Understanding new compliance requirements for foreign nationals with property in South Africa

Foreign nationals who own fixed property in South Africa and derive rental income from it are increasingly facing new compliance hurdles when accessing or transferring those funds. 

Recent feedback from multiple South African banks indicates the tightening of access to non-resident bank accounts where additional tax compliance requirements are not met, which could leave foreign property owners temporarily out of pocket, says Lovemore Ndlovu, the head of the South African Reserve Bank (Sarb) Engagement and Expatriate Compliance at Tax Consulting SA.

South Africa's property market continues to attract strong interest from foreign buyers and non-resident foreign buyers (foreign investors). 

According to Lightstone, in 2024, foreign buyers accounted for 40% of all property purchases exceeding R10 million, thereby underscoring the growing appetite for high-end real estate. The proportion of non-resident foreign buyers also rose from 2.9% in 2019 to 3.7%, driven by lifestyle appeal, favourable exchange rates and attractive investment returns. 

“Bank messages signal that bona fide non-resident bank accounts may soon be restricted unless additional tax compliance requirements are met. If these new compliance requirements are not met, funds received from the rental source will be placed in a non-interest-bearing suspense account before being credited into the bona fide non-resident bank account,” Ndlovu says. 

Tax Consulting SA says that at the centre of this issue is the Approval International Transfer (AIT) Tax Compliance Status (TCS) PIN before receiving and sending money offshore. 

This requirement has become more prominent following regulatory changes introduced by the South African Reserve Bank (SARB), effective October 23, 2025.

Changes in banks' tax compliance requirements

Many bona fide non-resident clients have recently been advised by their banks that rental income cannot be cleared or credited into their non-resident rand accounts unless proof of tax compliance is provided.

Banks are now requiring confirmation in one of the following forms:

• AIT TCS PIN: The individual is registered with the South African Revenue Service (SARS).
• Manual letter of compliance - international transfer: The individual is not registered on the SARS system.

According to Ndlovu, the requirement has been confirmed following engagements with both SARS and SARB, who have clarified that bona fide non-resident individuals earning rental income from South Africa are now subject to AIT TCS PIN requirements, even where the income was previously regarded as freely remittable.

“It must be noted that, by South African tax laws, where one owns a property and receives rental income, they are obligated to register for tax and submit a tax return annually to report the rental income earned.

"This effectively removes the manual letter of compliance - international transfer from the list of tax compliance confirmation documents for bona fide non-resident individuals, leaving only the AIT TCS PIN as a requirement.”

The practical snag: Applying for an AIT TCS PIN before rental income is received

The head says a key area of confusion is that some banks are instructing bona fide non-resident clients to apply for an AIT TCS PIN in advance, before the rental income is even received and reflected in their bank accounts.

“In effect, this interpretation suggests that non-residents must apply for an AIT TCS PIN based on anticipated or future rental income, rather than on funds that are already available.” 

The independent tax practice says this approach is problematic for several reasons:

• Rental income is typically received monthly and often fluctuates.
• AIT TCS PIN applications require demonstrable availability of funds.
• SARS systems are designed around actual amounts, not projections.

From a practical and technical perspective, Ndlovu says it is generally not feasible to apply for an AIT TCS PIN before funds are reflected in the bank account.

“While one could theoretically submit a lease agreement to SARS to indicate anticipated income, there is no clear guidance on how SARS would assess or approve such applications.” 

Why are banks taking different approaches?

The discrepancy appears to stem from how bona fide non-resident bank accounts operate under exchange control rules, the practice says. 

When local funds (such as rental income) are credited into a non-resident account:

• The funds are immediately encumbered.
• Under previous rules, once an encumbrance was lifted, funds could be used locally or remitted offshore freely.
• Under current rules, rental income is now subject to AIT TCS PIN requirements.

If a bank releases the encumbrance without an AIT TCS PIN, the funds become freely remittable offshore, which is precisely what the new SARB framework seeks to regulate, says Ndlovu. 

The head says this likely explains why some banks are requesting an AIT TCS PIN upfront, before releasing the encumbrance. However, this creates a catch-22 situation:

• Without an AIT, the funds remain encumbered.
• While encumbered, the client cannot use the funds locally or offshore.
• Yet an AIT TCS PIN typically requires that funds already be available.

Each bank, as an authorised dealer, has discretion in how it implements these controls, which explains the lack of uniformity across the industry.

 What makes the most sense practically?

From a policy and process perspective, it would be far more workable for AITs to be addressed at the point of repatriation or transfer offshore, rather than before receipt of funds into bona fide non-resident accounts, says Ndlovu. 

“However, this would mean that rental income remains encumbered until the AIT TCS PIN is issued, limiting the taxpayer’s ability to use the funds even locally in the interim. This is an area that clearly requires further alignment and clarification, and is expected to be raised in future rulings meetings between SARS, SARB, and the banking industry.” 

Key takeaways for foreign property owners

If you are a foreign national earning rental income from South Africa, Ndlovu advises that you:

• Do not assume rental income is automatically freely remittable.
• Expect banks to request either an AIT TCS PIN or a manual letter of compliance.
• If they are not registered with SARS for tax, this is becoming increasingly risky.
• Non-compliance may result in restricted or frozen non-resident rand accounts.
• Planning is essential, particularly if they rely on rental income offshore or for servicing their financial obligations in South Africa.

While the regulatory intent is clearly to strengthen tax and exchange control oversight, the practical implementation remains uneven and confusing,” says Ndlovu. “Until clearer, industry-wide guidance is issued, foreign property owners should take a proactive compliance approach to avoid delays, restrictions, or unnecessary frustration.”

“If you own rental property in South Africa and are uncertain about your tax registration status or AIT TCS PIN requirements, now is the time to seek professional guidance, before your funds are affected,” advises Ndlovu. 

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