Immigration to South Africa

Permanent Residence
Permanent residence will be granted to an applicant, who has been a holder of a Work Permit for a period of at least five years and has been offered permanent employment. This permit is extended to the spouse or life partner and children under the age of twenty one.

A direct permanent residence permit will be granted to the spouses or life partners of South African citizens or holders of permanent residence permits if and when their spousal relationship has existed for a minimum of five years. Proof of a life partnership will have to be provided by means of an affidavit and proof of cohabitation, as well as sharing of financial liabilities.

Work permits
Employers are required to advertise the position offered to the foreigner, as well as demonstrate in writing who has applied for the position advertised and the reasons why these applicants were not suitable. An ‘Evaluation Certificate for Foreign Qualifications’ of the highest certificate of education also need to be submitted on behalf of an applicant. Such a certificate is issued by SAQA (The South African Qualifications Authority) and is used to compare foreign qualifications with South African qualifications.

In addition, a benchmarking procedure has been introduced, which is to confirm that an applicant’s overall salary and conditions of an employment contract is not inferior to that paid to employees in South Africa, within the same market segment. A separate certificate confirming the above is now required by every applicant, and can be issued by either the Department of Labour or registered organizations offering benchmarking services.

Quota Work Permit
This permit is granted to a limited number of applicants per year, who qualify in certain industry sectors with proven specified knowledge, qualifications and experience.

The applicant’s qualifications must be approved by SAQA; and based on this, the Department of Home Affairs decides within which category the applicant falls when granting a quota work permit. Following this, the applicant is given ninety days to find employment within which category the applicant falls when granted a quota work permit.

Foreigners with exceptional skills or qualifications (independent of the work categories) may obtain a Work Permit based solely on such abilities and qualifications, without any proof of an employment offer.

Additionally, the Department will grant Work Permits on the grounds of secondment or intra-company transfers of employees.

Business Permit
Investors and entrepreneurs are able to apply for a Business permit, which now has no maximum limit to its duration. However, it remains to be seen for what duration a business permit is now issued for each individual case.

To apply for this permit, one would need a chartered accountant to certify the availability of:

The amount to be invested is not required on submission of such application, however, it must be invested within 24 months and proof of this must be presented to the Department of Home Affairs. However, it is possible to decrease or apply for a waiver in terms of the capitalization of the business. Requirements include a letter of recommendation by the Minister of Economics, or alternatively, it must be shown that business, whether planned or already existing, is within a sector of industry which is in the national interest.

This business would be required to create at least 5 positions for either South African citizens or holders of a permanent residence permit who would need to be employed within the first twenty four months of the business operating.

A comprehensive business plan would need to be submitted and all investors or entrepreneurs looking to invest in an existing business, are required to submit the last annual financial statement and the articles of association.

Retired Persons Permit
A retired persons’ permit can be issued for up to four years and can be extended for four years at a time. The holder of a permit may reside in South Africa permanently or seasonally – a minimum stay within in South Africa stipulated in the former Immigration Act, no longer applies.

The applicant must provide proof of either a pension, retirement annuity or retirement account with a minimum value of R20 000 per month or assets, regardless of the value, which generate a monthly income of at least R20 000 per month.

The Department of Home Affairs currently applies the above mentioned funds as income/assets for both partners together.

Financing of a foreign purchase

Despite certain restrictions on non-residents wanting to purchase property in South Africa, it is possible to buy your dream holiday home or permanent residence in South Africa.

The non-resident may borrow up to a maximum of 100% of his/her borrowing base. The ‘Borrowing base of a non-resident individual is the sum introduced into South Africa to fund the purchase of a property, i.e 50% of the purchase price.

For example, if non-residents purchasing a property in South Africa for R600,000, introduced R300 000 into South Africa for the purchase, they would be able to apply to the South African Reserve bank for permission to secure a bond of R300 000 in SA. In other words, banks will lend up to 50% of the purchase price, subject to their normal terms and conditions, which would include a valuation of the property.

Where non-residents bring funds into the country over a number of years, they may borrow up to a maximum of 100% of the total funds invested in South Africa – which could be more than 50% of the purchase price of the property.

Such non-resident loans are however subject to foreign exchange approval from the South African Reserve bank. Financial assistance is granted in the form of a loan secured by a mortgage bond to be registered in favour of the bank granting the loan. Lew Geffen Sotheby’s International Realty will appoint a mortgage originator for foreign buyers who will apply to all the major financial institutions in South Africa on their behalf to secure mortgage bonds at the most competitive rates available.

A non-resident purchasing property in SA is not required to open a local bank with a commercial bank, as funds can be transferred directly from an overseas account into a mortgage account in SA.

If an account is to be opened, especially if an access facility is required for the capital paid off, then the non-resident is required to obtain an original letter of credibility from his bankers.

This local account will often be funded from abroad or from rental income from the property purchased, subject to the bank holding the account being in possession of a copy of the rental agreement.

As exchange control is a complex subject, non-residents are advised to consult a mortgage originator on this issue.

Temporary residents / foreign nationals
Foreign Nationals (temporary residents) may apply for local financial assistance, for the purchase of residential property. The mortgage bond is not restricted and depending on the standing of the client, can be 100% of the purchase price of the property. The granting of any borrowing facility is subject to the approval of the Lending Manager in the Branch of the bank where the foreign national holds their account.

It is important to note that when a foreign national leaves South Africa, the criteria for Non-Resident purchasers will apply and the bond may need to be reduced to fall in line with the South African Reserve Bank’s formula requirements.

The transfer process and fees involved in purchasing SA real estate
Some of the major costs involved in any real estate purchase are outlined below:

Deposit
The majority of banks will require a deposit when applying for a home loan, the exception being for first time homebuyers. The deposit required is usually around 10% of the value of the property.

Transfer
The SA Government levies a tax on property transactions, known as transfer duty which is paid when you buy a property and it is transferred into your name. Transfer duty is charged on a sliding scale depending on the price of the property as follows:

A buyer is not expected to pay transfer duty when buying directly from a developer, but in this instance Value Added Tax (VAT) applies and this is generally included in the selling price of the unit.

The transfer and registration of a property into the new owners name needs to be handled by a specially qualified legal practitioner known as a conveyancer.