Budget 2025: what agents need to know

Jani le Roux

17 March 2025

Last week Finance Minister Enoch Godongwana presented his 2025 Budget after a much-publicised delay. We’re giving you a snapshot of the good and the bad, but before we delve in, it is important to note that this budget, while presented, has not been approved. The next few weeks will likely deliver a few surprises as the various departments jockey for amendments.

The good news

Transfer duty: The threshold has been increased by 10% from R1.1 million to R1.21 million. “According to the latest BetterBond Property Brief the average house price for first-time buyers is R1.3 million so increasing the transfer duty threshold certainly helps this buyer segment”, says Jan le Roux, CEO of Leapfrog Property Group.

No adjustments to certain taxes: “There have been no adjustments to capital gains tax, dividend tax, donations tax or estate duties. All property owners who have undertaken estate planning or investment and financial planning based on these taxes will be able to keep their plans stable”, explains Renier Kriek, MD of Sentinel Homes.

Investment in infrastructure: “It was positive to note that the critical need for infrastructural improvements has been highlighted in today’s National Budget, as investment in sound infrastructure with a focus on energy, clean water supply and effective sanitation, well-maintained roads and other transport facilities, as well as affordable and effective broadband connectivity, promotes economic growth, and fosters employment opportunities”, says Dr Andrew Golding, chief executive of the Pam Golding Property group.

No fuel levy increases

The bad news

Personal income tax: “It is disappointing that personal income tax brackets were not fully adjusted for inflation. Without a proper inflation-linked tax bracket adjustment, middle- and higher-income earners will pay more in real terms due to ‘bracket creep.’ This effectively reduces their disposable income, leaving less money for savings, home loan repayments, and property investments,” says Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa.

VAT increase: After weeks of debating a proposed 2% VAT increase, the Minister’s budget now calls for a 0.5% increase this year, and a further 0.5% increase in 2026/27, instead of the hotly debated 2% that was originally included.

Golding explains that 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 – 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.

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. Furthermore, purchasers of new-build units will also be affected, as VAT is incorporated in the purchase price of new developments when brought to market by developers.

Comment from industry experts

Can SARS put its money where its mouth is? SARS governor Edward Kieswetter has publicly stated that the entire fiscal shortfall can be made up if his department receives more funding to bring tax dodgers to boot. “R7.5 billion has been allocated to SARS over the next three years and it is now up to Governor Kieswetter and his team to live up to this claim. If in fact, he is proven right, effective tax collection could well save us from further VAT increases, opines le Roux.

The public service bill: Berry Everitt, CEO of Chas Everitt International Property Group notes that the Budget makes no mention at all of the urgent need to reduce the size of SA’s bloated and notoriously ineffective public service and the accompanying wage bill,

“In fact, it provides for taxpayers to fork out an additional R23,4bn to cover that wage bill over the next three years – a sum that equals more than half of the additional R42,5bn in revenue the proposed VAT increases are supposed to generate”, he adds.

How could the VAT hike impact real estate?

A shift in market dynamics: Leonard Kondwe, national manager at Rawson Finance shares, “From a property market perspective, the VAT increase presents both challenges and opportunities for the South African real estate sector. While it may drive up costs for developers, buyers, and renters in the short term, it could also create a shift in market dynamics that benefits certain segments. For example, reduced demand for new developments might stimulate increased activity in the secondary market, particularly in the affordable housing segment. This could lead to a rise in the value of pre-owned properties, potentially offering great opportunities for existing homeowners and investors.

Although higher VAT may temporarily slow the pace of new developments, it also encourages innovative solutions within the industry. Developers and stakeholders might explore cost-saving measures and alternative building methods to maintain affordability and attract buyers. Additionally, the rental market is poised to experience growth, as more people opt to rent while navigating the changing economic environment. This could lead to increased demand and rental income opportunities, particularly in key urban areas”.

Boosting the rental market, at the expense of sales: “The proposed changes will inevitably add further financial strain on consumers already grappling with high unemployment and sluggish economic growth. As a result, fewer buyers are likely to be able to afford property purchases, which could lead to a decline in market activity and overall transaction volumes,” says Goslett.

If affordability does become more of a concern, Goslett explains that more people may opt to rent rather than buy, driving up rental demand and possibly rental prices. “Lower transaction volumes would then slow down property price growth, particularly in the mid-to-high-end market segments. This will also have a knock-on effect on real estate agents. A slowdown in sales would impact their commission-based earnings, which could cause the real estate sector as a whole to contribute negatively towards economic growth,” Goslett warns.

The real problem with transfer duty: “While we note that only the transfer duty threshold has been increased, the bigger question is why is transfer duty so high to begin with? Surely if one had to pay less tax on a property sale, more buyers would take the plunge and purchase their own homes, which would have a cascading effect – agents, conveyancers, movers, insurance companies, handymen services – all would see more business, which would improve the economy. Lower taxes on more transactions will benefit SARS and benefit the economy,” says le Roux.

What happens next?

There is still a long road ahead before Budget 2025 can be approved. It will be reviewed in Parliament, and there will be committee deliberations and coalition negotiations before a final Parliamentary vote. Only if the majority approves will it be implemented.