Selling a property involves more than just finding a buyer and signing on the dotted line. Many sellers focus on expected costs, such as estate agent commission, but overlook other expenses that can significantly impact their final proceeds. Being aware of these hidden costs can help you plan better and avoid surprises.
1. Bond Cancellation Fees
If you have an existing home loan, an instruction will need to be given to the bank to cancel your bond upon selling. Most banks require written notice before cancellation, and if this notice period isn’t met, penalty fees may apply. Additionally, the Conveyancers instructed by the Seller will charge a fee for handling the bond cancellation process.
2. Compliance Certificates
Property sales require sellers to obtain various compliance certificates before transfer. These typically include:
Electrical Compliance Certificate (COC) – Confirms that the electrical installations meet safety standards.
Plumbing Compliance Certificate – Required by the City of Cape Town to verify that water systems comply with municipal regulations.
Gas Compliance Certificate – If there are gas appliances, this certificate confirms installation compliance.
Beetle Certificate – Confirms that accessible timber elements are free from active infestation by wood-destroying insects.
If any of these systems require repairs before certification, the seller is responsible for the costs.
3. Municipal Clearance Figures
The conveyancers instructed by the seller must obtain a municipal clearance certificate before the property transfer can be effected. The City of Cape Town requires sellers to settle all outstanding rates, water, electricity, refuse, and sanitation charges. Additionally, an advance payment may be required to cover future charges for a few months. This amount is determined by the municipality and must be paid before the clearance certificate is issued. Any excess funds are refunded after transfer.
4. Body Corporate and Homeowners’ Association Fees
If your property falls within a sectional title scheme or an estate governed by a homeowners’ association (HOA), you’ll need a levy clearance certificate before transfer. The managing body will only issue this once all outstanding levies and special levies (if applicable) have been settled. There may also be an administrative fee for issuing the certificate.
5. Moving Costs
Once your home is sold, moving expenses can add up. Whether hiring a moving company or handling the move yourself, costs such as transport, packing materials, and possible short-term storage should be factored into your budget.
6. Occupational Rent Considerations
If you are remaining in the property after the agreed transfer date, you may be required to pay occupational rent to the purchaser. This amount is typically determined in the Offer to Purchase and is payable from the agreed occupation date until transfer is effected. Conversely, if the purchaser takes early occupation, they will be liable for occupational rent to the seller.
7. Capital Gains Tax (CGT) Considerations
Sellers may be liable for Capital Gains Tax (CGT) on the profit made from the sale of their property. While there is a tax exemption on primary residences up to a certain threshold, properties exceeding this amount—or those classified as investment properties—may be subject to CGT. Consulting a tax professional can help you determine your tax liability.
8. Repairs and Touch-Ups Before Selling
While not legally required, most sellers choose to undertake minor repairs and cosmetic touch-ups before listing their property. This could include fixing leaks, repainting walls, or replacing worn fixtures. A well-maintained home is more appealing to buyers and often results in a quicker sale at a better price. However, these costs can add up and should be factored into your selling budget.
9. Legal Fees for Special Cases
The Conveyancers instructed by the Seller are responsible for effecting the transfer of the property. While their costs are generally covered by the purchaser, there may be additional legal fees in specific situations, such as:
Resolving property boundary disputes.
Cancelling servitudes registered against the title deed.
Legal advice regarding co-owned properties or deceased estates.
If any of these apply to your sale, additional legal costs may arise.
10. Estate Agent Commission and VAT
Estate agents charge commission on the sale of the property, usually as a percentage of the selling price. It’s important for sellers to check whether VAT is included in this amount, as this can affect the final proceeds received. Always clarify the total commission and VAT obligations upfront with your estate agent.
Planning Ahead to Avoid Surprises
Understanding the hidden costs of selling property allows you to budget effectively and avoid last-minute financial stress. Before listing your home, consider consulting with a real estate professional or conveyancer to get a clearer picture of your expected expenses.
If you have any questions or need guidance tailored to your specific situation, we’re here to help every step of the way.
Sally Gracie
Chas Everitt Cape Town South
