Transfer duties, costs & bond fees: What’s the difference?
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.
“When purchasing a property, there is often confusion regarding the distinction between transfer duty and transfer costs. Many buyers are also surprised by the bond registration costs that they incur,” says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
To help clear up the confusion, RE/MAX of Southern Africa clarifies what each of the costs are 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 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.
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. These costs can add up to a large amount, so it is advisable to use an online calculator to get an estimate of these costs before you go ahead with a purchase.
“Purchasing property is not a simple process, but with a RE/MAX agent by your side, it can be. Real estate agents deal with these transactions daily and have the hard-earned experience and knowledge to guide you through every step so that you are never left confused at any point during the process of finding the perfect home,” Goslett concludes.