Foreigners may purchase and own immovable property in South Africa without any restrictions, as foreigners are generally subject to the same laws as South African nationals. The only foreigners disqualified from owning property in South Africa are foreigners that are here illegally.

It is thus possible for a foreign individual to own property individually, jointly or in undivided shares. Foreign companies and trusts are also permitted to own property in South Africa, provided that they are registered in South Africa as an external company.

What is required as a foreigner purchasing property?

While purchasing property in South Africa as a foreigner has its advantages, it is important to bear the following considerations in mind, namely:

Visa requirements

Non-residents would need to comply with the Immigration Act 13 of 2002 if they intend to stay in their South African property for extended periods. The permit for which they apply would largely depend on their country of origin, the purpose of their visit and how long they intend on staying in South Africa.

Although there is a lengthy list of countries who do not need visas for visits of less than 90 days, foreign nationals from visa-restricted countries will have to apply for the relevant visa.

Capacity to enter into an agreement

Should the foreign purchaser not be in South Africa to sign transfer or bond documents, such purchaser will need to have the documents signed either at a Notary Public, who (depending on the country of signature) may have to have the documents Apostilled; alternatively the purchaser could also sign the necessary documents at a South African embassy.

Additional costs

Foreign nationals are, as is the case with South African residents, liable for any transfer duty, should the value of the property exceed R1,000,000 (one million Rand). Properties purchased from developers, on the other hand, will generally attract Value Added Tax (VAT) as opposed to transfer duty and which VAT sum will be included in the purchase price. They will also be liable for the ordinary costs of transfer which are payable by purchasers when purchasing property (kindly consult our calculator for an estimate on the property transfer costs).

It is very important to note that foreigners who purchase property in South Africa must register as South African tax payers for their Capital Gains Tax obligation. Should the foreigner wish to sell his property, a withholding tax of a certain percentage on the proceeds of the sale of a property of more than R2,000,000 (two million Rand) becomes payable until clearance is received from the South African Revenue Service from any amount to be paid to the seller or the seller’s agent. This can be avoided if the South African Revenue Service is approached prior to the transfer to obtain a tax directive and in which case only the directed amount (if any) will be withheld.

Financing

South African exchange control regulations determine the extent to which foreign buyers can borrow money locally to fund the purchase. Foreign buyers not working in South Africa will typically not be granted more than half of the purchase price to fund the purchase. The balance must then be paid in cash and this may be cash generated in South Africa, or off-shore funding.

Foreigners who have temporary work permits may be granted more than half of the purchase price, but the loan amount will still depend on the bank’s criteria. A condition of the loan would be that the buyer must reduce the bond to less than half of the registered amount before they leave South Africa to go back abroad. Some institutions would possibly require a work permit of at least four (4) years before they would consider a bond for more than half of the purchase price.

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The Covid-19 pandemic and provisions of the Disaster Management Act have reduced already-slow Home Affairs processes to a crawl – impacting thousands of people and creating a backlog that could take years to clear.

The impact of the Covid-19 pandemic is set to further delay and derail Home Affairs processes, with potentially tens of thousands of people negatively impacted as a result.

While the Department of Home Affairs was mandated to limit services at the onset of the State of Disaster in March last year; the Department has been slow and inconsistent in resuming services.

Currently, only visa related services are being rendered, with no permanent residence or citizenship-related services being permitted.

After initially issuing badly drafted and confusing directives, the Department confirmed in March this year that it had extended the validity of short term visas to the end of June this year, and the validity of long term visas to the end of July, which allowed breathing room for those whose visas expired during the national state of disaster.

However, the scene is being set for a massive backlog at the end of June and July, when thousands of people must submit applications for renewal at a time when Home Affairs processes appear to be slower and more inconsistent than ever before.

Slow and inconsistent processes challenge foreigners

Despite officially not currently processing permanent resident and citizenship-related applications; Home Affairs is in fact processing some permanent residence applications, but with startling inconsistency, and is rejecting more than it approves.

Applicants are not able however to appeal these negative outcomes since the Department is not meant to be rendering these services, which is also going to create a massive backlog once they resume doing so.

