What are the upfront costs of buying a home?
The advertised price of a property is only a portion of the total cost. Buying a home triggers a series of legal, tax, and administrative fees that the buyer must settle in cash before the property changes hands.
This is the breakdown of each cost type — it applies to any buyer, first-time or not. For a full worked example of the total cash a first-time buyer needs to save, a companion article runs the numbers end to end.
The deposit
A deposit is an upfront lump sum paid towards the purchase price of the property. When a buyer signs an offer to purchase, it usually specifies the deposit amount.
Banks use the deposit to measure risk. A buyer who puts down 10% or more of the purchase price is borrowing less money against the value of the house, which often secures a lower interest rate on the loan. This money is held safely in a trust account by the transferring attorney until the sale is finalised.
Transfer duty (SARS)
Transfer duty is a property tax levied by the South African Revenue Service (SARS) whenever a property changes ownership. It is calculated on a sliding scale based on the property's value.
The law provides an exemption for lower-priced homes. As of the current tax brackets, properties bought for R1,210,000 or less attract R0 in transfer duty. For a home purchased for R1,500,000, the buyer pays 3% on the amount above the threshold, which comes to a cash tax bill of R8,700.
If the seller is registered for VAT — such as a property developer selling a newly built home — the buyer pays 15% VAT included in the purchase price instead of transfer duty. A single transaction never attracts both.
Transferring attorney fees
A specialised property lawyer, known as a conveyancer, manages the legal process of moving the property from the seller's name to the buyer's name.
By tradition and law, the seller chooses which attorney handles the transfer, but the buyer is responsible for paying their bill. The fee is based on guideline tariffs published by the Law Society of South Africa and scales up as the property price increases.
Bond registration and initiation
If a bank is financing the purchase, they instruct a second set of attorneys to register a mortgage bond over the property. This bond registration serves as the bank's legal security.
The buyer pays these bond attorneys for their time and paperwork. On top of the legal fee, the bank itself charges a bond initiation fee for processing the home loan application. The National Credit Act caps this initiation fee, but it still represents a few thousand Rand in upfront costs.
Municipal and administrative costs
Before a property can be transferred, the local municipality requires proof that no property rates or utility bills are in arrears. The municipality also asks for an advance payment — usually three to six months of estimated rates — before issuing a rates clearance certificate.
Finally, the state charges an administrative fee to physically update the country's property registry at the Deeds Office.
When the money is due
The bank loan covers the actual purchase price of the house, but these secondary costs are paid directly to the attorneys involved.
A few weeks after the offer is accepted, the transferring and bond attorneys send pro-forma invoices to the buyer. These bills must be settled in cash before the lawyers can lodge the documents at the Deeds Office to finalise the sale.
Terms used on this page
- deposit
- The part of the purchase price a buyer pays in cash rather than borrowing. The bank lends the rest, and a larger deposit usually buys a lower interest rate.
- offer to purchase
- A legally binding contract between a buyer and a seller outlining the price, terms, and conditions for the sale of a property.
- transfer duty
- A once-off tax paid to SARS when property changes hands, on a sliding scale set by the value of the property. Below the current threshold, nothing is payable.
- conveyancer (transferring attorney)
- The specialist attorney who moves ownership of a property from seller to buyer at the deeds office. Chosen by the seller, but paid by the buyer.
- bond registration
- Recording the bank's home loan against the property at the deeds office, handled by a separate bond attorney the bank appoints and the buyer pays.
- bond initiation fee
- A once-off fee the bank charges to set up a home loan. It is capped by the National Credit Act, and most banks charge at or near the cap.
- rates clearance certificate
- A municipal certificate confirming a property's rates are paid up. The deeds office will not register a transfer without it.
- deeds office
- The government registry where property ownership and bonds are officially recorded. Registration there is the moment the home legally becomes yours.
Sources
Reviewed July 2026