Sieg Heiriss, a KwaZulu-Natal-based conveyancer (a lawyer who specialises in property) who founded SK Heiriss Inc Attorneys, ponders whether it is time for the South African government to scrap transfer duty.

The average price of a house in the United Kingdom is £172 000 (pounds sterling) which is about R2m in South Africa. If a "natural person" purchases a house, transfer duty must be paid to the SA Revenue Service (SARS). On a purchase price of R2m, the transfer duty payable would be R105 000.

In the UK, this "transfer duty", i.e. a tax on the sale and purchase of a property, is known as Stamp Duty Land Tax and on our "average price" house of £172 000 the rate is 1%, i.e. £1 720 (or about R20 640 [about R84 000.00 lower than here in SA]. [See http://www.hmrc.gov.uk/sdlt/rates-thresholds.htm#1]

Whether transfer duty is payable or not, we must still obtain a transfer duty receipt [or exemption certificate] which is submitted with the transfer documents to the deeds office. At present, the obtaining of the transfer duty receipt / exemption is causing considerable delays and it can take weeks to obtain the certificate for example, from the SARS offices at Durban.

One wonders whether this is not again the ideal opportunity for our new finance minister (Pravin Gordhan), who was the former head of SARS, to consider the scrapping of this tax. The scrapping of Transfer duty would surely have many advantages and will boost our housing market significantly. It will have the added bonus of speeding up the conveyancing process.

Article by: Sieg Heiriss - www.realestateweb.co.za