Residential vs commercial — which leases this hub is about
This hub concerns commercial notarial long leases — leases of land (or improvements thereon) for commercial, industrial, agricultural, or analogous purposes, registered against the title deed at the Deeds Registry. It does not address the separate regime that governs residential tenancies.
The dividing line is the Rental Housing Act 50 of 1999. That Act applies only to leases of a “dwelling” — a residential structure leased for housing purposes. Its definition of “dwelling” sets the outer limit of the Act’s reach:
“dwelling”, includes any house, hostel room, hut, shack, flat, apartment, room, outbuilding, garage or similar structure which is leased, as well as any storeroom, outbuilding, garage or demarcated parking space which is leased as part of the lease;
The Act then defines “lease” by reference to that same concept:
“lease” means an agreement of lease concluded between a tenant and a landlord in respect of a dwelling for housing purposes;
Note — The Act's entire regime — Rental Housing Tribunals, tenant protection, mandatory lease terms, and the complaint mechanism — applies only to leases of 'dwellings for housing purposes'. A commercial lease of a warehouse, office park, factory, or agricultural land falls entirely outside this regime.
Because a commercial long lease is not a lease of a dwelling for housing purposes, the Rental Housing Act is simply irrelevant to it. The protections it offers (Rental Housing Tribunal jurisdiction, mandatory notice periods for termination of periodic leases, prescribed lease content) are residential protections and do not apply. Lessors and lessees in commercial long-lease transactions have no Tribunal to complain to under this Act; their rights and obligations are governed by the lease itself, general contract law, and the Deeds Registries Act framework described elsewhere in this hub.
A residential long lease — for example, a 15-year lease of a house — can in principle be registered as a notarial lease under the Deeds Registries Act 47 of 1937 (giving the lessee a real right), and simultaneously falls within the Rental Housing Act regime for its residential protections. But the majority of notarial long leases encountered in practice are commercial. This hub focuses on the commercial case; where a residential long lease is contemplated the Rental Housing Act position must be separately considered.
The Consumer Protection Act fences
The Consumer Protection Act 68 of 2008 (“CPA”) applies to transactions in the ordinary course of a supplier’s business where the counterpart is a consumer. For most commercial long-lease transactions — where both lessor and lessee are companies or close corporations — the CPA is excluded on at least two independent grounds.
Ground 1 — juristic-person threshold (s 5(2)(b))
Section 5(2) exempts certain transactions from the Act entirely. Paragraph (b) covers the common commercial case where the lessee (as consumer) is a large juristic person:
This Act does not apply to any transaction … in terms of which the consumer is a juristic person whose asset value or annual turnover, at the time of the transaction, equals or exceeds the threshold value determined by the Minister in terms of section 6;
Note — The threshold is set by the Minister under s 6 of the Act. The current threshold is R2 million in asset value or annual turnover. Last reviewed 27 June 2026; confirm the current threshold figure before relying on this exclusion — the Minister may adjust it by notice in the Gazette.
Where the lessee is a company (or close corporation, trust, or other juristic person) with assets or annual turnover at or above R2 million at the date of the lease, the entire CPA falls away. In a typical commercial long-lease transaction — a company leasing an office park for 20 years — the lessee will almost invariably exceed this threshold, and the CPA simply does not apply.
Ground 2 — fixed-term agreement exclusion for juristic persons (s 14(1))
Even where a juristic-person lessee is below the threshold in s 5(2)(b) (for example, a small start-up company that has just been incorporated), the CPA’s provisions on fixed-term agreements are separately excluded:
This section does not apply to transactions between juristic persons regardless of their annual turnover or asset value.
Note — Section 14 of the CPA is the provision that gives consumers the right to cancel a fixed-term agreement on 20 business days' notice, and imposes maximum term lengths (where prescribed) and renewal-notification obligations on the supplier. Those consumer protections do not apply to any transaction between juristic persons — regardless of asset value or turnover. A commercial lease between two companies is a transaction between two juristic persons.
