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FOREIGN BUYERS (NON RESIDENT)
All information regarding the financial aspects of property purchase is based on current rules and regulations and is subject to change at any time. Please consult with the forex department of your local bank for details.
Exchange control in respect of the purchase of property in South Africa by contract workers
Nationals of other countries who are temporarily resident in South Africa on secondment to a local entity or who are recruited under a definite contract and for a specific period are regarded as residents of South Africa for the duration of their contract or secondment. Such persons must, however, declare the following to the South African Reserve Bank:
Whether they previously resided in South Africa and if so, furnish the name of the Authorised Dealer (Bank) who dealt with their emigration formalities. Whether they own foreign assets and if so, give a written declaration to the effect that they will not place such foreign assets at the disposal of any third party normally resident in South Africa. The foreign national's local bankers will forward these statements, together with a letter from the employer giving particulars of earnings and confirming employment on contract or secondment, to the South African Reserve Bank.
On completion of these formalities the foreign national may then enjoy all facilities available to residents of the Republic which includes a mortgage / bond for the purchase of a residential property. Such mortgage / bond is not restricted and depending on the standing of the client can be 100% of the purchase price of the property. The granting of any borrowing facility is subject to the approval of the lending manager in the Branch where the foreign national holds his / her account.
Exchange control in respect of the purchase of residential property in South Africa by new immigrants
Immigrants to the Republic of South Africa are required, on arrival, to complete a Form MP335a, which form incorporates a Declaration of Foreign Assets and Liabilities. This document together with a copy of the immigrant's permanent residence permit is forwarded to the Exchange Control Department of the South African Reserve Bank. Thereafter within the first five years of residence the immigrant is permitted to dispose of or otherwise invest his / her foreign assets including foreign cash funds held by him / her on the date of his / her arrival in the Republic without interference from the South African Reserve Bank.
Immigrants may purchase residential property utilising a bond facility without restriction and depending on the standing of the client such bond could be 100% of the purchase price of the property. The granting of the bond facility is subject to the approval of the lending manager in the Branch where the client's account is held.
Should an immigrant decide to leave the Republic permanently within five years he / she may, under advise to the South African Reserve Bank, re-transfer abroad all assets introduced during the five year period provided that such transfers are not financed out of local borrowing facilities. Should the immigrant, an sale of the property, have funds in excess of the sum introduced into the Republic a special request would have to be submitted to the South African Reserve Bank for permission to export these funds.
Exchange control in respect of the purchase of residential property in South Africa by non-residents
A Non-resident of South Africa is a person (i.e. a natural person or legal entity) whose normal place of residence, domicile or registration is outside the Common monetary Area. The Common Monetary Area consists of South Africa, Lesotho, Namibia and Swaziland.
Non-residents may purchase property in South Africa but they may not be granted any financial assistance e.g. a bank loan for the full purchase price. The non-resident is allowed to apply to the South African Reserve Bank, via his local bank, for a bank loan facility not exceeding 100% of his / her "Borrowing Base".
The "Borrowing Base" of a non-resident individual is the sum introduced into South Africa to fund the property purchase. For example : purchase of property at 2 million Rand. The non-resident introduces an amount from outside South Africa of 1 million Rand and may apply to borrow locally the amount of 1 million Rand. On receipt of the South Africa Reserve Bank approval for the non-resident to utilise bond facilities it is necessary for the non-resident client to open a non-resident account in South Africa to facilitate the bond repayments. This account would have to be funded from abroad or from rentals received on the property purchased subject to the Bank / Branch holding the account being provided with a copy of the rental agreement.
Non-residents purchasing residential property without utilising bond facilities are advised to ensure that the title deed is endorsed "non-resident" to ensure that when the property is sold there will be no delay in transfer of the sale proceeds abroad.
Rental income for non-residents is transferable provided the authorities are supplied with a copy of the rental agreement and a letter from an independent estate agent confirming the rental as market related.
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