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. Photo: 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?
I chatted to Cor van Deventer from VDM Attorneys — a conveyancer who sees the problem play out daily. He told me that transferring attorneys could not delay transfer duty payments.
Once the offer to purchase is accepted, the suspensive conditions are met and the conveyancer invoices the purchaser, the South African Revenue Service wants its money immediately — no negotiations. No payment plans or grace period.
If you can’t come up with the cash, under no circumstances will this transfer take place.
This is where deals die. Individuals who genuinely qualify for the bond are blindsided by an upfront cash requirement of R60 000, R100 000, R120 000 or more.
They simply do not have it because this segment of the market does not have disposable income on this level to part with.
You also can’t expose yourself to more credit now, as you’ve taken out the bond.
How do you pay this?
We have an affordability problem in South Africa.
This lack of understanding and insight forms the foundation of so many silent casualties in the property market every week.
Here is a simple real-world example. A property selling for R1.21 million is subject to zero transfer duty. Buy for R2.4m, and you are in the top brackets. Your duty is R59 200.
On top of this amount, your transferring attorney charges around R46 000. The buyer must produce over R100 000 in cash immediately.
Banks do offer 105% bonds for first-time buyers, but only if you are under 35, a first-time home buyer and tick a long list of boxes. Even then, the bank pays the costs only after registration. You still need the money up front. It does not solve the cash flow problem.
Many go to bridging finance houses. That means more interest, more debt and even more pressure.
Transfer duties are not only blocking first-time buyers. They are trapping families in homes they have outgrown. People are choosing to stay in their current property rather than move.
When looking at households in the R5m to R7m bracket who want to upgrade to the R8m to R10m segment, they can afford the bond. Some cannot justify the transfer duty of around R877 000.
By the time you add conveyancing fees, the cost to move reaches nearly R1m.
So, they are renovating instead of moving. This locks up the supply.
In places like Cape Town’s southern suburbs, where stock is limited, buyers are competing in a shrinking pool.
The real movement in South African property happens below the R3m price tag. This is the segment that needs relief most urgently. A change in thresholds here would stimulate real activity.
Instead, buyers with limited disposable income who take out bonds find themselves facing transfer duty on homes priced above R1.6m that they cannot cover.
The system is out of sync with how people buy property in 2025.
In many parts of the United States, transfer taxes are zero or extremely low. Their system encourages movement. High transfer duties naturally translate into fewer transactions.
Fewer transactions mean less municipal revenue, fewer renovations, fewer furnishings, fewer contractors employed, less VAT, less movement and less economic activity.
We are losing more than we gain.
We also shrink the pathway to generational wealth because the ability to move up the property ladder is one of the most fundamental wealth-building mechanisms available to households.
South Africa’s deeds registry system is one of the best in the world. Our property rights are secure and our legal processes are sound. Yet our tax structure is suppressing the very mobility that keeps a property market healthy.
Transfer duty should be reviewed, and its thresholds possibly adjusted. We ought to consider some form of relief for first-time buyers, perhaps a rebate.
Policy must be regularly re-evaluated if it becomes counterproductive or if it no longer fulfils its purpose.
If we want a thriving middle class, we cannot keep penalising people for trying to move, grow, invest and improve their lives. A tax that was never meant to be a barrier has quietly become one.
Let’s really take some time to think about whether or not the transfer duty rates are fit for purpose in today’s South Africa.
Maybe it’s time we admit that the property ladder is breaking not because people cannot climb, but because the state is charging too much at the first step.