What To Consider When Buying Land In South Africa

While owning property is a good idea and a good way to provide stability, it is not always an easy option. If you consider buying land in South Africa there are a few things you need to take into consideration before you go ahead.

We take a look at some of these factors and the pitfalls so the experience will be a good one for you. This is especially a good idea if you do not want to have a too large bond to pay off.

Let's take a closer look together and see what is the best way to go about buying land in South Africa.

Getting a Bond For Vacant Land

Almost all the time you apply for a bond for vacant land banks will not be that eager to supply you with it. That is mostly because it is riskier for them to lend you money to buy vacant land than buying land with buildings on it.

Another thing is that banks will not provide you with the full amount to buy vacant land; they will only give you around seventy percent. That means a large upfront deposit of thirty percent of the buying price will be required from you in order to secure a bond.

So you save up the money on your own before you will be able to get a loan for buying vacant land.

Selling Vacant Land

While the value of vacant land in most areas in South Africa is at a low point it might be a good idea to buy. This is especially a good idea if you want to buy the piece of land as an investment for future development or appreciation value.

Vacant land in South Africa will stay at this low price level for quite some time and that will not change soon. So you need to consider what the reasons are for buying a piece of land, building on it for residential purposes is a good option.

The building cost is currently quite high so it might work out much cheaper to buy an existing home.

Hidden Costs

When you buy a vacant piece of land to build on it later there are other considerations, you will be responsible for paying rates. Other costs might also be refuse removal and sewerage fees which must be paid monthly while you are the owner.

Other Risks

Before you buy a piece of land do research to see if there are electricity, water, and sewage connections available. Is the land in an area where residential development has taken place, if not must you pay for rezoning before you can build on it?

If there are no facility connections available you might want to reconsider because it is expensive to get it extended to your property. Depending on the reason for buying the land you might want to consider other things such as easy access to the land.

Bottom Line

At current prices and building costs, it might not be a good idea to buy vacant land in South Africa at this point in time. If you buy a piece of land for logistics purposes or in an agricultural area it might be a more feasible option.

Do your homework so you can do the best thing for yourself and your money.