The decision to raise the threshold at which transfer duty becomes payable from R500 000 to R600 000 is welcome news for the property industry, an estate agency head said on Wednesday.
Lew Geffen, chairman of Sotheby's International Realty, said the increase announced by Finance Minister Pravin Gordhan in his 2011 Budget will give many more people the opportunity to become home owners and get on the path to wealth creation.
Herschel Jawitz, CEO of Jawitz Properties, said the increase in the threshold means that for a property of R600 000 and higher, the transfer duty saving will be R5 000. “For first-time buyers this is a meaningful amount of money.”
This is a clear indication, said Jawitz, that government is aware of the issue of homeownership, especially for first-time buyers.
“The move is a surprise given that property prices have not really increased to the degree that would necessitate an inflationary increase in the threshold.
“With regard to the overall budget, allocations to the areas that directly impact on property values such as policing and road infrastructure are very positive,” Jawitz said.
Dr Andrew Golding, CE of the Pam Golding Property group, said that while they welcome the increase in the transfer duty threshold, they had hoped it would be a more significant increase.
This, he said, is given the fact that aspiring home owners are faced with numerous costs when acquiring a home, including ever-increasing rates and electricity tariffs.
“We do welcome, however, the announcement that government will explore an incentivised savings scheme for first-time home buyers, and look forward to further details regarding this,” he said.
“On our wish-list for this year’s Budget was for mortgage payments to be tax deductible for home owners, as is the case in some overseas countries and perhaps this could be considered for first-time buyers,” Dr Golding said.
Young Carr, CEO of Aida National Franchises, said the change in the transfer duty threshold will “especially help low income buyers to acquire their own homes”.
Carr said they were pleased with the R122bn allocation for the provision and improvement of housing, water and community amenities this year, and the announcement that government is to spend more than R21bn over the next three years upgrading around 400 000 homes in informal settlements.
"In our opinion, decent housing is just as important as decent jobs to give the young people of South Africa hope in the future,” he said.
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