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A Fin24 user is curious about the total percentage cost of selling a house and buying another at the same price. He writes:
What is the total percentage cost of selling a house and buying another one of the same price?
Does this cost impact on the performance of the economy in the following ways:
- A deterrent to moving house and changing jobs;
- A cost to hiring a person that has to move but is essential to the business.
- A cost in road accidents and in traveling costs, because the person does not want to sell and buy at such a high cost;
What would you say is the cost to economic growth?
Would the economy perhaps perform better if the cost was negative - that is, subsidised for job movers?
Greta Daniel, national sales and operations manager for Pam Golding Franchise Services, responds:
While there will be deliberation by home owners about a prospective move in the context of the current economy,in most cases the decision will be made out of a personal need to move.
Property has always been a long-term investment and if the home owner has kept up bond payments and been conscientious about maintenance, there should be capital growth on the sale of the property.
I am basing my answer on selling a home for R2.5m and buying a home for R2.5m, and a bond cancellation based on a bond of R1.5m.
The costs related to selling that need to be considered are capital gains tax as it applies to primary residence (bearing in mind that there is a R2m exemption on primary residence for natural persons), brokerage to the real estate agent, bond cancellation fees, and electrical inspection.
Brokerage, bond cancellation (on a bond of R1.5m) and electrical inspection would estimated to be in the vicinity of around R200 000 on a residential property sale of R2.5m, depending on negotiations.
When buying a residential property the cost implications are transfer duty, attorneys' fees, bond registration costs plus a relocation cost.
The prescribed costs for a R2.5m purchase would be around R160 000 (that is attorneys' fees and transfer duty) and sometimes companies will cover the cost of the furniture removal and offer their valued employees a reimbursement for soft furnishing such as new curtains.
However, if the relocation was made on a personal lifestyle premise, or the need to buy a smaller or larger property, to fit a new phase in family needs, the buyer would evaluate this in terms of savings on living costs, or opportunity for capital growth on a new property.
Property ownership has always been considered a fundamental in wealth creation, no matter what price band. It is also an emotional purchase which has to be weighed up in financial terms.
The National Credit Act and strict credit criteria regarding home loans limit debt exposure in our current market.
The effect on the economy should be viewed as a positive, by all the parties involved ie seller, buyer, investor, banks, brokers, and all affiliated businesses such as relocation companies and insurance companies.
- 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.
What is the total percentage cost of selling a house and buying another one of the same price?
Does this cost impact on the performance of the economy in the following ways:
- A deterrent to moving house and changing jobs;
- A cost to hiring a person that has to move but is essential to the business.
- A cost in road accidents and in traveling costs, because the person does not want to sell and buy at such a high cost;
What would you say is the cost to economic growth?
Would the economy perhaps perform better if the cost was negative - that is, subsidised for job movers?
Greta Daniel, national sales and operations manager for Pam Golding Franchise Services, responds:
While there will be deliberation by home owners about a prospective move in the context of the current economy,in most cases the decision will be made out of a personal need to move.
Property has always been a long-term investment and if the home owner has kept up bond payments and been conscientious about maintenance, there should be capital growth on the sale of the property.
I am basing my answer on selling a home for R2.5m and buying a home for R2.5m, and a bond cancellation based on a bond of R1.5m.
The costs related to selling that need to be considered are capital gains tax as it applies to primary residence (bearing in mind that there is a R2m exemption on primary residence for natural persons), brokerage to the real estate agent, bond cancellation fees, and electrical inspection.
Brokerage, bond cancellation (on a bond of R1.5m) and electrical inspection would estimated to be in the vicinity of around R200 000 on a residential property sale of R2.5m, depending on negotiations.
When buying a residential property the cost implications are transfer duty, attorneys' fees, bond registration costs plus a relocation cost.
The prescribed costs for a R2.5m purchase would be around R160 000 (that is attorneys' fees and transfer duty) and sometimes companies will cover the cost of the furniture removal and offer their valued employees a reimbursement for soft furnishing such as new curtains.
However, if the relocation was made on a personal lifestyle premise, or the need to buy a smaller or larger property, to fit a new phase in family needs, the buyer would evaluate this in terms of savings on living costs, or opportunity for capital growth on a new property.
Property ownership has always been considered a fundamental in wealth creation, no matter what price band. It is also an emotional purchase which has to be weighed up in financial terms.
The National Credit Act and strict credit criteria regarding home loans limit debt exposure in our current market.
The effect on the economy should be viewed as a positive, by all the parties involved ie seller, buyer, investor, banks, brokers, and all affiliated businesses such as relocation companies and insurance companies.
- 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.
