The true cost of buying a house in South Africa

Article summary

• Knowing the true cost of buying a home will enable you to budget appropriately.
• Other than the cost of the home itself, the biggest costs associated with buying a property are the bond registration and transfer costs, which are unavoidable.
• Additional expenses you should prepare for include moving costs, repairs and maintenance, rates and levies, and security costs.

Wouldn’t it be lovely if the price tag on your new home was all you had to pay? In reality, there are several hidden and not-so-hidden costs associated with buying property. Here are some of the major expenses, to help you prepare.

Note Whether it’s the hidden costs of buying a house or the obvious costs such as the payment of a home loan, you can use our Home Loan Calculators to determine what you will have to pay on the home loan, transfer costs, and more.

The cost of buying a house: 7 Expenses you should prepare for

Be prepared for these additional expenses so you can factor them into your budget:

1. Bond registration and transfer costs.
2. Moving costs.
3. Repairs and maintenance.
4. Utilities.
5. Rates and levies.
6. Security.
7. Home Insurance.

1. Bond registration and transfer costs

These are the biggest costs that home buyers must be aware of and budget for. They are also unavoidable.

• Bond registration fees are paid to the attorney who registers the bond in the buyer’s name. This attorney is appointed by the bank.
• Transfer costs are paid to the conveyancing attorney who transfers the bond from the seller to the buyer. The conveyancing attorney is appointed by the seller.
• Transfer duty is a tax on the transfer of property. Properties worth under R1 100 000 are exempt from transfer duty.

All these costs are dependent on the value of the property. The higher the value, the higher the fee.

Use our Transfer Cost Calculator to determine what you will pay for bond registration, transfer of property, and transfer duty.

2. Moving costs

You’ve bought the place; now you’re going to have to move in.

• Depending on where you’ve been living, and how much furniture you already own, you might have to hire a moving company to get you into your new home.
• It is advisable to obtain a couple of quotes to compare the costs and determine the insurance cover provided for your possessions whilst in transit.
• The costs can be anywhere between R5 000 and R15 000 in the same city, but most companies offer a discount if you move in the week and in the middle of the month, when demand is lower.

3. Repairs and maintenance

• You should include a requirement in the Offer to Purchase that the home seller fix any patent defects (defects that are easily revealed by a home inspection).
• However, you may still have to spend on fixing latent defects; defects that only become evident after the property is bought. The seller is not obligated to fix latent defects.
• Even after the seller has fixed patent defects, you’ll probably still have to do some cleaning, repainting, and other miscellaneous repairs.

4. Utilities

• If you are buying a freehold property (not a sectional title), you will need to register for your water and electricity connection, and your telephone and internet lines if you need those.
• These costs vary from area to area, and the internet fee will depend on the type of connection that you want, and whether the relevant lines are already installed.
• Generally speaking, put aside around R1 000 to R3 000 for connecting the electricity, water, and telephone.

5. Rates and levies

• If you have purchased a freehold property, you will have to pay rates and taxes, which can be anywhere from a couple of hundred to a few thousand rand per month, depending on the value of your property and the area.
• Rates cover sewerage usage and garbage removal, while your taxes are calculated against the value of your property.
• The estate agent should have included these rates in the information about the property when you were house hunting, but if you need to find out, you can ask the municipality representative when you register for water and electricity.
• These rates will stay the same every month.
• If you have bought into a sectional title, the apartment block’s body corporate will have set a levy to pay every month for the general upkeep of the buildings.
• Some suburbs have additional levies that are charged for a street security guard or boom operator.

6. Security

• When buying a new home, it’s a good idea to assess the security of the other houses in the area.
• Find out about the crime rates from the local police station, and then update your own security accordingly.
• You’ll have to budget for a monthly armed response fee as well.

7. Home Insurance

• Your bank will insist that you have Home Insurance in place to cover any structural damage to the property.
• Your possessions are not covered by this insurance, so it’s a good idea to explore the costs of an additional policy to cover you for theft.
• ooba Home Loans offer a range of insurance packages along with our home loan comparison services.

Know what you can afford

Knowing the true cost of buying a home helps you budget accordingly, and what will help you, even more, is knowing what home you can afford in the first place.

You can determine this by getting prequalified with ooba Home Loans. This will assess your financial status and tell you what you can afford on a home loan, so you can house hunt with confidence.

You can get prequalified by contacting an expert at ooba Home Loans or by using our free, online prequalification tool, the Bond Indicator.