The small adjustments in transfer duties announced in the budget will provide some relief for home buyers, but industry players doubt whether it will markedly lift flagging housing sales and prices.
Finance minister Tito Mboweni announced minor inflation-linked changes to the brackets to calculate transfer duty on property sales, which were last adjusted in 2017.
From March 1, the transfer duties exemption threshold will go up from R900,000 to R1m. That will result in a saving of up to R3,000 for anyone buying a house priced between R900,000 and R1m.
The knock-on effect of bracket adjustments means most buyers will save on transfer duties. For instance, someone buying a house priced at R1.75m will pay R6,750 less in transfer duties after March 1 while a buyer of a R12m abode will save R37,000.
Seeff Property Group chair Samuel Seeff welcomed the transfer duty relief. However, he had hoped the government would introduce more aggressive measures to kick-start SA’s stalling housing market, particularly at the upper end. He says the government needs to reverse the transfer duty and capital gains tax hikes implemented between 2015 and 2018.
"Rather than contribute more in tax revenue, these hikes have had the complete opposite effect, to the extent that sales volumes at the higher price bands are just about back to 2008 global financial crisis levels," says Seeff.
Given that transfer duty revenue was lower than expected for the third year running, it’s no surprise that the government hasn’t offered further relief.
Transfer duty collection for the 2019/2020 tax year amounted to R7.24bn, well below the estimated R8.06bn target that the National Treasury was hoping to generate from property sales.
It remains to be seen whether government’s estimates of R7.62bn for 2020/2021 will be met, given that the industry doesn’t expect a marked improvement in housing activity any time soon.
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