INFORMATION FOR FOREIGN INVESTORS

Who is a foreign national?
A foreign national is one of the following:

1. Non Resident
A non resident is a person (natural or legal entity) whose normal place of residence, domicile or registration is outside the Common Monetary Area e.g. visitors to South Africa. These persons may only be granted local borrowings for an amount equal to the amount introduced from abroad and invested in South Africa. Therefore if he invests R200 000,00 in South Africa he will qualify for a home loan facility of R200 000,00. Note that the lender i.e. the financial institution granting the loan must obtain exemption from the provisions of the Exchange Control Regulations. Financial institutions require the following information and/or documentation in order to process the loan:

a.) Confirmation of income e.g. a report from a foreign bank, an employer’s letter, 3 months bank statements, statement of assets and liabilities and/or a debit order from a local bank account to facilitate the loan repayment, to be funded from abroad.

b.) A copy of the sale agreement, documentary evidence that the buyer has introduced the balance of the purchase price from abroad and a copy of the buyer’s passport.

2. Contract worker
A contract worker is a natural person outside the Common Monetary area who has taken up temporary residence in South Africa to work in terms of a valid work permit. Contract workers may be granted normal banking facilities and a home loan facility may be considered up to 100%.The following information must be submitted to the lender:

a.) A copy of the work permit of contract of employment.

b.) A declaration regarding the buyer’s foreign assets in terms of the Exchange Control Rulings.

c.) Temporary residents are to ensure that the balance on their home loan is equal to the funds invested in South Africa before permanently departing from South Africa. This may mean that additional funds are to be invested in South Africa, the outstanding loan amount is to be reduced to equal the amount already invested in South Africa or the property may need to be sold if compliance with the Exchange Control Regulations is not possible.

3. Immigrant
An immigrant is a natural person who has immigrated from countries other than the Common Monetary area with the firm intention of taking up or has taken up permanent residence in South Africa. Loans of up to 100% may be considered in these cases. The following information must be submitted to the lender:

a.) Confirmation of income, a full general report from a foreign bank, 3 month’s bank statements from a foreign bank and a certified copy of the declaration made in terms of the Exchange Control Rulings which among other things contains an undertaking that the person will not place any foreign assets at the disposal of a third party normally a resident in South Africa. Note that immigrants may dispose of or otherwise invest their foreign assets without interference from the Exchange Control Department of the South African Reserve Bank.

4. Refugee
A refugee is a citizen outside the CMA who has been formally granted asylum. He can remain in South Africa permanently and may seek employment. An identity document is issued, but of a different colour and they qualify for resident account status with financial institutions. A 100% home loan facility may be considered upon delivery of the following documentation:

a.) A copy of the declaration referred to above in par. 3(a) and confirmation of income.

5. Foreign embassies and consulates
Foreign Embassies and consulates, including diplomats are persons from foreign countries based in embassies and consulates in South Africa who conduct official embassy or consular bank accounts. Where funds are introduced from abroad and invested in S.A. and proof of funds introduced is provided, finance equal to the amount introduced may be considered. The same documentation is required as for non residents referred to above in par. 1 except that a document of accreditation issued by the South African Reserve Bank must also be produced before local borrowing facilities will be considered.

6. Affected persons (Close Corporation/Company)
Affected Persons means a body corporate, foundation, trust or partnership (CC or Company) operating in S.A. in respect of which 75% or more of the capital, assets or earnings may be used for payment or any person who is not a resident in S.A. or 75% or more of the voting securities, voting power, capital, assets or earnings thereof are directly or indirectly controlled by any person who is not a resident of S.A. A loan of up to 100% of the effective capital may be considered. The following documentation is required:

a.) Exemption from the Exchange Control Regulations.
b.) A pro forma balance sheet.
c.) MP79(a) Reserve Bank Questionnaire.
d.) Annual audited financial statements.
e.) A copy of the sale agreement or offer to purchase.
f.) A certified copy of the passport.
g.) Documentary evidence that the balance of the purchase price has been introduced from abroad and invested in S.A.

7. Jointly where one party is a foreign national
Joint accounts where one or more persons is/are a foreign national apply where two or more people purchase a property together. Exemption in terms of the Exchange Control Regulations is required where 75% or more of the property is owned by non residents. If 75% or more of the property is to be owned by non residents, the same criteria applies as for non residents. The following documents are to be submitted to the lender:

a.) A copy of the offer to purchase of the sale agreement.
b.) A certified copy of the passport/s.
c.) Documentary evidence that the balance of the purchase price has been introduced from abroad and invested in S.A.