The transfer duty tables have been adjusted to account for property price inflation, spelling good news for buyers.

The threshold below which transfer duty is not payable has increased by 10%, from R1.1 million to R1.21 million, says Herschel Jawitz, ceo of Jawitz Properties.

For a first-time buyer, the savings will be R3 300, which is a meaningful amount of money. “The transfer duty saving will be similar for a purchase price of R1.5 million. On a purchase price of R2 million, a buyer will now pay R7 839 less transfer duty than last year,” Jawitz said.

He was reacting to the tabling of the 2025 Budget Speech by Finance Minister Enoch Godongwana on Wednesday afternoon.

Jawitz said the adjustments to the transfer duties send a very positive signal to the market, which is already starting to see the benefit of lower interest rates and improved overall sentiment. "Buyers are feeling more positive, and the transfer duty adjustments will add to the improved level of buyer activity we are seeing in the market," he said.

He said given the state of the country's finances and the fact that property prices in most parts of the country have not increased by 10% over the last few years, the adjustment to the transfer duty brackets by 10% is surprising and very positive. “There have been no changes to the Capital Gains Tax on the sale of residential property,” Jawitz said.

However, the Vat increase is not great news. Dr Andrew Golding, chief executive of the Pam Golding Property group, said while the National Treasury was faced with a challenging balancing act in delivering the National Budget, the increase in VAT, albeit 0.5% in the short term – with a further 0.5% the following year (2026/27) - will impact already cash-strapped consumers, particularly those who can ill afford it – this despite the increase in zero-rated foods to cater for the poor.

"With citizens about to be hit with hefty electricity hikes – which will attract increased VAT, this simply increases financial pressures on consumers who must also pay VAT on other municipal tariffs – all of which adds up to a sizeable share of their monthly income."

Golding said from a property perspective, there are a number of VAT-inclusive services associated with the purchase of a home, for which buyers will need to allocate additional budget, which will impact particularly on first-time buyers seeking to gain a foothold on the first rung of the property ladder.

There was some good news for homebuyers in the Budget, as the thresholds for transfer duties will be adjusted by 10% to compensate for inflation. Obviously, it was difficult to adjust the transfer duty thresholds again with current pressure on the fiscus, but the threshold for exemption from paying transfer duty was lifted from R1.1 million to R1.21 million This is particularly positive news for first-time homebuyers as the average price paid by a first-time buyer in early-2025 was R1.24 million, according to ooba Home Loans.

Dr Omalola Arise, who is an Academic at the Management College of Southern Africa (MANCOSA) said the South African government’s decision to increase VAT from 15% to 15.5% in 2025, followed by a further rise to 16% in 2026, is set to have far-reaching effects on the property market, broader economy, and business operations.

She said the VAT hike aims to generate R28 billion in additional revenue to support critical public services, but it comes at a time of slow economic growth and high consumer inflation. “The property sector, in particular, will feel the strain as new developments become more expensive, transaction costs rise, and landlords may pass on higher operating expenses to tenants through increased rentals.

While VAT is not applicable to second-hand property sales, legal, agency, and maintenance costs will see upward pressure, potentially discouraging property investments,” Arise said.

She added that from an accounting and business perspective, the VAT increase necessitates strategic financial planning.

“Developers and property investors will need to adjust cost structures, while businesses must assess VAT efficiency and optimise cash flow management to accommodate higher operational costs.

"Consumers, who are already facing cost-of-living pressures, may limit spending, which could negatively impact businesses dependent on discretionary purchases, such as home improvements, retail, and construction services. While the government claims that VAT is the least harmful tax adjustment compared to increasing corporate or personal income taxes, it still risks slowing economic activity in key sectors.

The academic said to mitigate the impact, businesses should reassess pricing models, explore tax-efficient structures, and time major expenses wisely before the next VAT hike in 2026.

Arise said that meanwhile, the government may need to expand VAT relief measures or introduce targeted incentives to support industries most affected by the change.

Professor Waldo Krugell, an economist with the School of Economic Sciences at the North-West University (NWU) said the Minister of Finance "has truly performed a balancing act this year".

He said the big question, of course, was where he could cut spending or find additional sources of revenue. “In the end, he is continuing spending on the Social Relief of Distress grant, making provision for positions for doctors and teachers, and keeping the 5.5% salary increase for public servants on the books. He manages this by increasing the VAT rate by half a percentage point this year and another half next year. He does not provide any relief for bracket creep, but at least keeps the fuel levy unchanged. There is also support to protect the poorest against rising living costs in the form of increased grants and the addition of a few more VAT zero-rated products,” Krugell said.

The economist said Godongwana has done what he can with the limited fiscal space available. He said the Minister continues efforts to stabilise government debt, even though it will end up at a slightly higher level, promises more investment in infrastructure, and proposes plans to increasingly involve the private sector in electricity transmission and rail transport. “High-income earners will have to bear a larger share of the additional spending, but the VAT rate increase means that everyone will carry a part of the burden. Once the debate over rands and cents is settled, we should focus much more on how to accelerate the reform process.”

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