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A Fin24 user wants to buy a house and rent it out, but does not qualify for the amount needed to finance this. He writes:
I would like to buy a house for renting out purposes, but I do not qualify for the amount I need.
I wanted to know if there is a place where I can go or if the government can help me?
Fritz van Heerden, manager of Pam Golding Properties in Kuils River, responds:
Government's intention, as I understand it, is to assist people in acquiring a primary residence.
People who operate in the buy-to-let market generally do not meet the criteria to qualify for housing subsidies.
Government will only help with housing subsidies if the following criteria are met:
You qualify for a housing subsidy if all of the following statements are
true:
- You are married or cohabiting with a long-term partner. If you are married or cohabiting, it does not matter whether you have financial dependants or not.
or
You are single or divorced with financial dependants.
- You are a South African citizen;
or
You have a South African permanent residence permit;
- You are over 18 years of age;
or
You are under 18 years of age and married or divorced with financial dependants.
- You are of sound mind;
- Your gross monthly household income is less than R3 500;
- You have never received a subsidy from the government and neither has your partner;
- You have never owned property and neither has your partner;
- You and your family will live on the property bought with the subsidy.
Although I mentioned the intent of the government is to assist with a primary residence, I cannot find a direct prohibition to renting out a house that was subsidised.
I suppose it makes sense as people would have to be able to rent out their properties if they had to relocate due to various reasons, and were not able to sell their properties. So, you would have to see if you meet all the criteria.
For more information go to: http://www.westerncape.gov.za/
Home > Directories > Services > Housing > Subsidies & Assistance > Individual Housing Subsidies
Individual housing subsidies
Individual housing subsidies are available to low-income households, where an applicant wishes to buy a residential property for the first time.
The subsidy can be used to buy an existing house - including the property on which the house stands.
It can also be used to buy a house on a plot-and-plan basis, or to finish an incomplete house.
Successful applicants will receive this subsidy only once. It is not a cash pay-out, but is paid directly to a financial institution or a conveyancing attorney.
How much is an individual housing subsidy worth?
- If your household income is less than R3 500, you are eligible for a subsidy of R96 362. You do not have to repay this subsidy as it is not a loan.
- If you can prove that you are disabled or in poor health and if your household income is less than R3 500, you are eligible for a housing subsidy of R96 362, plus a set disability variance amount. This amount is to pay for the cost of any extra features your house may need, for example, a ramp for wheelchair access.
How much will you have to pay?
- You will have to pay the difference between the individual housing subsidy and the cost of the existing house.
For example, if you buy a house for R97 362 and receive a subsidy of R96 362, you will have to pay in R1 000, plus the transfer, bond registration and conveyancing attorney's costs.
However, if you buy a house for R90 550 and receive a subsidy of R96 362, you will be able to pay for at least part of the transfer, bond registration and attorney's costs out of the R5 812 that is left of the subsidy money.
Note that this money will not be paid to you, but directly to the relevant party.
How is the individual housing subsidy paid out?
A housing subsidy is not a cash pay-out but is paid directly to the financial institution from which you are receiving a housing bond (in the case of credit-linked individual subsidies) or the seller (in the case of non-credit-linked individual subsidies).
To prevent fraud, in cases where a homebuyer has to make a contribution to the cost of a house the government requires that this contribution be paid in full before the subsidy is paid out.
- Fin24
Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.
Disclaimer: Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers.
Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.
I would like to buy a house for renting out purposes, but I do not qualify for the amount I need.
I wanted to know if there is a place where I can go or if the government can help me?
Fritz van Heerden, manager of Pam Golding Properties in Kuils River, responds:
Government's intention, as I understand it, is to assist people in acquiring a primary residence.
People who operate in the buy-to-let market generally do not meet the criteria to qualify for housing subsidies.
Government will only help with housing subsidies if the following criteria are met:
You qualify for a housing subsidy if all of the following statements are
true:
- You are married or cohabiting with a long-term partner. If you are married or cohabiting, it does not matter whether you have financial dependants or not.
or
You are single or divorced with financial dependants.
- You are a South African citizen;
or
You have a South African permanent residence permit;
- You are over 18 years of age;
or
You are under 18 years of age and married or divorced with financial dependants.
- You are of sound mind;
- Your gross monthly household income is less than R3 500;
- You have never received a subsidy from the government and neither has your partner;
- You have never owned property and neither has your partner;
- You and your family will live on the property bought with the subsidy.
Although I mentioned the intent of the government is to assist with a primary residence, I cannot find a direct prohibition to renting out a house that was subsidised.
I suppose it makes sense as people would have to be able to rent out their properties if they had to relocate due to various reasons, and were not able to sell their properties. So, you would have to see if you meet all the criteria.
For more information go to: http://www.westerncape.gov.za/
Home > Directories > Services > Housing > Subsidies & Assistance > Individual Housing Subsidies
Individual housing subsidies
Individual housing subsidies are available to low-income households, where an applicant wishes to buy a residential property for the first time.
The subsidy can be used to buy an existing house - including the property on which the house stands.
It can also be used to buy a house on a plot-and-plan basis, or to finish an incomplete house.
Successful applicants will receive this subsidy only once. It is not a cash pay-out, but is paid directly to a financial institution or a conveyancing attorney.
How much is an individual housing subsidy worth?
- If your household income is less than R3 500, you are eligible for a subsidy of R96 362. You do not have to repay this subsidy as it is not a loan.
- If you can prove that you are disabled or in poor health and if your household income is less than R3 500, you are eligible for a housing subsidy of R96 362, plus a set disability variance amount. This amount is to pay for the cost of any extra features your house may need, for example, a ramp for wheelchair access.
How much will you have to pay?
- You will have to pay the difference between the individual housing subsidy and the cost of the existing house.
For example, if you buy a house for R97 362 and receive a subsidy of R96 362, you will have to pay in R1 000, plus the transfer, bond registration and conveyancing attorney's costs.
However, if you buy a house for R90 550 and receive a subsidy of R96 362, you will be able to pay for at least part of the transfer, bond registration and attorney's costs out of the R5 812 that is left of the subsidy money.
Note that this money will not be paid to you, but directly to the relevant party.
How is the individual housing subsidy paid out?
A housing subsidy is not a cash pay-out but is paid directly to the financial institution from which you are receiving a housing bond (in the case of credit-linked individual subsidies) or the seller (in the case of non-credit-linked individual subsidies).
To prevent fraud, in cases where a homebuyer has to make a contribution to the cost of a house the government requires that this contribution be paid in full before the subsidy is paid out.
- Fin24
Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.
Disclaimer: Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers.
Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.
