Why is it so hard for foreigners to apply for a bond? | Legal Articles


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Why is it so hard for foreigners to apply for a bond?

Foreigners wishing to buy properties in South Africa are finding it difficult to obtain residency permits and home loans, even though they may have high level qualifications and skills that would make them an asset to the country.

Bond applications - Conveyancing attorneys Cape Town

Generally, foreign national bond applications are assessed under three categories:

  • Temporary residency permits, which include the applicant’s work permits, the permit for the spouse and other documentation.
  • Permanent residency permits, which are usually issued to foreign nationals who have been in South Africa with temporary permits for at least five years. Holders of this permit can apply for a South African identity document, which will show that they are non-South African citizens. This document gives them the same rights to mortgage loans as those that apply to South Africans. This means that they are not restricted unlike most foreigners who usually can only apply for a 50 percent loan.
  • If and when a foreign national who has qualified for permanent residency renounces his previous citizenship, he can attain South African citizenship which is the third category. However, if his country of origin allows dual citizenship, he can hold that citizenship as well as South African citizenship.

Bond Application Process

In order to get a bond, the foreign applicant has to have a valid work permit, which must be stamped in his/her passport. This work permit has to have at least three years remaining before its renewal date, in order to qualify the applicant for a home loan.

Even with all the documentation in place, such an individual will still be unable to get nearly the full loan amount on his purchase because most banks limit the Loan to Value to 50 percent regardless of the fact that the applicant’s salary is paid into a South African bank account.

Foreigners who believe they qualify as refugees face even greater difficulties in qualifying for a bond. The most difficult challenge being to get the refugee maroon identity document, which has to be renewed every two years.

Trying to assist people and in turn contribute to the South African economy is made more difficult by inefficiencies and very lengthy delays at the Home Affairs office. Such difficulties occur on both first-time permit applications and on renewals, which can take more than a year to be approved by the Department of Home Affairs.

There were two examples where highly qualified individuals faced difficulties with this process. In one case, a qualified female mining engineer holding a unique level of excellence achieved by only one other person in the world had been “blocked” for eight months, despite having an employment contract with Gencor.

In another case, a USA professor in virology could not get a work permit for six months even though he is a recognised international expert in AIDS treatment.

Van Deventer & Van Deventer Inc. – Conveyancing Attorneys in Cape Town and Johannesburg

South Africa is desperately short of qualified people genuinely able to help the country attain higher growth. Thus, instead of making this process difficult for them, we should be trying harder to assimilate them and assist them in becoming homeowners.

For legal assistance, please contact us.

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