Business
Tighter rules hit rental income for foreign property owners in South Africa
South Africa’s property market has long held a certain allure for international buyers. From coastal holiday homes to luxury city apartments, foreign investors have steadily carved out a space in the local market. Now, a new layer of financial compliance is beginning to reshape how those owners access the rental income generated from their properties.
Recent feedback from local banks suggests that foreign nationals who earn rental income from South African property are encountering stricter checks before those funds can be used or transferred abroad. The shift is tied to tighter tax and exchange control oversight that has become more visible following regulatory changes introduced by the South African Reserve Bank in October 2025.
When rental money is not immediately yours
For many non-resident property owners, the biggest shock has been the possibility that rental income may be temporarily held back. Banks are increasingly indicating that funds cannot be credited into certain non-resident accounts unless proof of tax compliance is provided.
In some cases, rental income may be placed into a non-interest-bearing suspense account until the required documentation is confirmed. For investors who rely on that income to cover offshore obligations or local expenses, even a short delay can create real pressure.
Tax specialists say the core issue centres on the Approval International Transfer tax compliance status PIN, commonly known as the AIT TCS PIN. This verification is now becoming the primary proof that a foreign property owner is compliant with South African tax requirements when moving money across borders.
Why the rules suddenly matter more
South Africa’s luxury property segment has seen growing interest from international buyers. Lightstone data shows that foreign purchasers made up 40 percent of property transactions above R10 million in 2024. The share of non-resident buyers has also edged up over recent years, driven by lifestyle appeal, favourable exchange rates, and the promise of solid returns.
With more foreign-owned properties generating rental income locally, regulators appear focused on ensuring that tax obligations are properly recorded before money leaves the country.
Under South African tax law, anyone earning rental income from property located in the country must register with the South African Revenue Service and submit annual returns declaring that income. What has changed is how strictly that requirement is now being enforced through the banking system.
The paperwork banks are asking for
Foreign property owners are increasingly being asked to provide one of two confirmations. Either an AIT TCS PIN if they are registered with SARS or, previously, a manual letter confirming compliance for those not on the tax system.
Industry engagement indicates that the manual letter option is effectively falling away for non-resident individuals earning rental income. In practical terms, the AIT TCS PIN is becoming the key document needed before funds can be cleared or transferred.
Some banks have even advised clients to apply for this clearance before rental income reflects in their accounts. That approach has created confusion because the application process is designed around actual funds received, not projected income. Rental payments can vary month to month, making advance applications difficult to support with accurate figures.
Why banks are not all doing the same thing
Part of the inconsistency comes down to how nonresident accounts operate under exchange control rules. When local income is paid into these accounts, the funds are automatically restricted until certain conditions are met.
Under earlier practices, once those restrictions were lifted, the money could be used locally or sent offshore with fewer hurdles. The current framework places rental income under closer scrutiny, especially before funds are released.
Banks, acting as authorised dealers, have some discretion in how they apply these controls. That has led to mixed experiences across institutions, with some requesting documentation earlier in the process than others.
The catch that investors are running into
The situation has created a practical dilemma. Without an AIT TCS PIN, the funds remain restricted. While restricted, the owner cannot use or transfer the money. Yet the application for the PIN usually requires proof that the funds already exist.
Tax professionals note that from a systems perspective, SARS is geared toward verifying real amounts rather than future projections. Even if a lease agreement is presented, there is still uncertainty about how such applications would be assessed.
What foreign owners should be doing now
The message for foreign property owners is becoming clear. Rental income should no longer be treated as automatically transferable.
Investors are being encouraged to confirm their tax registration status, ensure annual returns are up to date, and plan ahead if they depend on rental income abroad. Failing to meet the requirements could result in restricted accounts or delayed access to funds.
While the intention behind the tighter framework is to strengthen oversight of tax and cross-border money flows, the rollout has been uneven. Further discussions between regulators, banks, and tax authorities are expected as the industry works toward clearer and more consistent guidance.
In the meantime, foreign nationals with South African rental property are being urged to take a proactive approach. Getting compliance in order early may be the difference between smooth transfers and frustrating financial bottlenecks later.
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Source: IOL
Featured Image: Intro Real Estate
