The short answer is yes. Foreign buyers, whether they are natural persons or legal entities registered outside the country, can buy property in South Africa. Of course, they must comply with local legislation. For example, a foreign company or trust will be required to register locally according to the requirements set out in the Companies Act.
Properties may be sold to permanent resident holders who are non-citizens and to refugees with a permanent residence permit after they’ve lived in South Africa for five continuous years. But selling or letting property to illegal foreigners is, well, illegal.
It needs to be clear whether a property is purchased for investment or whether the foreign national wants to stay in the property for a longer period. Often foreigners buy holiday homes where they stay for a few months and rent the property out as holiday accommodation for the rest of the year. Then they might need a visa or residence permit. The requirements are set out in the Immigration Act 13 of 2002.
You don’t have to be in South Africa to buy a house. Non-residents can view a property on the internet and complete the transaction without ever setting foot in the country. Depending on the country of signature, the purchaser will need to have documents signed before a notary public or at a South African embassy. In some instances, the documents may have to be apostilled.
Exchange control regulations state that foreigners may only borrow up to 50% of the purchase price of a property locally. The balance must be paid in cash and may well be sourced from an international bank. The amount and purpose of foreign funds brought into South Africa must be reported to the Financial Surveillance Department of the South African Reserve Bank, which regulates and monitors cross-border transactions.
Foreign nationals who bought a holiday home and receive rental income will be liable for tax as a non-resident, and they’ll have to pay capital gains tax when they sell the property. Upon the sale of a property, the proceeds up to the amount that was introduced from a foreign source, plus the capital growth and interest, can be repatriated.
Don’t buy before you’ve received legal advice
If you’re a foreign national, consult a local conveyancing law firm that understands the regulatory requirements and has experience in assisting foreign nationals in purchasing property in South Africa before you sign the sales agreement.