Property & Wealth

The South African Property Market

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In the light of uncertainty caused by recent comments and the policy initiatives of certain members of government concerning real estate in South Africa, The Intelligence Bulletin is introducing a monthly column on property matters to keep our readers abreast of developments in this important sector of the economy.

This first instalment is intended to serve as a scene-setter.

By way of introduction, it is generally accepted that there are three primary types of property:

  • Movable property, which forms the vast majority of our possessions, ranging from barrels of wine and the cars we drive to the wax effigies in museums;
  • Fixed or immovable property, which is the land and all the rights attached to it; and
  • Intellectual property, which covers copyright, patents and the protection of original ideas.

Fixed property in South Africa does have its complications

Our focus is on fixed property or real estate which, broadly speaking, includes the land, together with the vegetation on and the minerals below it; the zoned airspace above it; all construction with foundations and, additionally, that form of property ownership defined by the Sectional Title Act.

In 1994 South Africa become a constitutional democracy and the constitution of the Republic of South Africa essentially guarantees that anyone, including foreigners, can own residential property.

Uncertainties

Bear in mind that it is estimated that between 17 and 20 million South Africans live on communal land, and when dealing with the rural areas of especially the erstwhile black ‘homelands’, where traditional leaders still play a significant role, the situation becomes a lot more complicated.

This ‘communal land’ is often the subject of controversy, as is the present case with the government introducing the controversial Regulation of Land Holdings Bill which, among other things, seeks to restrict the size of farming units and to limit the right of foreigners to own agricultural land.

Industry players have been quick to describe this Bill as an attack on property rights and several institutions are geared up to challenge the government, where needed, to ensure the continued stability of land ownership in SA.

Foreigners

Foreigners, in particular, are also obliged to comply with the exchange control requirements as prescribed from time to time by the SA Reserve Bank.

For instance, an Egyptian visiting SA for the first time, can buy a cottage on the coast in Cape Town for cash by signing the contract and depositing the agreed purchase consideration with the seller’s conveyancer and by fulfilling all the other matters of legal compliance.

However, should that visitor require a home loan by way of finance, the transaction immediately becomes more complex and the buyer will, additionally, be obliged to overcome the currency restraints imposed by the Reserve Bank.

The existing situation is stable

Nevertheless, all uncertainty put to one side, it must be emphasised that South Africa has an extremely sophisticated system of land registration, and foreigners have the security that the ownership of what they purchase is recorded on the title deed of the property in the Deeds Office by the Registrar of Deeds.

The crux, though, is that while anyone can buy a home in SA, or a farm for that matter, the future landscape for the ownership of fixed property is one beset by uncertainties, which the government should resolve without delay.

                                                                                                                                                                                   by Rod van Basten

Rod van Basten is the pseudonym of an ex-lawyer who, after spending some time in the publishing world, is now involved in the property market.

(Editor: This article is a commentary and is not intended as legal advice. Readers are advised to consult the relevant professional people before making any decisions to buy property in SA.)

Also read: Don't love property too much



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