Delays in South African Property Transfers – and a Short-Term Financing Option

Delays in South African Property Transfers – and a Short-Term Financing Option

How bridging finance can help you pay costs arising from delays in South African property transfers.

Delays in property transfers are causing headaches for South African buyers, sellers, banks and conveyancing attorneys.

Current deferrals are the result of various factors and role players. Most are avoidable.

How long it currently takes to transfer property in South Africa

Normally, a typical property transfer in South Africa is finalised within three to four months. That said, the past 24 months have been anything but normal.

Nowadays, it’s not unusual for six months or more to elapse before the seller receives the proceeds of the sale and the buyer is entitled to take occupation of his or her new home.

Reasons for delays

Here are the core reasons why it’s taking so long to conclude the sales and purchases of South African real estate.

Backlogs at the Deeds Office

The extended lockdown and periodic closures of the Deeds Offices caused by the pandemic have severely impacted the timeous registration of properties countrywide.

Even today, social distancing measures have resulted in partially staffed offices. The reduced staff complement is unable to cope with the current backlog in cases.

Despite a state promise to fast-track the roll-out of an effective IT system to support remote work, there appears to be no respite from the current logjam.

Dysfunctional municipalities

To expedite the transfer of property, the municipality where the property is located is mandated to collect outstanding, and projected, rates and taxes on that property.

This is done by calculating what’s owed by the seller (rates, taxes and municipal services) over the following three to four months. The municipality submits the outstanding figure to the conveyancing attorney.

Once the money is paid, a rates clearance certificate is issued and the transfer can proceed.

In the past, municipalities have provided rates clearance figures within five days of application. It would then take two to three days from the date of settlement for the municipal rates clearance certificate to be issued.

These days, municipalities are failing to provide rates clearance figures and certificates within reasonable time frames. These delays are having a major impact on the successful closure of sales.

Delays at SARS

The South African Revenue Service (SARS) is responsible for issuing transfer duty certificates for the property. SARS can only proceed once the duties have been paid by the transfer attorney and proof of payment has been submitted.

SARS uses the opportunity to check the tax compliance status of both the seller and the buyer. If there are any discrepancies, SARS may decline to issue the certificate until the issues have been resolved.

Costs that sellers may face while waiting for property transfers

Property transfer delays are not only frustrating, they can lead to extra costs to the seller.

In some cases, the rates clearance certificate can expire. When that happens, the figures are re-calculated by the municipality. The seller has to settle the existing rates and taxes, plus the projected average for the next four months.

A short-term financing solution: property bridging finance

Short-term loan provider lamna has a finance product tailored for South Africans impacted by protracted delays in the property transfer process.

Providing the deed of sale and transfer documents have been signed and the purchase price is guaranteed, lamna offers bridging finance of up to 75% of the funds on transfer.

Bridging finance is the ideal safety net for sellers who require funds to cover costs as they wait for property transfers to be finalised.

Asset-backed loans with lamna

At lamna, as well as bridging finance to cover the costs of delays in South African property transfers, we offer fast, discreet loans against the value of a wide range of assets, from luxury watches and jewellery to vehicles or artwork.

For more information about using an asset to secure a short-term loan, contact us on 086 111 2866 or simply complete and submit our online application form.

ILLUSTRATIVE EXAMPLE

Client borrows R10,000 for 90 days.

Loan Amount
Repayment Period
Monthly Interest
Total Cost of Loan
Initiation Fee
Monthly Fee
APR
R10 000
3 months
R500.00
R2 914.50
R1 207.50
R569.00
60%

Fixed rates range from 36% to 60% APR and payment options range from minimum 3 to maximum 24 months. Apart from the initiation and monthly fees shown below, the only additional fee is credit life insurance if the borrower does not have this already.

APR & Loan Repayment Period

Fixed rates range from 36% to 60% APR and payment options range from minimum 3 to maximum 24 months. Apart from the initiation and monthly fees shown below, the only additional fee is credit life insurance if the borrower does not have this already.

Non-Payment

Non-payments may result in the matters being escalated.

Renewals

All accounts may be renewed if they are up to date.

Collection

All payments are made via EFT or direct deposits into Lamna’s bank account. There are no debit orders.

Delays in South African Property Transfers – and a Short-Term Financing Option

Apply Online

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Delays in South African Property Transfers – and a Short-Term Financing Option

Apply Online

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Delays in South African Property Transfers – and a Short-Term Financing Option

Apply Online

Delays in South African Property Transfers – and a Short-Term Financing Option

Apply Online

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