Observations on the South African Budget Speech – A European Perspective and why Malta is an affordable, attractive investment destination for many South Africans.

The South African Budget speech was announced this week. Government acknowledged a decade of weak economic performance and that the South African economy will marginally grow by 0.9 per cent while inflation will average at 4.5 per cent in 2020.

On the upbeat, there were no major tax increases and to support the property market, the threshold for transfer duties for properties costing R1 million or less was adjusted, although transfer costs still apply. The so-called “sin taxes” are all up for alcohol and tobacco, with an additional increase in carbon taxation.

Most market analysts expect the real estate market’s growth to remain restrained for properties costing more than R5 million and this sector is unlikely to see any real growth. One positive aspect is that there are rumours of plans by the government to lower corporate taxes while many hope that a lowering of the Capital Gains Tax (CGT) and relief for high-end property transfer duty rates will aid in boosting sales of this part of the South African property market.

On the education front, it was commented that the amount of pupils per classroom is still on the increase and similarly hospitals are getting fuller. Additionally communities are now more unsafe than ever before.

The government has every intention to deal with wasteful expenditure as in the past few years, but this is indeed a difficult task. The South Africa budget speech included proposals for the introduction of new laws to halt awarding excessive salaries in some public entities, paying hyper-inflated leasing costs towards the leasing of government buildings and in general to cut down on runaway costs paid for by the public purse.

Currently more than 8.2 million people between the ages of 15 and 34 are not receiving any formal education, which does not bode well in the long-term. Furthermore all government grants have been adjusted positively to see that those that need it most have a little bit more to spend.

The South Africa budget speech also promised that the government will take any measures necessary to address the electricity situation. Currently the rolling black-outs several times a day result in dire consequences for industry and caused an outcry from the general public and severe criticism from abroad.

Looking at the nation’s embattled national carrier, South African Airways (SAA), another rescue bailout has been allocated to its budget to save it from bankruptcy. This is in the amount of R16.4 billion “to settle guaranteed debt and interest”.

On the plus side, for those looking at selling their home and moving funds abroad for example, the exempt amount for foreign remuneration was adjusted to R1.25 million and the government also promised to get rid of  the complex process of financial emigration through the South Africa Reserve Bank. The latter has proved to be a frustrating burden in the past that placed severe restrictions on free trade with the rest of the continent and the world for that matter.

More money has been allocated in the budget for 2020 to deal with land claims, restoring ownership to rightful owners of land through what is promised to be a fair process.

As many members of the South African public are presently cautious regarding concentrating on long-term local investment, we advise those that are currently looking offshore to broaden their investment portfolios, to investigate Malta property and the tax benefits of its Residency Programmes.

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Malta property has experienced unprecedented growth in both the sales and rentals markets and property here is still very affordable for South Africans who want to invest their hard-earned money in real estate. It is a win-win situation for those who decide to relocate to Malta: South Africa and Malta have double-tax treaty agreements, so you can either be taxed in South Africa or in Malta at a flat rate of 15% under for instance the Global Residency Programme. Furthermore, should you own a property here, it will appreciate in Euro terms  – one of the world’s most stable and powerful currencies. Properties purchased by foreigners can either be used as second or permanent homes or rented out (meeting certain criteria), providing premium rental income to its owners in Euros.

In addition, Malta has an excellent education system, English is the second national language and its healthcare is one of the best. For many South Africans who already pay exorbitant rates for medical insurance back home, the best of comprehensive medical insurance in Malta costs a fraction of the price. Malta is the gateway to Europe with more than 300 days of sunshine per year and should one become a resident here, you are guaranteed border-free travel to any of the EU destination countries. Lastly, violent crime is extremely rare here and Malta is one of the world’s safest countries to live in.

If you are interested in Malta, here is some good news: Frank Salt Real Estate will be holding Malta Residence and Property Investment seminars regarding living and investing in Malta in South Africa this March: on the 10th of March in Johannesburg, the 12th of March in Durban and the 16th of March in Cape Town.  Attendance is free of charge but one must pre-register.

Come and investigate how to make Malta your home –  many South Africans already have! Find out more.