South African Properties for Foreign Buyers

We need to confess to a guilty pleasure.

We binge watch Listing Cape Town. A lot.

There is something so gratifying about watching a celeb or wealthy investor (from the shores of Paris as an example) roam through the halls of palatial mansions or sophisticated penthouses in sought-after areas. With asking prices (especially in the Western Cape) ranging from R15 million to R280 million you can only imagine what it would be like to have sundowners on that deck. Or a bubble bath in that tub. All overlooking the exquisite Atlantic Seaboard.

It’s what dreams are made of.

For the average South African, the only way we get to see these incredible properties is because of shows like this. So yes, we binge watch them.

The reality of course – according to Businesstech – is this:

“International buyers are significant contributors to the activity in the highest-priced property range in South Africa, particularly in Cape Town’s Atlantic Seaboard, where an estimated 20% of all luxury property transactions are sales to foreign buyers”.

The effect of this? Due to high demand for properties in the Western Cape (and elsewhere), property prices continue to rise pushing the affordability of certain areas out of the reach of the everyday South African.

And while we don’t mind foreign investment – it certainly does help our GDP – it sometimes gets our backs up. Why? Because (at least on the face of it), properties we would like to be living in (or dream to be living in) are continuously being snapped up by foreign buyers – they have the money. And those homes are forever out of our reach.

Kuda FX foreign exchange for property

But are foreigners allowed to purchase property in South Africa?

Before we get our heads in a spin, we should be asking the right questions.

Firstly, are South Africans entitled to purchase property in South Africa? And if so, how do they go about doing it?

The short answer to the first part of the question – yes, they are.

Foreigners are entitled to purchase property in South Africa whether it’s in their own names or jointly in undivided shares with other parties or via juristic entities such as companies or trusts. Provided of course, that they comply with the legal requirements and formalities as set out in the Immigration Act 13 of 2002 and the Protection of Investment Act 22 of 2015.  

Part of these requirements and formalities include –

  • There is a ‘non-resident’ endorsement on the property’s title deed. If the owner sells, they may repatriate all funds introduced from outside South Africa to acquire fixed property in the country and any profit from the sale.
  • Suppose the South African Reserve Bank (SARB) approves foreign loans to fund a land purchase via a corporate entity, the entity will be in a position to repay the foreign loan plus any interest if interest was being charged on the loan. Any profit will result in a dividend being declared to its shareholders.
  • Loans by a South African bank to non-residents are subject to foreign exchange approval from the Reserve Bank. Authorised Dealers may grant or authorise local financial assistance facilities to non-residents in respect of bona fide foreign direct investment in South Africa without restrictions, except where the funds are required for financial transactions and/or the acquisition of residential or commercial property in South Africa, the 1:1 ratio will apply.
  • Non-residents who have brought funds into South Africa over several years may borrow up to 100% of the total funds invested in the country. Provided they have introduced 100% of the purchase price. Any facility being made available to a non-resident party must be secured by an unencumbered Rand deposit or Rand-based asset of equal or higher value. In addition, any facility accorded to the non-resident in respect of the aforementioned may not cause the borrower to exceed 100 percent of the Rand value of funds introduced from abroad and invested locally. (Bregman Moodley Attorneys)

It’s important to note that the above does not apply to the leasing or selling of property to illegal immigrants or foreigners.

So, we have answered the first part of the question. Now for the second…

How do foreigners go about purchasing property in South Africa?

At Kuda FX we pride ourselves on the fact that we provide a truly personalised service tailored to the specific needs of our clients. This includes the purchase of property whilst you are abroad. You will have a direct line to your Relationship Manager and quickly get to know the support team and dealing desk. What’s more is – our support is ongoing throughout the process of the property purchase.

And because we specialise in international money transfers, we have streamlined processes in place. Our dealing desk can facilitate quick and efficient transfers of funds from the buyer’s home country to South Africa, ensuring timely completion of the property purchase transaction.

We never leave you hanging.

In addition, we provide support and guidance when foreigners open bank accounts within South Africa. This is allowed of course. In fact, foreigners can open a bank account without physically being in South Africa. A client can open a non-resident account from anywhere in the world.

This – of course – makes the transfer of funds between a home country and South Africa, a seamless transaction. As it should be.

But that’s not all. At Kuda FX we ensure –

  1. Compliance with Regulatory Requirements – foreign currency transactions involve compliance with regulations imposed by the SARB. We have years of experience in navigating these regulatory frameworks and can ensure that the necessary documentation and reporting requirements are met, reducing the risk of complications or delays.
  2. Currency Risk Management – purchasing property in a foreign country involves exposure to currency fluctuations. We can provide tools and strategies to manage currency risks effectively. Such as forward contracts or options to lock in exchange rates for future transactions, allowing buyers to budget and plan with greater certainty.
  3. Cost Savings – along with currency risk management, our transaction fees are proven to be much more affordable than the banks. This helps clients save money during their property purchase processes. We understand how slight differences in the exchange rate can make a big impact on final costs.

Just because you’re not physically in South Africa, doesn’t mean we cannot enable you to purchase the holiday home of your dreams.

With all the above in mind, we encourage you to get in touch with a Kuda FX professional, like our team at Kuda FX who would be happy to explain the above concepts in further detail or provide any other assistance you may require with your needs.

In fact, if you have any queries on the information we have set out above, please feel free to get in touch with us.

At Kuda FX, we are always in your corner!

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