🕊️ Financial PlanningBuying a home in South Africa: bonds, transfer duty and First Home Finance
South Africa has no compulsory housing fund and nothing is deducted from your pay for housing. Home finance is a mortgage — a 'bond' — from a bank, and the government helps in two ways: fully subsidised RDP houses for very low incomes, and the First Home Finance subsidy (formerly FLISP) for first-time buyers in the 'gap market' who earn too much for an RDP house but struggle to get a full bond. This guide covers the bond, the upfront costs, and the subsidy.
The bond and what it costs upfront
Bonds come from the big banks (Standard Bank, FNB, Absa, Nedbank, Capitec) and are usually priced off the prime rate, so your instalment moves when the Reserve Bank changes rates. A bond originator (ooba, BetterBond and others) can submit your application to several banks at once for free and let you compare offers. First-time buyers can often get a 100% bond, but a deposit of 10% improves the rate.
The upfront costs are separate from the deposit: transfer duty (see below), the transferring attorney's conveyancing fees, the bond registration attorney's fees, and Deeds Office and admin charges. On a lower-value home these can add up to a meaningful percentage of the price, so budget for them.
Transfer duty
Transfer duty is a tax the buyer pays on the purchase of property. There is no duty on the first R1,100,000 of value; above that it rises on a sliding scale (3%, then 6%, 8%, 11% and 13% on the highest bands). Many first homes fall under or just over the R1,100,000 line.
If you buy a newly built home directly from a VAT-registered developer, you pay VAT in the price instead of transfer duty — you do not pay both. Your conveyancer works out which applies.
First Home Finance (formerly FLISP)
First Home Finance is a once-off government subsidy for first-time buyers with a gross household income roughly between R3,501 and R22,000 a month. The subsidy is on a sliding scale — larger for lower incomes — and is paid towards your deposit or used to reduce the bond amount, which lowers the monthly instalment. It is administered by the National Housing Finance Corporation and you usually apply once your bond is approved in principle.
You must not have owned property before and must be a South African citizen or permanent resident. If you qualify, the subsidy is often the single biggest lever on whether the bond is affordable, so check it before you commit to a price.
Frequently Asked Questions
- Is anything deducted from my pay for housing in South Africa?
- No. There is no housing fund and no payroll housing levy. Home finance is a bond from a bank. Government help comes through fully subsidised RDP houses for very low incomes and the First Home Finance subsidy for the gap market.
- How much is transfer duty?
- Nothing on the first R1,100,000 of the price. Above that it rises on a sliding scale from 3% up to 13% on the most expensive bands. New homes bought from a VAT-registered developer carry VAT in the price instead of transfer duty.
- What is First Home Finance (FLISP)?
- A once-off government subsidy for first-time buyers earning roughly R3,501 to R22,000 a month (gross household). It is a sliding-scale amount paid towards your deposit or used to cut the bond, administered by the National Housing Finance Corporation. You apply once your bond is approved in principle.
Informational content, not financial, tax or legal advice. Check amounts, limits and current rules directly with the official sources (the the UIF, the South African Reserve Bank, Tax Administration South Africa, the Corporation for Deposit Insurance) before making a decision.
