Property experts are hoping that today’s Budget Speech will see the transfer duty exemption being increased to allow more South Africans to get onto the property ladder.
They also want national government to introduce both incentives for households and businesses that install solar features, and tax relief measures for individuals that have had to endure the costs of other devices to mitigate load shedding.
These include gas stoves, generators, invertors, UPS devices, surge protection devices, battery-powered LED lighting, batteries, as well as the costs of purchasing and running generators – including for the purposes of security, says Andrew Golding, chief executive of the Pam Golding Property Group.
“Surely such items, which carve a chunk out of household disposable income – and amid the National State of Disaster declared for the energy crisis – should be considered for tax relief for financially over-burdened consumers.”
The Group would also like to see an increase in the threshold for transfer duty exemption because it currently stands at below R1 million while, according to ooba, the average price paid by first-time home buyers, was R1.12 million as at December 2022.
“Applications from first-time home buyers slumped to 45.8% (December 2022), the lowest reading since early 2017 as the cumulative impact of repeated interest rate hikes weighed on household finances.”
The incentives for households to install solar, he says, will potentially add value to homes and, once again, assist the economy by helping off-set the drag of load shedding, so it is hoped that the National Budget will include some relief for businesses and households for this purpose.
This will also help keep the most-affected small and medium businesses afloat.
Because the property market is very closely linked to how the country’s economy performs, Adrian Goslett, regional director and chief executive of RE/MAX of Southern Africa, is hopeful that the budget speech will pose “achievable solutions” to the factors that pose the greatest risks to our economic growth. Load shedding is the “most important” area of concern.
Herschel Jawitz, chief executive of Jawitz Properties is also wishing for an increase to the transfer duty exemption.
“Given the pressure on disposable income which impacts on first-time buyers, it would help this sector of the market if this threshold was increased. First-time buyers are very ‘cash sensitive’, and even a marginal increase in this threshold might impact positively.”
However, he notes that an increase in the threshold means less money for government, “and the government needs money”. For this reason, and the fact that there is pressure on the government in terms of spending in an economy that is “barely growing”, Jawitz does not belief there is likely to be any property-related relief in today’s budget.
“The transfer duty percentage brackets and the R2 million capital gains tax exemption are also unlikely to change.”
Several socio-economic factors impact the property market directly, with affordability, creditworthiness and confidence in local government the biggest, says Paul Stevens, chief executive of Just Property.
“I therefore eagerly anticipate fiscal moves that will positively impact these, particularly investment in infrastructure and job creation.”
Samuel Seeff, chairman of the Seeff Property Group, says the country “desperately” needs a pro-growth budget aimed at returning the economy to a growth trajectory.
“We would also like to see the interest rate come down again so that the property market can be reignited.
“This will require a containment of costs, especially those resulting from the Eskom-energy crisis. It is therefore vital that urgent measures are taken to stabilise Eskom and the energy supply. We also need to see investment into infrastructure maintenance and development, which are essential for economic growth.”
Aside from government intervention, he says the budget should include interventions for local municipalities to play a bigger role in alleviating the pressure of power outages. This can be achieved through measures such as taking traffic lights off the grid, whether with solar or back-up battery systems.
Seeff would also like to see tax breaks for solar and alternative energy solutions in households and businesses as an “urgent boost to keep the economy moving”. Furthermore, the house price threshold for exemption from transfer duty should be increased as it has been R1 million for over two years.
“Transfer duty needs an overhaul to reduce transaction costs, especially for first-time buyers, but also for the price bands above R5m where an increase in sales volumes can generate significantly more income for the economy and fiscus. You have to sell many more homes at R1m to generate the direct and indirect economic benefits that a R10m or R20m+ sale does.”
He adds: “As we have seen during the Covid-induced low interest rate period of 2020 to early-2022, providing measures which boost the property market can result in a significant economic boost. This resulted in transaction volumes and values traded over the past two years (2021 and 2022) being the highest on record.”
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