20 February 2008, Source ABSA.com
The 2008 National Budget, delivered to Parliament by the Minister of Finance, Trevor Manual, on 20 February did not contain much for the residential property market. No further cuts in transfer duty, last lowered in the 2006 Budget, were announced. The maximum value of a property exempted from transfer duty remains at a level of R500 000 in the 2008/09 fiscal year.
Gavin Opperman, the Managing Executive of Absa Home Loans, said a further cut in transfer duty on property was expected against the background of continued growth in house prices in all segments of the market during the past twelve months. “There has been a growing realisation that homeownership has become much more broad-based and is an integral part of the household sector in South Africa. This is not expected to change, with past reductions in transfer duty on property having been instrumental to these developments”, he said.
Opperman also said that, taking into account that residential property prices are still increasing, no further reductions in transfer duty rates will keep up the pressure on housing affordability, especially in the bottom and middle segments of the market, whose spending power has been eroded by higher interest rates and rising inflation over the past year-and-a-half, driven oil price, food inflation, and rand exchange rate movements.
However, housing for low-income earners is to receive further attention in future. The government acknowledges the fact that providing adequate and affordable housing to low-income earners remains a huge challenge and that measures and incentives encouraging employers, developers and other role players to increase the supply of housing in this segment of the market, should be further explored. The existing threshold limits for low-cost housing allowances, for example the R6 000 deductible limit per house for employer-provide housing, will be revised. Depreciation allowances for the construction of low-cost housing that employers and developers may claim are to be reviewed. In the case of low-cost housing provided by employers, further tax relief in respect of fringe benefit tax in the hands of the employee will be considered.
Opperman concluded that the amount of around R53 billion budgeted for with regard to housing over the next three fiscal years up to 2009/11 is widely welcomed and is proof of government’s continued commitment to the provision of housing to the people of South Africa.