Picture: THINKSTOCK
Picture: THINKSTOCK

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ESTATE agencies and economists believe the budget could have implemented more effective measures to generate revenue for the state while supporting SA’s property sector.

Jawitz Properties CEO Herschel Jawitz said the increase in transfer duty for properties above R10m, from 11% to 13%, "amounted to nothing more than a simple wealth tax".

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"Given the overall size of the budget and the challenges facing the fiscus, the additional revenue would barely be noticeable from a residential point of view and gives an indication of how hard the government is looking to scrape every bit of revenue it can from the consumer barrel," he said. "If read correctly, the increase would mean an additional R20,000 in transfer duty per R1m above R10m. At that level, very little impact is expected on sales volumes."

Seeff Properties chairman Samuel Seeff said that on the plus side there was R5.5bn in relief on personal income tax for lower-and middle-income earners. "This will provide some relief against rising costs and inflation and encourage home ownership," he said.

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"The only real concern that we have is the hike in transfer duty at the upper end of the market for the second successive year, this time taking it from 11% to 13% for transactions of R10m and above. Based on what we have seen following last year’s hike, we would reiterate our concern that rather than generate the additional funds sought, it decreases the incentive to sell."

Pam Golding Property Group CE Andrew Golding said the budget was positive, even if its measures did not necessarily work that well with the property sector. While the hike in transfer duty on property sales above R10m in essence represented a form of wealth tax, as did the higher capital gains tax, the budget was inclusive and was clearly focused on restoring confidence in SA’s economy.

"Although the increased transfer duty and capital gains tax is not welcome news for the property market and may to some degree dampen sentiment, mainly in the higher end of the market, generally the budget was expected to present a more austere scenario," he said.