It should be noted that the Preamble to the Act provides, amongst other things, that visas and permanent residence permits are to be issued expeditiously and on the basis of simplified procedures and objectives without consuming excessive administrative capacity.

The Department is not fulfilling its obligations in this regard: random rejections are set to create huge administrative burdens for an already severely understaffed department.

Our office is seeing many visa and permit applications rejected for reasons that should not apply. In the case of temporary visa applications, where it was once very rare for an application to be pending for more than three months, we now have a backlog of approximately five months, while the Department states it is currently not dealing with citizenship services, determination of status applications or anything related to them – even enquiries.

This raises questions about how a backlog can be possible when the Department offers fewer services than it did before the pandemic.

In addition, the lack of focus on permanent residence raises concerns that efforts may still be ongoing to remove permanent residency as a status category and eliminate the possibility of becoming a citizen by naturalisation, as regulated in the South African Citizenship Amendment Act.

There are signs based on the Minister’s White Paper in 2017, and a revised immigration bill currently being drafted, that categories of visas and permits currently in existence may be on their way out, placing holders of these visas and permits in a precarious position.

We are also seeing a growing number of rejections of critical skills visa applications, freelance work applications by foreign spouses of South Africans, and work authorisations for foreigners with a retired persons visa.

These rejections, often for nonsensical reasons – for example, Department staff stating that they could not get hold of an applicant’s employer –  strip people of their right to work. Because appeals take so long to process, many applicants risk losing their jobs, adding to the unemployment problem at a time when the government should be accelerating the labour market and helping grow the economy.

This situation will result in a flood of applications and appeals when the Department resumes full service again.

Hope for South Africans

However, while challenges remain for foreign-born people seeking to live and work in South Africa; there is a glimmer of hope for South African-born people hoping to work abroad and remain South African citizens.

Currently, South Africans are frequently stripped of their South African citizenship without warning if they apply for citizenship of another country.

A recent court case launched by the Democratic Alliance challenges this, arguing that section 6(1)(a) of the Citizenship Act 88 of 1995 is inconsistent with the Constitution because certain clauses of the act deprive citizens who have assumed foreign citizenship of their right to vote, hold a South African passport and retain citizenship.

The Minister of the Department of Home Affairs countered that South Africans could retain their South African citizenship – and thus have dual citizenship – if they complied with the steps laid out in the Act.

The Act states that individuals will automatically lose their citizenship unless they apply for a letter of retention to keep their South African citizenship, and specifically excludes dual citizenship by minors and/or by marriage.

As South Africans confronted by job losses and a difficult economic environment increasingly look to other countries for opportunities, they should be able to retain their citizenship while abroad – if they follow the processes.

For those who were summarily stripped of citizenship, there is a hope that while judgement in this case was reserved, if the Democratic Alliance should win, they could be permitted to reclaim their citizenship in future.

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With the COVID-19 pandemic easing, Baker Donelson's Business Immigration Team is seeing an increase in demand for U.S. employer-based employment visas. However, even as we have been obtaining employment visa petition approvals at a record pace for L-1, E-2, H-1B and O-1 employees, at the same time, these and other international business visitors and employees from around the world are facing challenging COVID-19 travel restrictions. Fortunately, it may be possible for an individual otherwise covered by one of the geographic COVID-19 travel restriction proclamations to receive a National Interest Exception (NIE) to allow travel and entry to the U.S.

National Interest Exceptions for Certain Nonimmigrants and Students

On April 26, 2021, the Department of State updated its NIE page to expand certain eligibilities to China, Iran, Brazil, South Africa, Schengen Area, United Kingdom, and Ireland. Most recently, on April 30, 2021, the Department of State included India in its NIE policies.

Key eligibilities for travelers who were present in the above-listed countries include:

1. Travelers who are seeking to provide vital support for critical infrastructure; journalists; students and certain academics covered by exchange visitor programs.

