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05 Jul 2017

Articles for Foreigners

  1. Foreigners rights to own property in South Africa

  2. Immigration regulations

Foreigners rights to own property in South Africa

South African Law does not prohibit a foreigner from purchasing immovable property in the Republic of South Africa. Foreigners are furthermore permitted to sell the property at any time and repatriate the original capital expended plus their profit at such time of their choosing. In as much as South African residents [natural persons or legal entities whose normal place of residence, domicile or registration is within the Republic of South Africa] are subject to certain exchange controls, foreigners are required at the time of wishing to repatriate their funds, to establish that the funds initially utilized for purchasing the property were imported into the Republic at the time of purchase from foreign sources [the purpose being to ensure that no South African resident/citizen is trying to expatriate funds].

This is best achieved by opening a special “non-resident” bank account with a South African commercial institution and ensuring that all funds expended for purposes of the property investment, travel through that account. The opening of this account is however not a prerequisite to the purchase of the property. In such circumstances the funds would be remitted directly to the conveyancing attorneys appointed to attend to the registration of the transfer of ownership of the property purchased who will, if requested, cause the title deed issued to the foreign investor to be endorsed by the attorneys’ own bankers, and thereby facilitate the repatriation of the funds when required. This “endorsement” will serve as proof that the purchase price of the property was paid with imported funds. Foreigners are furthermore permitted to borrow funds from a South African financial institution and permit the registration of a mortgage over the property purchased as due security for such loan. The South African laws however restrict the capacity of foreigners to procure such a loan to a sum amounting to a maximum of 50% of the proposed purchase price of the property.

Prepared by Milton Koumbatis



Much has been made of the “new” regulations promulgated in terms of the “new” Immigration Act.

Lest the publications cause unnecessary anxiety in the minds of foreign investors, it is important to stress that the new laws do not change the existing laws relating to the right of a foreigner to purchase immovable property in the Republic of South Africa. In this regard our own publication on “Foreigner’s Rights to own Property in South Africa” remains entirely correct and is an accurate representation of the law as it stands. There is also no indication whatsoever from any government authority that any change to the above position is proposed or contemplated.

The “New Regulations and Act” deal entirely with the right of foreigners to reside in the Republic of South Africa whether on a permanent or temporary basis and are therefore relevant only insofar as they might affect the right of the foreign investor to enter South Africa for purposes of using his property.

The majority of foreigners wishing to purchase property in South Africa fall within the following four categories and we shall accordingly restrict our commentary on the New Regulations and Act to the impact which they might have on such foreigners:

  1. People who wish to own immovable property in the Republic and to use same for vacation purposes
    There has been no significant change in the law affecting investors of this nature. Such investors traditionally qualified for entry into the Republic on the basis of a “visitors permit”. This situation has not changed and there is no reason to believe that it will change. A visitors permit is granted for a period of three months and can be renewed by the Department of Home Affairs if required.
  2. People who wish to own immovable property in the Republic of South Africa and to use same as their retirement accommodation
    Changes have occurred which affect investors of this nature. The permit which such an investor would wish to acquire is entitled a “retired person permit” [whether permanent or temporary]. The permanent permit is of course valid for an indefinite period. A temporary permit is valid for a period of four years at a time and will be renewed by the Department if the investor continues to qualify in terms of the prescribed criteria. The temporary permit is specifically capable of dealing with investors who wish only to remain in the Republic for limited or seasonal periods during the validity of the permit. The criteria for qualification for the permits are that the investor must be able to establish that he has a pension [or retirement annuity or retirement account] producing a minimum income of R20 000.00 per month or that the net worth of the investor is R12 million producing an income of at least R15 000.00 per month.
  3. People who wish to own immovable property because they wish to conduct business in the Republic of South Africa
    The particular permit which such an investor would require is a “business permit” [whether permanent or temporary]. A permanent permit would endure indefinitely if, for a total period of five years after its issue, the investor continues to meet the criteria for qualification. A temporary permit is valid for two years at a time and can be renewed as long as the investor continues to meet the criteria for qualification. The criteria for qualification [for both permanent and temporary permits] are that the investor must invest at least R2.5 million in a business and must [amongst other prescribed alternatives] have either a proven entrepreneurial skill or prove that at least five citizens or residents will be employed by the business or prove that the business is in one which will operate in one of the listed sectors of the economy [example – information and communication technology, clothing and textiles, tourism or crafts].
  4. People who wish to own immovable property because they have relatives in South Africa who are citizens or permanent residents of South Africa
    A temporary permit would be given to any foreigner if the foreigner is “immediate family” of any South African citizen or permanent resident provided that the South African citizen or resident establishes certain prescribed financial assurances relating to the care for such foreigner. “Immediate family” includes the South African citizen’s / resident’s children, grandchildren, parents, brothers and sisters. Children and parents in fact qualify for permanent residence on the same criteria. The above summary hopefully makes it clear that our immigration laws are still very “foreign investor” friendly and that such persons will continue to feel comfortable about investing in our thriving property market.

Prepared by Milton Koumbatis

Caution: While every effort has been made to ensure that the information contained in this article is correct, Miltons Inc. will not be liable for any loss suffered by any person due to any error in the article.

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