The Namibian government’s recent decision to increase the transfer duty threshold from N$600,000 to N$1.1 million is expected to stimulate buying activity in the property market.
According to FNB’s Market Research Manager for Treasury, Mandisa Van Wyk, the move is likely to encourage more homebuyers, especially first-time buyers, to purchase properties as they will now face lower costs associated with transfer duties.
However, she warned that the housing market’s overall growth may still be tempered by the current high interest rates, which are placing financial strain on borrowers.
While the reduced transfer duties offer significant savings, the elevated cost of borrowing could slow the uptake of these benefits in the short term.
“These changes are meant to provide relief to the property market and stimulate growth. These measures by the government could possibly induce more buying activity, however the uptake could be slow as the interest rate environment is still elevated, and borrowers are strained for cash,” she said.
She further explained that the impact of this change on banks remains minimal. Banks typically facilitate property purchases, but it is the buyer who is responsible for paying transfer duties, either directly or through additional borrowing.
With the new threshold, buyers will have fewer costs to finance, which could ease the overall burden on home loans.
“The impact on banks regarding transfer duties is minimal as banking institutions facilitate the purchasing of properties, meaning the buyer/seller pays these fees either through cash or borrowing additionally from the Bank,” she said.
According to the Minister of Finance and Public Enterprises, Ipumbu Shiimi, the decision is part of a broader strategy to assist lower-income earners and encourage property ownership in Namibia, especially in light of rising property prices and economic challenges.
By increasing the threshold to N$1.1 million, Shiimi said the government seeks to reduce the financial burden on homebuyers, particularly those in lower income brackets.
The adjustment means that anyone purchasing a property under this value will no longer have to pay transfer duties.
Properties priced above N$1.1 million will still attract transfer duties, but these are scaled based on the value of the property. The higher the value, the higher the transfer duty payable.
“Property prices have increased, and the previous threshold had not been adjusted for quite some time. We’ve now decided to raise the threshold to N$1.1 million to provide relief, particularly to low-income earners looking to purchase homes. The goal is to encourage more people, especially those struggling with affordability, to buy properties and become homeowners,” he said.
