Q: Can I Purchase Property in South Africa?
This question was recently asked by a reader. I knew that the answer was yes, as I have a friend who purchased a home in Dainfern after their lease ran out, but didn’t know much else about the details.
Lucky for me, I have another reader, Jeff from the U.S., who is weighing whether to retire in South Africa, and he has done a ton of research. He was generous enough for me to share his answers, which I have incorporated into this blog post as the following Q&A:
A: Yes, expats CAN purchase property in South Africa. I know for a fact that permanent residents can purchase property and can even own investment properties like holiday rentals, but you will have to abide by all relevant tax laws when doing so. I don’t know if holders of temporary residency permits under the retired persons’ category can purchase property or not. You can contact a professional service like Intergate Immigration if you’d like. That is the company I deal with and I have been very pleased with the information they have provided.
My first reader then had a number of other questions regarding visas and permanent residence. I address many of these questions in my post about applying for a visa in South Africa, but here are more of Jeff’s answers re visas and permanent residence:
Q: Should I apply for permanent residence or the temporary retired person’s visa? How long does each take?
A: Most people who apply for the temporary retired persons’ permit also apply for the permanent residency permit as well. It is recommended you do this at the same time due to the long approval times. At present it can take up to 24 months to get a permanent residency permit. The temporary retired persons’ permit takes between 8 to 12 weeks. However this sometimes happens much faster. I have heard of people getting their permits in a matter of days but this is rare and you can’t count on it. By applying for both at the same time you can go ahead and move once the temporary permit is granted and not have to worry about the permanent permit, just go pick it up when it comes in. Some sites can be confusing on this last point as they give the impression all permits have to be picked up from consulate offices in your country of origin but that isn’t true. You file in your home country, pick up the temporary permit once it is granted and then go ahead and move to SA. Then (usually much later), once your permanent residency is approved, you can pick up that permit at the Department of Home Affairs in SA.
The next question deals with income requirements. There are different requirements based on which visa category you apply for. There is a retired person’s route and an independently wealthy route, and some of this is highlighted in my recent post How We Retired in South Africa. But read on for some Jeff’s more specific answers.
Q: What exactly are the income requirements for the retired person’s visa?
A: For the temporary retired person’s permit you need to prove income equivalent to 37,000 ZAR per month per applicant (i.e. a married couple would have to prove 74,000 ZAR per month). This can be from a pension, rental income, cash or cash equivalents. It does not have to come from a single source, it can be in any combination you like. Regardless of how you do it, you have to prove enough income to meet the total amount for the entire 4 years the permit is good for. So even if you did not have an actual monthly income but had cash or cash equivalents that totaled 1,776,000 ZAR (37,000 per month for 48 months) you would be good to go. At the end of the 4 years you could apply for renewal in which case you would have to prove that you had enough money to meet the total for a further 4 years.
Q: How about income requirements for permanent residency?
A: At this point it would be wise for me to point out that you cannot use a capital asset or lump cash sum to meet income requirements for the permanent residency permit for retired persons. The 37,000 ZAR per month per applicant would have to be lifelong guaranteed. Now, if your financial situation does not meet the criteria for permanent residency under the retired persons’ category you still have another option. You can apply for a financially independent permit. Under this permit you can get permanent residency if you can prove assets totaling 12 million ZAR or more. Unlike the 37,000 ZAR, I don’t think the 12 million is per applicant so the amount should be the same even for married couples. It used to be slightly higher for a married couple (17M) but they must have changed it because I couldn’t find any reference to a different amount. You don’t have to relocate these assets to SA, you can keep them in any jurisdiction you choose. Also, there is no tax on your accumulated assets other than ongoing requirements in terms of income tax and capital tax, and only then if you are deemed a South African resident for tax purposes (which you likely will be but don’t worry about that as the USA and SA have a tax treaty that keeps you from being double taxed). An added benefit of the financially independent permit is that you are free to work, invest, start a business, volunteer, and do pretty much anything else a South African citizen can do except vote or run for office. There is, however, one little downside and that is that there is an additional one-time fee of 120,000 ZAR that has to be paid to Home Affairs once the permit is granted. This fee is in addition to the standard 1,250 ZAR application fee. It is not too bad considering you only have to pay it if your application is approved. You pay the 1,250 ZAR up front and then the remaining 120,000 ZAR upon approval. This is an improvement over the old rules that required the larger sum up front and was non-refundable if you were refused a permit.
Q: That is quite a lot of money!
A: If all of these numbers seem daunting remember that the US dollar is worth considerably more than the rand. At current exchange rates the dollar equivalents (rounded up to the nearest dollar) are $107 for the standard application fee, $2,613 per month per applicant for the temporary retired person’s permit ($125,401 total for the 4 years), $847,441 total assets for the financially independent permanent residency permit, and $8,473 one-time fee for that permit if approved. These amounts may change in the future as they have done before so it is good to keep up to date. In fact I kind of expect the required amount of income or assets to increase at some point in the coming years because the value of the rand keeps dropping.
Q: So what would be your advice for someone intending to retire in South Africa?
A: My advice would be to go for a permanent residency permit (retired or financially independent depending on how you have your assets structured) and apply for the temporary residency permit for retired persons at the same time so you don’t have to wait forever before getting to emigrate. Also, it would be a good idea to buy rather than rent. The reason I say this is because of some of the political tensions in SA regarding these issues. Immigration laws are constantly in flux and part of the problem is that a lot of voters want less immigration but the government knows that SA needs more of the right kind of immigrants (skilled workers and wealthy retirees). So the rules tend to ebb and flow; they get stricter for a while and then they get more lax. If you get a permanent residency permit then you don’t have to worry about future changes in the law. As long as you are a law abiding resident they can’t try to make you leave. Regarding property, there is a popular notion among the general populace in SA and encouraged by the politicians that the rise in housing prices in recent years is due to rich foreign buyers bidding the prices up and that regular South Africans cannot afford to buy property. This is a fantasy but it sells well at election time. There has been talk of passing laws banning or restricting the purchasing of real estate by foreign nationals. So far it hasn’t gotten beyond the talking stage and I doubt anything will come of it because of opposition by the banking and construction industries, but for expats who can afford it I would recommend buying as any legal changes will apply to future activity and won’t be retroactive.