The additional costs of buying and selling property
Category Property news
Whether you’re buying or selling a property, there are always additional costs to be considered, says Mike Greeff, CEO of Greeff Christie’s International Real Estate. “It’s important to factor such costs into your calculations prior to concluding any transactions in order to avoid nasty or unaffordable surprises,” adds Greeff.
Sellers are liable for a number of costs – these include: estate agent’s commission and possible Capital Gains Tax. A seller is also liable for the cost of bond cancellation. “Even if your bond has a zero balance, it will still incur a cancellation fee of around R3000 to R3500,” says Greeff.
He adds that it is also important to provide the bank with three-months written notice of cancellation or penalties will be charged. Sellers must also ensure that rates and services bills are paid up and all arrears are settled. There is also a requirement for a 120-days-in-advance payment. “Levy amounts owing to body corporates or home-owner’s associations must also be settled by the seller,” explains Greeff.
Compliancy certificates are a cost all sellers will incur. “Ensuring that the electrical, plumbing and gas installations in the property you’re planning to sell are in order, can be a costly, but this is a vital step in the selling process,” says Greeff, adding that a beetle inspection is also required.
“Should an inspection reveal faults or non-compliancy, apart from the cost of the inspection, the seller must pay for the requisite adjustments and repairs to bring the property up to a compliant level.”
The seller is obliged to provide the purchaser with a certified copy of the title deed. If this has been lost, then the seller must pay for a replacement. The current cost is R2057 for a single deed.
“If a seller has agreed to make certain repairs, particularly if such undertakings appear in the contract, then he or she is liable for the costs of those repairs,” says Greeff.
The purchaser’s costs might include Transfer Duty, unless the seller is VAT registered and the sale is deemed to be part of the seller’s VATable enterprise. In the contract, the purchase price will be recorded as either including or excluding VAT.
“There may be a cost associated with obtaining a home-owner’s association consent to transfer, and this cost could be for the purchaser’s account,”says Greeff. Services may have been paid up by the seller, however, the purchaser will have to foot the bill for a rates clearance certificate, and in the case of a sectional title transfer, the cost of a levy clearance certificate. If the purchaser is making use of a home loan, then there will be a cost to register the bond.
“The purchaser will also bear the costs of any additional contracts such as a tripartite agreement, if applicable,” says Greeff. He adds that should the purchaser intend to renovate or subdivide, there will be a cost related to a conveyancer’s certificate with regard to Title Restrictions.
In the case of the plans, purchasers should try to ensure that the seller gives an undertaking to deliver copies of approved plans for the property. This should be noted in the agreement, or the costs could be for the purchaser’s account.
“Finally, the purchaser should be aware of the potential to have to incur the costs of occupational rental, which the seller may charge if the purchaser moves in before transfer.
Author: Greeff Properties
