Trevor Manuel’ tenth budget speech is expected to be a boost to the local property market. In he’s speech yesterday; Manuel announced that property costs are being slashed significantly.
Previously Transfer Duty costs on a R500 000 home could be as much as R20 000. These and other home loan registration costs have been a major obstacle for first-time home buyers and lower income earners.
As from the March 1, 2006 properties under R500 000 will not be subject to Transfer Duty costs. While properties between R500 000 and R1mil will only pay 5% on the amount over R500 000.
FNB Home Loans were quick to applaud this announcement. Ed Grondel, CEO of FNB Home Loans, said: “This move will help to further encourage home ownership in South Africa. This positively affects prospective first-time homeowners, where a saving of R25 000 would be enjoyed on a home of R500 000.
“Taking into account the substantial increase in property prices in recent years, I know that this will be welcome relief to all home buyers, and especially first-time entrants to the property market,†said Manuel.
Although this is a positive move for the local property market does not compare to other markets in Europe and Australia. According to Moneyweb.co.za transfer tax in London is 4%, in Croatia 5%, in Paris 6,5% and Australians don’t pay any tax for properties below R2.4 million.
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