This article aims to assist foreigners or non-residents of South Africa to determine whether they can buy and invest in the real estate market of South Africa and what is to be expected before and during a property transaction.

  • South Africa has one of the most comprehensive property registration systems in the world and at present there are no legal restrictions on non-residents buying property in South Africa. The only constraint would be in the case of illegal immigrants. When a person lives in South Africa without the necessary documentation and authority, they are disqualified from owning property in South Africa.
  • The Minister of Rural Development and Land Reform however published a Regulation of Agricultural Land Holdings Bill (“the Bill’) which disqualifies non-residents from acquiring agricultural land (farmland) in South Africa. The Bill has however only been published for comments and is not yet enforceable. The Bill may in the future impose some limitations on foreign ownership of agricultural land.
  • The acquisition by a non-resident of residential and commercial properties remains unaffected for now as well as for the foreseeable future.
  • It is possible for a non-resident to acquire property in his/her personal capacity or through a foreign company or trust, provided that such foreign entity is registered in South Africa as an external company as set out in Section 23 of the Companies Act, 71 of 2008, and if the shares in the entity are owned by a non-resident, to appoint a public officer who is a South African resident. The decision regarding the capacity in which the non-resident acquires the property (personal capacity or through a foreign company or trust) remains his/her prerogative, as non-residents have the same freedom to choose the way in which they wish to acquire property as South African nationals have.
  • South African legislation requires a written Agreement of Sale to transfer property, which agreement becomes legal and binding once it is signed. In the case of a non-resident not being present in South Africa, such non-resident may sign the Agreement of Sale in the country he/she resides in before a Notary Public or at a South African embassy, depending on the foreign country and legislation pertaining to that specific country. However, the easiest and most cost-effective way would be to appoint a representative in South Africa and to provide him/her with a Special Power of Attorney to sign the Agreement of Sale and further transfer documents on the non-resident’s behalf. Such Special Power of Attorney is usually given to the attorneys attending to the transfer of the property.
  • When a non-resident transfers funds from a foreign source into a South African bank account, which with the purchase of property will usually be the transferring attorneys’ trust account, the bank will issue a document known as a “Deal Receipt”, which will be required if the non-resident ever wishes to repatriate the funds and any profit due on the resale of the property.
  • If a non-resident requires financing from a local bank and he/she is not in possession of a valid work permit, he/she is only allowed to borrow an amount equal to the amount of money he/she is bringing into the country to finance a property transaction. However, banks will only finance non-residents up to 50% of the purchase price. This means that a non-resident must provide a deposit of 50% of the purchase price in cash, which can be cash generated in South Africa or from offshore funding.
  • Non-residents who have valid work permits in South Africa may be granted bonds of more than 50% of the purchase price, but this will still depend on each bank’s own criteria.
  • All purchasers, whether non-residents or South African residents are liable for transfer duty on a property transaction where the purchase price exceeds R1 million, as at the current rate. Properties purchased from developers attract Value Added Tax (“VAT”), although the VAT amount will usually already be included in the purchase price. The Purchaser will further be liable for transfer costs and, where applicable, bond registration costs.
  • All non-residents are required to register as South African taxpayers for their capital gains tax obligations and are liable to pay capital gains tax on the disposal of immovable property in South Africa, including any right or interest in immovable property.
  • The sale will also be subject to a withholding tax of a certain percentage on the proceeds of the sale should the property be sold for more than R2 million. However, upon consultation with a legal expert, this can be avoided if the South African Revenue Service is approached before transfer to obtain a capital gains tax directive to only withhold the capital gain amount.
  • A non-resident is not generally subject to income tax in South Africa, save for capital gains tax as mentioned above. This means that a non-resident that sells immovable property in South Africa can transfer the funds out of the country and the local tax laws of their country of residence will apply.
  • The property market in South Africa can be described as a “buyer’s market” and has recently shown signs of a rise due to an increase in affordability and decrease in interest rates, which has resulted in an increase of foreign investment. One of the major South African banks confirmed that up to 2.6% of the second quarter of 2020 was made up of foreign buyers and that the number is expected to increase in 2021.
  • Even though the process might seem simple, a non-resident buyer should still seek expert advice from an attorney specializing in property matters for assistance throughout the process of purchasing property, to avoid unnecessary delays and move the process along swiftly and smoothly.

The content of this article is to provide general guidance and understanding on the subject matter and should not be construed as providing full legal advice on the topic. Detailed specialist advice should be sought for specific situations.


Lisa Radyn



Property and Commercial Law


Phone: 012 361 9823