What is occupational rent and how is it calculated?

What is occupational rent?

Also called occupational interest, occupational rent is most simply understood as the financial compensation for occupying a property that you do not own – either because, as the buyer, you’ve moved in before the transfer and registration has been finalised or because, as the seller, you continue to occupy the property after the sales transaction is completed.

It protects both the Seller and Purchaser by providing certainty and fairness in cases where the property transfer does not go completely as planned or when an earlier or later occupation date is agreed.

How is it calculated?

The amount is generally agreed upon in the agreement of sale and is usually equal to the amount the property can be rented out for (market-related value). In most cases, this will equal about 1% of the purchase price. The rates and taxes for the property remains the responsibility of the registered owner, unless the contract stipulates otherwise. Similarly, utility charges such as electricity, water and levies, can be negotiated by the parties in the contract.