You Don’t Need to Be a Citizen to Invest in SA Property
Investing in property in South Africa as a non-resident is simpler than you might think. Not only is it straightforward, but it’s also a solid investment opportunity. Property values in South Africa have a history of growth, making it a stable asset.
South Africa’s property market is well-regulated and financed, providing a secure investment environment. Whether you're looking for a rental property or a holiday home, investing in South Africa is a wise choice.
Who Can Buy Property in South Africa?
Buying property in South Africa is legally accessible to non-residents. You’ll have the same rights as South African citizens when purchasing property, though your status as a non-resident won’t change. You’ll still need a visa for working or holidaying in South Africa.
If you rent out your property, you’ll be liable for income tax as a non-resident and capital gains tax (CGT) if you sell the property.
Financial Considerations for Non-Residents
If you need a home loan, there are additional factors to consider. Affordability is key, but the size of the loan depends on your status as a non-South African. Here’s the breakdown:
Foreign Nationals:
• Non-South African citizens living and working in South Africa.
• Eligible for home loans up to 75% of the property value, potentially more with a suitable motivation.
Bona Fide Non-Residents:
• Foreign citizens not living or working in South Africa.
• Can buy property without visiting South Africa.
• Eligible for loans up to 50% of the property value, with the other 50% paid in cash.
Understanding Affordability
Banks use a 1:1 ratio to assess affordability.
This means you must deposit foreign funds equal to the loan amount into a South African bank account or use a rand-based asset as collateral. The bank will compare your rand income to your South African debt commitments and expenses.
For non-residents paid in foreign currency, the bank considers your income after debt repayments and expenses, accounting for currency fluctuations. A deposit of 50% of the asking price is typically required.
However, favourable exchange rates may allow non-South Africans with investments in dollars, euros, or pounds to buy property outright. For example, if you can buy a R4 million property in cash, you could bond it for R2 million and use that to purchase another property, totalling R6 million in investment property with only a R2 million loan.
The Benefits of Local Financing
Raising finance in local currency simplifies transactions, avoiding currency conversion hassles and fees. Rent can be paid into a local account, covering local expenses and loan instalments.
The Buying Process
The process for non-residents is like that for citizens, with some exceptions. If you’re not in South Africa, transactions will be through proxies or intermediaries. If you’re married, your spouse must sign all documents.
Start your journey with an online property search here, then find a reputable real estate agent to assist you. A good agent can significantly reduce stress, especially if you're not present in South Africa.
Open a non-resident transactional account to manage your funds and facilitate your property purchase.
Click here to process your online home loan application, ensuring a quicker, smoother process and potentially better loan terms.
How to Apply
Ready to invest? Contact us here to start your property investment journey in South Africa.
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