With the South African government’s recent increase in the transfer duty exemption threshold to R1.21 million, first-time buyers have a unique opportunity to enter the property market without paying this once-off tax. This change can save buyers tens of thousands of rands - money that can be strategically used to ease the overall cost of buying a home.
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Understanding the opportunity
Antonie Goosen, principal and founder of Meridian Realty, explains that the raised exemption effectively gives first-time buyers a head start.
“Transfer duty can add tens of thousands to the total purchase cost," says Goosen. “But to truly benefit, buyers need to approach their purchase with care, budgeting for other upfront costs like bond registration fees, attorney costs, and initial maintenance or furnishings.”
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Many first-time buyers are focusing on properties valued between R900,000 and R1.2 million, often found in smaller towns, commuter belts, and outer metro areas. These locations offer freestanding homes or sectional title units with strong growth potential.
Goosen stresses the importance of prioritising location and long-term resale value over short-term appeal: “Ask yourself if the area is growing, if there are good schools or infrastructure nearby, and if it will be easy to sell later, even if the market cools.”
A smart investment strategy
Kobie Potgieter, Broker/Owner of REMAX Independent Properties in Port Elizabeth, advises first-time buyers to view their initial purchase not just as a home but as the start of a property investment portfolio.
“Instead of selling when they move on, buyers can retain their first property as a rental, generating passive income while acquiring their next home.” This strategy is particularly achievable in affordable markets where properties fall below the transfer duty threshold,” says Potgieter.
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Similarly, Kim Peacock, Broker/Owner at REMAX Dolphin Realtors, highlights emerging nodes on the North Coast such as Shakaskraal and Ballito, where entry-level developments offer good security, low levies, and proximity to transport routes. She encourages buyers to:
- Prioritise location over size for stronger long-term gains
- Focus on low-levy, secure developments near key infrastructure
- Pre-qualify to understand all costs involved, including bond registration and legal fees
Value-add opportunities
In markets like Hermanus, where affordable listings under R1.21 million are scarce, Barbara Larney, Broker/Manager of REMAX Wine and Whales, notes that first-time buyers often seek properties with strong renovation potential. “They focus on homes they can upgrade to build equity over time, leveraging the transfer duty saving to invest in improvements.”
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Making the most of your savings
Adrian Goslett, Regional Director and CEO of REMAX Southern Africa, explains that the transfer duty exemption can be used strategically: “Buyers might increase their purchase budget slightly to access better locations or properties with greater growth potential. Alternatively, they can use the savings to cover hidden costs like bond registration, attorney fees, moving expenses, or initial home improvements.”
Practical tips for first-time buyers
Goosen cautions against stretching budgets to the limit: “Don’t buy at the top of your affordability. Leave room for emergencies, interest rate hikes, and long-term savings.”
He also highlights the importance of working with experienced, ethical agents who understand the unique needs of first-time buyers and can guide them through the process, paperwork, and potential pitfalls.
The transfer duty exemption is a powerful tool for first-time buyers willing to do their homework and plan carefully. By focusing on long-term value rather than short-term sparkle, staying within budget, and choosing the right location, buyers can lay a strong foundation for a successful property journey.
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