“Minister Pravin Gordhan’s hope of encouraging home ownership,” said Lanice Steward, MD of Anne Porter Knight Frank, “will not be realised until the banks revise their lending criteria a little.  Most property commentators agree that the National Credit Act is beneficial.  However, most would also say that the Act is now being applied with unreasonable stringency.”

As has been widely publicised, under the new transfer tax law no duty is now payable on sales with a value of up to R600 000.  On sales in the R600 000 to R1 million bracket, 3% is charged on the amount exceeding R600 000.  On sales in the R1 million to R1,5 million bracket, a basic fee of R12 000 is now payable plus 5% of the amount exceeding R1 million.  For sales of R1,5 million and higher, a tariff of R37 000 plus 8% of the amount exceeding R1,5 million is payable.

Just how big the savings brought about by the new system – as compared to those of the previous arrangement, says Steward, are shown by the fact that on a R1 million home, the new tariff of R12 000 is a saving of R68 000.  On a R1,5 million home, the saving is R83 000 (i.e. R37 000 tax as against R120 000 paid previously).  On a R3 million home, previously R240 000 would have been payable, now the figure is R157 000 – a big reduction.

These tax concessions, added Steward, apply to natural persons (i.e. SA citizens), companies, CCs or trusts.  

Particularly hard hit by the banks’ inability to lend, said Steward, are the self-employed.

“The Minister has suggested some worthwhile subsidies to make the employment of SA’s youth possible and job creation was given a strong priority in the budget.  This action needs to be complemented by a drive towards home ownership.  The banks’ attitude (on home loans) to those going it alone is, however, negative.  They in fact penalise the independent operator – even though it is on him that South Africa’s future will depend.”