Travelers in these categories who have a valid visa in the appropriate class or who have a valid Electronic System for Travel Authorization (ESTA) for travel under the Visa Waiver Program and seek to travel for purposes consistent with ESTA authorization, should contact the nearest U.S. embassy or consulate before traveling, if they believe they may qualify for an NIE. There are 16 critical infrastructure sectors whose assets, systems, and networks, whether physical or virtual, are considered vital to the U.S. By letter in support of the NIE application, the U.S. employer is required to describe how its business qualifies under one of the named critical infrastructure sectors, how the individual traveler's activities in the U.S. directly support the business operations, and how his or her presence in the country is essential to the ongoing success of the U.S. employer's business. It is a good idea to include a copy of organization chart that shows the applicant's position and the manager to whom he or she reports, as well as other employees he or she may supervise, if any. Any member of our Business Immigration Team can assist with questions regarding the application process.

If an NIE is approved, it is valid only for 30 days to be used for a single entry into the U.S. on either a valid visa or ESTA authorization, as appropriate.

2. Qualified travelers seeking to enter the U.S. for purposes related to humanitarian travel, public health response, and national security.

3. F-1 and M-1 Students – The updated NIE policy states, "Students and academics subject to these proclamations due to their presence in China, Iran, Brazil, or South Africa, may qualify for an NIE only if their academic program begins August 1, 2021 or later."

The Department of State (DOS) notes that the pandemic continues to limit the number of visas the U. S. embassies and consulates abroad are able to process. Until the DOS is positioned to process more visa applications, for certain reasons of business necessity, our Baker Donelson team can assist with requests for expedited visa appointments in connection with the NIE application as well. See the April 27, 2021 Department of State Media Note announcing the policy, titled Uniform Global National Interest Exceptions to COVID-19 Travel Restriction.

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The four-year Zimbabwe Exemption Permit lapses in December and the South African government has not yet indicated if it will renew it.

Thousands of holders of the Zimbabwe Exemption Permit (ZEP) are living in uncertainty because the South African government has not yet indicated whether it will renew their permits. About 180 000 Zimbabweans hold ZEPs. The four-year permit expires on 31 December 2021.

Some Zimbabweans said their banks had already warned them to renew their permits or face closure of their accounts in December.

The permits were first issued in 2010 under the Dispensation of Zimbabweans Project (ZDP). The programme was renewed in 2014 as the Zimbabwe Special Permit (ZSP), before the ZEP was introduced in 2017.

Zimbabwe nationals desperate to resolve ZEP renewals

A Zimbabwean, who we will only identify as Matthew, said he can’t make plans for the future. He is a supervisor at a restaurant and lives in New Brighton with his wife and two children. He has been living in South Africa for 20 years.

“I started with an asylum seeker permit before I got the ZDP, ZSP and the ZEP. I have lived in this country for the better part of my adult life. It will be heartbreaking if the government refuses to renew the permits.

“I have two bank accounts and insurance as well as burial policies. These will all go down the drain if the government refuses to extend the permits.”

He said he is established in the community and his children speak fluent Xhosa. “They identify themselves with local culture because they were born here,” he said.

Another ZEP holder said South Africa should grant citizenship to those who have lived legally in the country for five or more years.

“Some people have invested a lot in the country. Others have bought immovable property, which they will be forced to leave,” he said.

Home Affairs mum on ongoing delays

Chairperson of the Zimbabwe Migrants Support Network Chris Mapingure said, “We appeal to the Department of Home Affairs to issue a statement regarding the renewal of the ZEP.”

Chairperson of the Zimbabwe Exiles Forum Advocate Gabriel Shumba said he is receiving an unprecedented number of enquiries from concerned permit holders.

“It is an issue that seriously affects thousands of Zimbabweans, especially with some banks threatening to close accounts.”

Residence by investment programmes are available in several EU countries. These programmes grant visas in return for investments in specified areas. Drawing on a new study, Kristin Surak examines the uptake of these programmes across the EU, the characteristics of applicants, and the nature of their investments.

Who wants to buy a visa? The spread of so-called golden visa programmes over the past decade has raised many questions about these opportunities to gain a residence permit – for those who can afford it. All one needs to do is park around €250,000 or so in a specified investment area – usually real estate, bank deposits, or government bonds – and go through a standard application process, which can take just a few weeks. Spouses, children, and sometimes even parents can be included on the application, securing residence benefits for the whole family. Such programmes can be found around the world and are quite common in Europe, where half of all EU member states host them.

