Buying property in South Africa is a dream for many foreigners. From luxury apartments in Cape Town’s Atlantic Seaboard to family homes in Sandton or Umhlanga, our property market offers opportunities that are attractive when compared to international prices.

But there’s a catch. Foreign buyers quickly discover that while South Africa welcomes their investment on paper, the banks and regulators don’t always treat them fairly in practice.

The 50% Deposit Rule

Most foreign buyers are told they need to put down a deposit of at least 50% of the purchase price in order to qualify for a bond. That’s a far cry from the local buyer who might qualify for up to 100% financing.

This requirement doesn’t come from the Constitution or an Act of Parliament, but rather from the South African Reserve Bank’s exchange control guidelines. The idea is to manage foreign capital inflows and protect the banking system from risk.

But here’s the controversial question: is this truly about financial prudence, or is it a subtle form of protectionism that discourages foreign ownership?

The Visa Challenge

Another stumbling block for foreign buyers is how banks interpret visas. In many cases, consultants and credit teams don’t fully understand the differences between temporary residence permits, work visas, asylum documents, or special dispensation permits.

This can lead to inconsistent decisions:

• Some banks may decline a perfectly valid applicant simply because they don’t recognise the visa type;

• Others may impose stricter conditions, like larger deposits or additional documentation; and

• The result is confusion, delays, and frustration for buyers who are otherwise financially sound.

In practice, the lack of standardisation means the outcome often depends on which bank (or even which credit analyst) processes your application.

The Hidden Impact on the Market

• Luxury Properties Suffer – Areas popular with international buyers, like Clifton, Camps Bay, Sandton and Umhlanga, often see slower transactions because buyers can’t easily access financing;
• Investment is Deterred – South Africa desperately needs foreign capital to stimulate growth, yet one of the easiest avenues - property - is being artificially restricted;
• Locals Lose Too – Sellers may battle to offload high-end properties because potential foreign buyers can’t get bank support.

Are Banks Being Too Cautious?

Banks cite risk and compliance as the reason for treating foreigners differently. But the reality is that many foreign buyers are high-net-worth individuals with far lower default risk than locals.

Globally, countries like the UK, Australia, and the US allow foreign buyers to access mortgage finance - sometimes with slightly higher deposits, but never to the extent of 50% across the board.

This raises the question: are South African banks acting out of genuine caution, or simply hiding behind outdated rules?

Sentinel Homes to the Rescue

This is where alternative lenders like Sentinel Homes step in. Unlike the major banks, Sentinel takes a more practical view: if a buyer holds a valid visa and is lawfully resident in South Africa, they are treated as a resident for the purposes of financing.

That means temporary residents - whether on work permits, spousal visas, or long-term temporary residence -can qualify for home loans without facing the rigid 50% deposit hurdle. Sentinel recognises that holding a visa is proof of lawful residence, and that these buyers deserve to be treated fairly while they live, work, and invest in the country.

For many foreigners, this is a game-changer. It opens the door to property ownership in South Africa when the big banks say no.

What Buyers Can Do

If you’re a foreign buyer looking at South African property:

• Don’t rely on one bank’s answer – each bank interprets the guidelines differently;
• Work with an experienced bond originator – Phoenix Bonds can approach all major lenders on your behalf and identify where there’s flexibility; and
• Get clarity early – secure a prequalification before you sign an Offer to Purchase to avoid disappointment.

The Phoenix Bonds View

At Phoenix Bonds, we believe that every buyer deserves a fair chance, whether local or foreign. Our job is to cut through the red tape, negotiate with banks, and help you secure the best possible deal within the rules.

Banks may try to treat foreigners like second-class buyers - but with the right support, you don’t have to settle for second-class service.