How Regulation and Taxes Perpetuate the Housing Crisis
If we want genuine broad-based home ownership, we must stop treating property transfer as an opportunity to tax and feed bureaucracies.
Written By: Bryan Theunissen
Housing in South Africa has become a cruel paradox. A modest suburban home that cost R12,000 to build in the 1970s now sells for millions, despite having been “paid for” many times over in successive transactions. Families who once could reasonably aspire to home ownership are now locked out — not because bricks and mortar have become so much more valuable, but because the state and its satellites have embedded layer upon layer of cost into every property transfer. Something in the system is deeply wrong.
We are told the housing crisis is about the sins of the past. In reality, it is the machinery of the present that locks people out — a maze of taxes, fees, and compliance rituals that make homes more expensive every time they are sold.
The hidden bill in every property transaction
When people talk about the price of a house, they usually mean two things: the market value of the property itself and the improvements on it. There is, however, a third and very significant component: the legal, administrative, financial, and fiscal costs that attach to every transfer.
These costs can be grouped into three categories:
• Taxes and state charges: transfer duty, capital gains tax, deeds office fees.
• Legal and professional fees: conveyancing, estate agent commission (commonly 5%), bond registration and cancellation, bond originator fees.
• Compliance and utilities: property searches, FICA compliance, rates clearance, compliance certificates, reconnection of utilities.
Together these can easily reach 20–25% of the transaction value. That is not a trivial surcharge — it is a structural tax on mobility and ownership.
How these costs inflate prices over time
The key point is that these costs do not vanish. They are capitalised into the price each time a property is sold. Sellers must recover the hidden bill they once paid, and future buyers pay it again in turn. Over time, the effect compounds.
A simple illustration: suppose transaction costs add 20% to price on every resale, and a property changes hands ten times. A house that begins at R1,000,000 will, by the tenth transaction, need to sell for roughly R6,190,000 simply to absorb the cumulative friction. If the surcharge is 25%, the figure is closer to R9,300,000.
This is not wealth created — it is wealth siphoned. The price of a home climbs not because of improved quality or productive investment, but because bureaucracy demands its cut at every turn.
Work created for its own sake
Who benefits from this arrangement? Not the families buying and selling homes. The winners are the intermediaries: banks, lawyers, estate agents, bond originators, compliance officers, and government departments.
Much of the work involved is duplicative, defensive, and often ceremonial. Certificates to certify certificates, stamps to validate other stamps. The system creates employment, yes, but employment dedicated to maintaining the system itself. It is, in the economic sense, rent-seeking — extraction of value without production of new value.
An outdated system in a modern world
The architecture of property transfer we still use is essentially colonial. In the 18th century, when properties were sold perhaps once or twice in a lifetime, elaborate deeds registries and professional conveyancers provided certainty. In the 21st century, with vastly more transactions and vastly better technology, those same processes are now costly relics.
Tradition alone is a poor justification for exclusion. The legal machinery has simply not kept pace with reality, and its inertia serves those who profit from the inefficiency.
What reform could look like
The solution is not utopian. Practical, technical reforms would sharply reduce costs and broaden ownership:
• Digitise and automate title registries. A modern, searchable digital system would cut delays and eliminate duplicative work.
• Replace percentage-based levies with a simple flat fee. Verification should be proportionate to the actual risk, not the property’s market value.
• Leverage digital verification. Blockchain and distributed ledgers are not panaceas, but they can reduce duplication and create transparent, tamper-resistant records.
• Ease the tax burden on primary residences. Targeted relief on capital gains and transfer duties would make ownership more realistic for first-time buyers.
• Open the market to low-cost alternatives. Fixed-fee conveyancing, online verification platforms, and stripped-down compliance requirements can compete with the current rent-seeking model.
The point is not to abolish oversight, but to make it efficient, proportionate, and affordable.
Expropriation by attrition
South Africa is locked in debate about expropriation without compensation. But we should notice the irony: expropriation already happens, slowly, through the accumulation of taxes and transaction fees that strip away real ownership value. Every time a property changes hands, the state and its auxiliaries seize a slice — not for justice, not for development, but for perpetuating their own machinery.
Conclusion — a call for radical simplification
If we want genuine broad-based home ownership, we must stop treating property transfer as an opportunity to tax and feed bureaucracies. The fewer the costs attached to a transaction, the more accessible ownership becomes.
The reforms are technical, not ideological. Streamlined registries, transparent flat fees, targeted tax relief, and sensible regulatory pruning would do far more to widen ownership than any amount of political rhetoric.
South Africa does not need expropriation to erode property rights. It is already doing so by pricing ordinary citizens out of the market for something as simple, and as necessary, as a place to call home.
Bryan Theunissen is a South African doctor with a stubborn streak of optimism. Even after years of watching bad policy win, he still insists on pointing to better choices.