These options are attractive for several reasons: they secure the right to reside in the issuing country, they may bring a return on the investment, and they bring travel benefits within the wider Union. Since the Covid-19 pandemic, too, a new bonus has been noted as well: the opportunity to enter Europe even when borders are raised. The work-around has not been lost on wealthy Americans who saw their mobility options plummet during the height of travel restrictions. For much of 2020, an eagle-embossed blue passport was simply not enough to get into many countries. But because most EU member states allowed both their citizens and their residents to return, a golden visa could have done the trick in many places.

But who participates in these programmes? A lot of questions have been asked about benefits, risks, and even security issues around golden visa schemes, but without systematic quantitative research on programme uptake, such assessments remain speculative. In a recent study, I use new data to look into who and how many go for these options, which have been available in fourteen EU member states, including the UK before Brexit.

Across time, EU countries have approved around 40,000 applications for golden visas. However, the actual number of people gaining residence permits is much greater since each application includes an average 1.6 family members in addition to the investor. As such, over 100,000 people have gained EU residence through them. Yet within the Union as a whole, this represents a tiny proportion – about 1 percent or less – of longer-stay residence permits issued. As such, they’re not a very prominent way of gaining access to Europe. Nonetheless, smaller countries with popular schemes, like Greece and Portugal, can find that their golden visa programme accounts for more than 10 percent of resident permits issued in recent years.

If fourteen EU member states have – or have had – programmes, not all have seen similar uptake. Some places, like Estonia, Luxembourg, and the Netherlands, have welcomed fewer than a dozen people in total through these measures, and most countries with programmes approve fewer than 500 applications annually. Instead, interest is concentrated on just a handful of options: in particular, Portugal, Spain, Latvia, and Greece. These four countries have accounted for 70 percent of all approved applications and almost 60 percent of all revenue generated.

Where do the investors come from? Almost 50 percent are Chinese, followed by Russians who constitute around one-quarter of the participants. Both countries saw the growth of substantial private wealth during the transition from communist to capitalist systems under continuing autocratic rule – a combination that stokes interest in investment migration options. Outside these two behemoths, the most popular countries of origin read as a list of political hotspots: Brazil, Turkey, Ukraine, South Africa, Iran, Egypt, Lebanon, Iraq. This finding aligns with research on demand for citizenship by investment programmes that shows that many investors see their new documents as an insurance policy or a way to hedge risks. Furthermore, demand is patterned by colonial connections: Portugal sees a disproportionate number of Brazilians, as does Greece with Turks and Latvia with Russians.

Migration is often a family decision, and the mobility opportunities offered by golden visa programmes are no different, with an average of 1.6 family members added to each application – a number that is growing. Indeed, some countries have expanded their family reunion provisions to draw in more investors. The result is that significantly more people gain residence than investment monies brought in. Yet these are still noteworthy, with the programmes now attracting over €3 billion annually to the EU. The most popular places, like Portugal, Spain, and Greece, attract around €750 million each year through the options.

Finally, some evidence suggests that that a few individuals are “serial investor migrants.” That is, they acquire citizenship through investment in a place like Saint Kitts or Dominica and then use their new nationality when applying for residence by investment. The end result is to multiply the options in their “mobility portfolio.” Though complete numbers are not available, there are at least 100 serial investor migrants, with most gaining residence in the UK, though some have acquired visas for Hungary, Ireland, Latvia, and Portugal. Indeed, the island federation of Saint Kitts and Nevis – whose entire population of 55,000 would fit into Arsenal Stadium – had the highest per capita uptake of the UK’s Tier 1 (Investor) visa.

The impact of Covid-19 on the programmes remains to be seen, and it will take some time for its impact to appear. Many government ministries slowed or stopped application processing during the pandemic, and travel to submit biometric information for the applications has yet to resume completely. The result is long backlogs in many countries. However, it is likely that the pandemic, as well as Brexit, will bring a change in the demographics of demand.

Principally, it is likely to increase. The pandemic has meant that even more wealthy people have felt hemmed in by borders and are likely to hedge the risk in the future by ensuring they can move smoothly across them and spend time in desirable locales. But the composition may change as well as more wealthy people from western countries, suddenly facing limited mobility, search for solutions. As a result, Americans and Brits may fuel a boom in demand for golden visas

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