What are transfer and bond costs when buying in Cape Town?

Sellers get warned about commission and compliance certificates. Buyers rarely get warned about anything, and then the attorney's cost estimate lands and the number is bigger than expected. Here is what you actually pay on top of the purchase price when you buy in Cape Town, and roughly how much to set aside.

Transfer duty

This is the big one, and it is set by law on a sliding scale based on the purchase price. The first R1,100,000 is duty free. Above that, the rate climbs in bands, from 3% up to 13% at the very top end.

Here is what it looks like at three real Southern Suburbs price points I have covered on this blog:

Duty rates are adjusted from time to time in the national Budget, so always confirm the current bands with your conveyancer before you commit to a number.

Transfer attorney fees

The seller picks the conveyancer, but the buyer pays them. This attorney handles the legal transfer of the property into your name, and their fee follows a sliding scale based on the purchase price, plus VAT and disbursements like deeds office search fees and a FICA administration fee.

On a R2,000,000 home, budget somewhere around R25,000 to R30,000 all in. It is not negotiable in the way agent commission is, since it is largely a fixed professional scale, but it is worth getting the exact figure from the transferring attorney early so it is not a surprise at the last minute.

Bond registration costs

If you are financing the purchase, there is a second, separate attorney who registers the bond over the property in favour of your bank. This is a different cost to the transfer attorney above, even though both are conveyancers and sometimes even the same firm.

Budget roughly R20,000 to R25,000 for bond attorney fees on a R1,800,000 bond, plus a bank initiation fee (regulated and capped under the National Credit Act, typically a few thousand rand). If you are putting down a smaller deposit and financing more of the purchase, this line item grows accordingly.

The top end: buying above R10 million

The costs do not scale in a straight line. Because transfer duty runs on a rising sliding scale, the bill accelerates fast at the top of the market. Every rand of the purchase price above roughly R2.7m is taxed at 11%, so a premium home costs far more to transfer than the price tag alone suggests.

On a R10,000,000 home, the kind of price you see in Constantia, Bishopscourt, Newlands and upper Claremont, transfer duty alone comes to around R897,600. That is before a single attorney fee. Transfer attorney fees also climb with the price and comfortably clear R90,000 at this level, and if the purchase is bonded there is bond registration on top of that.

Add it up and the cost of buying a R10m home, excluding the deposit, lands close to R1,000,000 once duty, attorney fees and disbursements are in. Many buyers at this level pay cash or put down a large deposit, which trims the bond costs, but transfer duty is unavoidable no matter how you fund the purchase.

The lesson holds at every price point: the higher you buy, the more the acquisition costs matter, and the more it pays to have the exact figures from your conveyancer before you make an offer.

The quick budget

All in, a buyer on a R2,000,000 Southern Suburbs home is usually looking at somewhere between R90,000 and R100,000 in transfer and bond costs on top of the deposit. None of it is a fee you can shop around hard on, which is exactly why it needs to be in your budget from day one, not discovered halfway through the process.

What this means if you are buying

None of these costs are optional and none of them are refundable if the deal falls through, so the real skill is not avoiding them, it is budgeting for them before you make an offer. A buyer who has priced in transfer duty and bond costs upfront negotiates from a position of certainty. A buyer who has not is the one who gets cold feet at the eleventh hour when the attorney's invoice arrives.

If you already own a home and are weighing up buying before you sell, the costs on your current property work differently. I break those down in what it costs to sell a house in Cape Town, which is the seller-side counterpart to this post.

Looking at current listings in the Southern Suburbs and want a heads up when something new comes onto the market at your price point? Join my VIP list and I will let you know first.

So before you make an offer, the real question is: have you actually budgeted for the full cost of buying, or just the price on the listing?