What No VAT Increase Means for the Residential Property Market

In a significant policy reversal, the proposed VAT increase from 15% to 15.5% – which was scheduled to come into effect on 1 May 2025 – has officially been cancelled. Following extensive parliamentary discussions and consultations, the Minister of Finance confirmed that the rate will remain at 15%, offering a reprieve to South Africans already navigating a tight economic climate.

“This is a huge relief for everyone in the property space,” says Roger Lotz, franchisee at Rawson Properties Helderberg and Somerset West Rentals. “We’d been preparing our clients for a small but meaningful increase in transaction and management costs. The decision to cancel the VAT hike means we can press pause on those adjustments – for now.”

While the announcement provides immediate financial relief, it also comes with some important caveats for property buyers, sellers, landlords, and homeowners.

Buyers: budgeting just got easier

For those in the market to buy property – especially in new developments where VAT is included in the price – the cancellation translates directly to savings.

“That extra 0.5% could have added thousands of rands to the cost of a new home,” explains Lotz. “Now, buyers can focus their budgets on deposits, moving costs, and improvements without the squeeze of higher service-related expenses.”

Transactional costs like conveyancing fees, bond registration, and legal services will also remain at the current VAT rate, helping first-time buyers and seasoned investors alike keep acquisition costs under control.

Sellers: simpler, more transparent deals

The VAT cancellation simplifies commission discussions between sellers and their agents, particularly on residential properties where VAT doesn’t apply to the sale but does apply to the agent’s commission.

“There’s always a bit of back and forth when it comes to commission structures,” says Lotz. “Removing the threat of a rate increase lets us keep those conversations more straightforward and keeps more value in the transaction for both parties.”

Landlords: margin pressure eases (for now)

Landlords, who were bracing for cost increases across maintenance, administration, and professional services, can now hold the line – at least temporarily.

“Almost every third-party service a landlord uses includes VAT,” says Lotz. “From fixing a leaking tap to monthly admin fees, that extra half a percent would have added up. This cancellation helps keep those operating costs in check.”

However, Lotz cautions that the broader economic picture is still evolving.

“The state has a R75 billion shortfall to cover now. We don’t yet know what future tax or policy changes may come to close that gap.”

Homeowners: financial stability, but stay alert

While the average homeowner may not have been directly affected by a VAT hike on their primary residence, indirect costs – from contractor services to monthly levies – would have crept up. With the rate frozen, monthly budgets can breathe a little easier.

Still, the message from Treasury is clear: future adjustments in government spending and taxation are coming.

“It’s not the time to go lax on your property planning,” says Lotz. “We’ve avoided one cost increase, but other forms of adjustment may still lie ahead.”
Looking Forward: stability today, strategy for tomorrow

While this VAT decision is undeniably good news for the property sector, it also serves as a reminder of how closely fiscal policy and property investment are intertwined. Treasury’s announcement made it clear that new proposals are already being considered for future budgets.

“This is a window of opportunity,” says Lotz. “Whether you’re a buyer, seller, or landlord, use the stability we have now to review your strategy, shore up your finances, and position yourself for whatever comes next.”

As always, the best way to stay ahead is to stay informed. For advice tailored to your specific situation – and to make the most of today’s more favourable climate – reach out to your nearest Rawson office. We’ll help you move forward with clarity, confidence, and the reassurance that comes with expert local guidance.