Conveyancer’s fees to increase from 1 March 2013

Conveyancer’s fees to increase from 1 March 2013

Who gains the most – Attorneys or the State?

With the imminent increase in transfer-and bond fees (transfer fees will increase by about 10% and bond fees by between 20%-25%), the public is bound to get upset about yet another increase.

This prompted me to calculate the percentages of fees and expenses the transfer of properties in three price ranges with the aim of establishing who stands to gain more from property deals: The State or Attorneys.

The calculation below presumes that a client registers a bond for the same amount as the purchase price. In practise this seldom happens as financial institutions are usually only prepared to grant 100% bonds up to R1 500 000,00. Expenses paid to third parties such as local authorities, service providers to attorneys and financial institutions (who charge an initiation fee of R5 700 (VAT incl) for every bond) were disregarded for purposes of the calculation.

Purchase price/ Amount of bond	Transfer duty (SARS)	VAT SARS	Transfer Deeds Office Levy	Transfer fee (T Att)	Postages & Petties (T Att)	Bond Deeds Office Levy	VAT on bond fee & expenses	Bond Fee (B Att)	Postages & Petties (B Att)	Total all	% to State	% to Attorneys
800 000	6 000	1 694	750	11 550	550	750	1 380.40	9 360	500	32 534	32.50%	67.50%
1 500 000	37 000	2 387	850	16 500	550	850	2 018.80	13 920	500	74 576	57.80%	42.20%
3 500 000	197 000	5 327	950	37 500	550	950	3 497.20	24 480	500	270 754	76.72%	23.28&

The table above speaks volumes. It is thought that at present the average property in South Africa sells for R850 000,00. At that price Attorneys obviously gain the most. But from approximately R1 500 000,00, the State earns close to 60% and more of the total fees and expenses bill. And remember, as attorney’s fees increase, so does VAT.

The reason for this is that Transfer Duty was reduced a few years ago to assist entry level purchasers of property. The formula to calculate Transfer Duty is at present the following:

Value of property	Transfer duty
R0-R600 000                        R600 001-R1 000 000        R1 000 001-R1 500 000 R1 500 001 and above	0% 3% of value exceeding R600 000 R12 000 + 5% of value exceeding R1 000 000 R37 000 + 8% of value exceeding R1 500 000