Cape Town – Foreign nationals looking to buy property in South Africa are subject to strict Exchange Control Regulations that limit how much they can borrow, experts warn.
According to Tax Consulting South Africa, while international buyers can qualify for mortgages, “the law explicitly determines how much you are legally allowed to borrow from local financial institutions, as well as the regulatory conditions which should be met to obtain such a loan.”
The main constraint is the so-called “50% Borrowing Rule,” which mandates a 1:1 ratio. For every Rand a foreign buyer invests into South Africa, a bank may lend an equivalent amount, effectively capping loans at 50% of the property purchase price.
“Property ownership is open to foreign nationals, but the borrowing framework is more technical, and that is where many buyers stumble,” the experts say.
“Without the right expert guidance, it is easy to receive conflicting or incorrect information about what foreign purchasers may or may not do. Understanding the rules upfront can save time, prevent frustration, and ensure that your South African property plans are structured correctly from the start.”
The lending process begins with Exchange Control Regulation 3(1)(f), which stipulates that “no person may grant financial assistance to a non-resident without the National Treasury’s permission.”
This regulation is enforced by the South African Reserve Bank’s Financial Surveillance Department and implemented through authorised banks.
While mortgages are allowed, the Currency and Exchanges Manual for Authorised Dealers governs how much can be borrowed, when exceptions apply, and what security is required.
Experts say that some foreign buyers may qualify for more than 50% financing if they live and work in South Africa, but the rules are highly technical and often misunderstood.
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Compiled by Betha Madhomu
