What is the difference between transfer costs, transfer duty and bond costs?

To avoid causing any unnecessary stress when purchasing a home, it can be useful to understand the various costs you will incur above and beyond the asking price. As a rule of thumb, buyers should allow for between 8% and 10% of the purchase price to cover the additional costs, which will include bond registration fees, transfer duty, transfer costs, and other legal fees.

To help clear up the confusion, we clarify what each of the costs is and how buyers can budget for each of them.

Transfer costs

Transfer fees are paid to a transferring attorney, who is appointed by the seller to transfer ownership of the property to the buyer. These costs are payable by the buyer and will vary, depending on the property purchase price. It will also consist of the conveyancer’s fees, such as postage and petties, plus VAT. Usually, the attorneys will provide the buyer with a breakdown of their costs at the inception of a transaction in the form of a proforma account.

Transfer duty

Transfer duty is a tax levied on the sale of a fixed property acquired by any person by way of a transaction or in any other way. These costs are payable by the buyer to the SA Revenue Service (SARS) when the property is transferred from the existing owner to the new owner. This will normally be done by a Conveyancer, who acts on your behalf. Transfer costs vary depending on the purchase price.

It is important to note that transfer duty is not always applicable. For example, it is not charged on a property that cost less than R1 100 000 as of 1st March 2023. A newlywed spouse who is married in community of property will also automatically become the co-owner of their spouse’s property without paying the transfer duty. Similarly, if a property is awarded to a spouse in a divorce, transfer duty does not apply. Beneficiaries are also exempt from paying transfer duty on property they inherited from a deceased estate.

For those relying on the sale of their previous home to cover this expense, it should be noted that transfer duty must be paid no later than 6 months from the date of conclusion of the deed of sale.

Bond Costs

To set up the bond on a property, buyers will also have to cover a few additional costs upfront. These include a bond registration cost, bond deeds office fees, post, petties FICA, and a Bank initiation fee.