DAVID DICKINSON: Township ghost houses created by unaffordable transfer costs

Public attention to housing in SA largely focuses on the inadequate delivery of state-built RDP houses, and the mushrooming of informal settlements.

Less attention is paid to the myriad problems arising from the transfer of township houses converted from the apartheid permit system to title deeds under the 1998 Conversion Act and 1991 Upgrading of Tenure Rights Act. 

Disputes over houses are a common problem brought to Orange Farm Human Rights Advice Centre, partnered with Lawyers for Human Rights, in the sprawling townships south of Joburg.

These disputes are frequently embedded within a matrix of interlocking problems. Of these, the transfer of title deeds as the first generation of title beneficiaries pass on is becoming increasingly salient, and with it the increase in “ghost houses”. 

Title deeds were transferred to permit holders under the legislation at no cost. But when the first title deed owner dies an expensive, bureaucratic and legal maze confronts relatives.

For many township title deed holders, the house is by far the most significant asset in their estate. The executor of a deceased estate requires either a letter of authority or letter of executorship to transfer the deceased’s assets (in terms of a will or intestate law).

A letter of authority can be issued at a magistrate’s court. Those with a letter of executorship are required by the Master’s Office to appoint an attorney or other professional to administer the estate. Which letter is required depends on the value of the estate, as provided for in section 18(3) of the Administration of Estates Act. Since 2014 this has been set at R250,000, a quantum we’ll return to. 

The Master’s Office uses the rateable value to determine the value of houses. In most cases we deal with in Orange Farm the deceased had few assets other than the house registered in their name, so this determines which letter is required by the family member, usually a son or daughter dealing with the affairs of their late parent. 

If the house’s rateable value is over R250,000, the professional executor is entitled to 3.5% of the value of the estate, plus VAT. To this must be added a range of expenses, such as advertising. The cost of administrating an estate of R250,000 is in the region of R13,000, yet the family house is often the only asset of significant value in the estate from which this must be paid. 

Even if this available, there is still the need to transfer the title deed into another family member’s name. This must be done by a conveyancer. For a house valued at R250,000 this will not be much short of R15,000. 

Finalising the estate comprising a house with a rateable value of R250,000 comes to not much less than R30,000. That must come from an estate comprising of a house that is typically the home of several family members.

Selling it to allow transfer in this circumstance would be absurd. The result? The title deed remains in the name of the deceased. We’ll return to the implications of the resulting “ghost houses”. Now back to the figure of R250,000. 

Just how many township houses have a rateable value of R250,000 or more? More than you might think. There are just under 16,000 residential houses in Orange Farm, and of these 42.5% (6,764 houses) have rateable values above R250,000. 

In 1994, the section 18(3) threshold was set at R50,000. Its present value lags the consumer inflation rate by just under R30,000. But CPI isn’t the appropriate index when the deceased estate consists of a house. Between 1994 and 2024 house prices increased at about twice CPI. On this basis the section 18(3) threshold would now be about R420,000.

If this threshold is applied to Orange Farm, the number of residential houses with rateable values requiring a letter of executorship falls to just 536 houses, or 3.4% of the total, illustrating the compressed nature of township property values. 

Such a threshold would remove the burden of many families having to pay a professional executor. However, the required R15,000 or more for conveyancing would remain. For many township families this is simply not available to change the name on a piece of paper.

Put bluntly, in SA getting family affairs in order after the death of a loved one is a privilege of the privileged. Not surprisingly, there is now some nostalgia for the permit system of the past, at least when it comes to the issue of transfer, which was then a simple administrative process. 

Does the increasing number of ghost houses matter? For families it means living without their affairs in order and the insecurity that results. Further, the complexity of any dispute over the house increases as successive generations live in a house for which there is no living title holder. Beyond this, ghost properties mean that the Deed’s Office registry is inaccurate, with negative implications for property and rates management.

The problem also seeps into other aspects of regulation such as the current drive to register spaza shops, for which applicants must prove ownership of the property, or permission from the owner — not easy when the legal owner is deceased. 

What needs to be done? An appropriately indexed section 18(3) threshold would assist many in terms of whether a professional executor must be appointed. However, even with this easy to implement adjustment, conveyancing costs still need to be found. Pro bono conveyancing would assist, but the scale of what is needed is huge, and SA’s legal pro bono system is in tatters. 

The much-heralded transfer of township title deeds now appears to have been giving township families assets they cannot afford to legally transfer from one generation to the next. A fundamental reform of property transfer costs is necessary. 

• Dickinson is professor of sociology at Wits University and an attorney at the Lawyers for Human Rights land, housing & property programme.