The cost of buying land and building a house in South Africa

Between making an offer and occupying a newly built home, there are nearly a dozen other expenses.

When you add them up, can you afford to buy land and build a home?

The Cost of Buying Land in South Africa

You find a gorgeous plot of land for what you think is unbelievable value.

It’s something you can afford.

But these are the expenses you need to consider:

• Land cost: Lenders typically don’t offer bonds on land below R170 000. If the land you intend to buy is more expensive, lenders may cover a portion of the loan, usually only 60% over 10 years.
• Value added tax: Some listing prices do not include VAT.
• Transfer duty: Transfer duty typically doesn’t apply to land, as you only pay on property valued at more than R1.21 million.
• Rates, taxes, levies: You’ll pay rates, taxes, and levies once the land transfers into your name.
• Development penalties: If you buy in a development, you may encounter development penalties if you don’t build (and complete the build) in a set time frame.
• Conveyancer fees: To conclude the transaction, you’ll need to pay an attorney to transfer ownership.

The cost of Building a Home

Some lenders offer building loans that cover some part of the building process.

Whether or not you get a loan, you’ll encounter these costs once you start building.

Building plans and permits

If you start building on land without municipal permission, you’ll incur fines for illegal building work. The municipality may demolish what you’ve built.

Therefore, budget for building plans and building permits.

All building plans must be designed by a South African Council for Architectural Professions (SACAP) architect to get approval.

Municipal Connections

If there isn’t a water and electricity connection, you’ll pay for it.

Costs vary depending on the municipality.

Construction

Construction costs include laying a foundation, installing plumbing and electrical, roofing, and labour.

Typically, to reduce costs, builders may use lower-quality materials or carry out non-compliant work.

To avoid having to redo work later, get the certificate of compliance (COC) for all work being done on the home.

Certificate of Occupancy

The certificate of occupancy is the municipal go-ahead that your home is safe to live in. In municipalities like Tshwane, if your home passes the first inspection, the certificate is free. If it fails, you’ll have to pay for future inspections.

Item	Starting Costs
Land	R50 000
Conveyancing fees	R6 250
Building plans	R6 200
Building permits	R8 200
Municipal connections	R18 000
Construction	R375 000
Certificate of occupancy	R750
Total	R464 400

Before you buy land, research the costs involved in the municipality where you intend to make the purchase.

Be prepared to spend more.

Clearing land with overgrown vegetation adds to your expenses.

Building on a slope can also increase building costs by 20%.

You may go over budget due to weather delays or failing an inspection.

These are all expenses you should consider before you choose to buy land rather than purchase a house.