Transfer duties breaking SA's property ladder

The transfer duty system is punishing those trying to enter or move through the market

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Out of sync: There is a visible gap between the housing problems the government wants to solve and the policies it puts in place. A tax that was never meant to be a barrier has become one.

(David Harrison)

A young couple finds their perfect starter home. They can afford the bond. Their salaries qualify. Their credit record is spotless. Then the transfer duty invoice lands in their inbox and the dream collapses.

This is the real affordability crisis in South Africa. Not the bond repayments. Not the monthly instalments.

The upfront costs attached to buying a home are becoming one of the most significant barriers to mobility on our property ladder.

South Africa is full of ironies and here comes another one.

The government says it wants to increase homeownership, yet the transfer duty system quietly punishes the people trying to enter or move through the market.

And we hardly ever debate whether the tax thresholds we use make sense.

Transfer duty is a tax on the sale of property. It forms part of national revenue, and the deeds office falls under the Department of Agriculture, Land Reform and Rural Development.

In principle, it is meant to support state functions. In practice, it is choking the segment of the market that is supposed to be growing.

Middle-class South Africans carry a disproportionate burden. They carry the country.

Now, many of them sit with transfer duty costs they can't afford and that have drifted out of touch with property inflation.

There is a visible gap between the housing problems the government wants to solve and the policies it puts in place.

Would a revision of transfer duty thresholds not stimulate more activity? More sales? More renovations? More conveyancing revenue? More VAT? More movement? Instead of more stagnation?