When buying property, many first-time (and even seasoned) buyers are surprised to discover that the purchase price is not the only amount they will need to pay. One of the most significant additional expenses is transfer costs.
What Are Transfer Costs?
Transfer costs refer to the expenses involved in legally transferring ownership of a property from the seller to the buyer. They are over and above the purchase price and must be settled before the property is registered in the buyer’s name.
These costs typically fall into three main categories:
- Transfer Duty
- Conveyancing Fees
- Deeds Office Fees
Transfer Duty
Transfer duty is a government tax levied on the value of the property being purchased. In South Africa, it is collected by the South African Revenue Service (SARS).
Key Points about Transfer Duty:
- It applies to properties valued above a certain threshold (e.g., as of 2025, properties below R1,100,000 are exempt—check the latest SARS tables).
- The amount increases progressively based on the purchase price.
- It must be paid before registration can occur.
Example:
If you buy a property for R2,000,000, you will pay transfer duty according to SARS’ sliding scale (a percentage of the value above the exemption threshold).
Conveyancing Fees
A conveyancer (a specialised property attorney) is appointed to handle the legal work involved in transferring the property.
Conveyancing fees cover:
- Drafting and lodging the transfer documents
- Conducting property searches
- Liaising with the Deeds Office and SARS
- Managing the financial aspects of the transfer
These fees are not fixed by law, but the Law Society publishes guideline tariffs. Always ask your conveyancer for a full quote upfront.
Important: Conveyancing fees attract VAT.
Deeds Office Fees
The Deeds Office charges fees to register the new title deed in your name. The fee amount depends on the purchase price of the property. Tip: While usually smaller than transfer duty and conveyancing fees, Deeds Office fees must be paid as part of the overall transfer costs.
Other Related Costs
Besides these core components, buyers should be aware of additional possible expenses:
- Pro-rata rates and taxes (e.g., municipal bills)
- Clearance certificates
- Postage and petty disbursements
- Bank initiation fees (if you take a bond)
How to Budget for Transfer Costs
Rule of Thumb:
As a guideline, expect transfer costs (including duty, legal fees, and Deeds Office fees) to add about 8–10% to your purchase price if the property exceeds the exemption threshold.
For example:
Purchase Price: R2,000,000
Estimated Transfer Costs: R160,000 – R200,000
Important: Always request a pro forma statement from your conveyancer so you know exactly how much to budget.
Why Must Transfer Costs Be Paid Upfront?
Transfer costs must be settled before the transfer can proceed because:
- The conveyancer must pay SARS transfer duty to obtain the required receipt.
- They must pay Deeds Office fees when lodging the documents.
- They must ensure all rates and levies are cleared.
If these costs are not paid, the property cannot be legally transferred.
Conclusion
Buying property involves more than just securing the purchase price. Transfer costs are an essential part of any property transaction. By understanding them in advance, you can plan your finances and avoid unpleasant surprises.