993 makes it mandatory for anyone who wants to sell anything that includes electrical wiring to have an Electrical Certificate of Compliance. It is common practice for the seller to obtain in. However, there will always be a clause in the sale agreement that refers to the Act, who should obtain it and who bears the cost.
Time to Complete: 1 week
Associated Costs: ZAR 1000- 1500
Agency: Certified electrician

Obtain a transfer duty receipt from the South African Revenue Services 

The transferring conveyancer obtains a transfer duty receipt/exemption certificate from the South African Revenue Services. As of 23 February 2011, the distinction drawn in calculating transfer duties in respect of legal entities and natural persons has been abolished. Both legal entities and natural persons now pay transfer duty based on the sliding scale. The scale has also been amended as follows: ZAR 0 – ZAR 600, 000.00: Exempt ZAR 600,001.00 – ZAR 1. 000,000.00: 3% ZAR 1.000,00 1.00 – ZAR 1.500,000.00: 5% ZAR 1.500,001.00 and above: 8%.
Time to Complete: less than a day online procedure(simultaneous with Procedures 3 and 4)
Associated Costs: Value of property (Rand): Rate 0 – 600,000: 0% 600,001 – 1.000,000: 3% of the value above R600,000, but less than R1.000,000 1.000,001 – 1.500,000: R12,000 + 5% of the value above R1.000,000 but less than R1.500,000 1.500,001 and above: R37,000 + 8% of the
Agency: South African Revenue Services

Parties sign all the documentation at the conveyancer’s office

The conveyancer will have all documentation signed by seller and purchaser and obtain guarantees for purchase price. The documents to be signed by the parties are as follows: 1. Seller 1.1 Power of attorney to pass 1.2 Transfer duty declarations 1.3 Affidavits (Solvency; FICA) 2. Purchaser 2.1 Transfer duty declarations 2.2 Affidavits (Solvency; FICA)
Time to Complete: 1 day
Associated Costs: Included in Procedure 1
Agency: Conveyancer’s office

The conveyancer lodges the deed at the Deeds Registry

The conveyancer lodges the deed at the Deeds Registry. The Registrar compares the draft deed with data in the register. There are two examinations at different levels. The standards are monitored and the deed is prepared for registration and execution. The Registrar executes the deed, updates the register and archives a copy. The registration fee depends on the value of the property.
Time to Complete: 6-14 days
Associated Costs: Cost last year: As of 2 May 2013, the Deeds Office fees have increased, as set out in the Government Gazette of 2 April 2013 (No.9938 Notice No. 241). A number of changes have been made to the Schedule of Fees of Office as prescribed in regulation 84 and
Agency: Deeds Registry

Source: www.doingbusiness.org


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