The practical result is that a commercial long lease between two juristic persons is outside the CPA on both grounds — the s 5(2)(b) threshold exclusion (if the lessee exceeds R2 million) and the blanket s 14(1) fixed-term exclusion (for all juristic-person transactions). The lessee cannot, for example, invoke s 14(2)(b)(i) of the CPA to terminate on 20 business days’ notice during a fixed-term commercial long lease. The agreed term governs.
Where one party is a natural person (an individual) rather than a juristic person, the position changes — neither the s 5(2)(b) threshold exclusion nor the s 14(1) blanket exclusion applies. Whether the CPA then governs depends on whether the transaction is entered into “in the ordinary course of the supplier’s business” and whether any other exemption applies. Legal advice is prudent in that scenario.
Transfer duty — none on an ordinary lease
Transfer duty is levied on the acquisition of “property” as defined in the Transfer Duty Act 40 of 1949. The natural question when registering a long lease is whether duty is payable. For an ordinary (non-mineral) lease, the answer is no — and the reason lies in the Act’s own definition of “property”:
“property” means land and any fixtures thereon, and includes—
(a) any real right in land but excluding any right under a mortgage bond or a lease of property other than a lease referred to in paragraph (b) or (c);
(b) a lease or sub-lease of any lot or stand which is registrable in the office of the Rand Townships Registrar in terms of the Registration of Mining Rights Proclamation, 1902 …;
(c) any right to minerals (including any right to mine for minerals) and a lease or sub-lease of such a right;
Note — Paragraphs (b) and (c) are the two narrow lease-related exceptions to the general lease exclusion: (b) catches leases or sub-leases of stands registrable in the Rand Townships Registrar under a specific 1902 mining proclamation (a vestigial Transvaal mining-era provision); (c) catches mineral-rights leases and sub-leases. Neither applies to an ordinary commercial or agricultural notarial long lease. The exclusion at the end of paragraph (a) — 'excluding any right under a mortgage bond or a lease of property other than a lease referred to in paragraph (b) or (c)' — is the operative provision that keeps ordinary leases out of transfer duty.
The definition tells us that a real right in land is ordinarily within “property” — but it expressly excludes a lease unless the lease falls within paragraph (b) (the narrow Rand-Townships mining stand) or paragraph (c) (a mineral-rights lease). An ordinary commercial or agricultural notarial long lease falls into neither category. Registering it therefore attracts no transfer duty.
This is confirmed by the converse: paragraph (c) explicitly includes a lease or sub-lease of a right to minerals, which shows that the legislature knew how to bring a lease within the definition where it chose to. Leases of surface land (the normal case) were deliberately left out.
Note that transfer duty is a distinct question from VAT (see the next section) and from Deeds Registry fees, which are payable on registration. The absence of transfer duty does not mean registration is free — the Deeds Registry fees prescribed under the Deeds Registries Act must still be paid.
VAT on commercial rent and premiums
Last reviewed 27 June 2026; the VAT rate and treatment can change — confirm the current position with a tax adviser before concluding the deal.
Value-added tax is imposed by s 7(1)(a) of the Value-Added Tax Act 89 of 1991 (“VAT Act”) on the supply of goods or services by a registered vendor in the course or furtherance of an enterprise. Where a lessor is a registered VAT vendor and lets commercial premises, the letting is a supply of services in the course of an enterprise — and the supply is standard-rated at 15%.
Rent
Periodic rental payments under a commercial long lease are each a taxable supply when they fall due. Under s 9(3)(a) of the VAT Act, the time of supply for periodic payments (such as monthly rent) is the earlier of the date on which the invoice is issued or the date of payment — so VAT is accounted for by the lessor period-by-period as each rental instalment falls due, not as a lump sum at registration. The lessee (if itself a VAT vendor making taxable supplies) can claim an input tax credit on the VAT component of rent, provided the lessor issues a valid tax invoice.
Up-front lease premiums
Where the parties agree to an up-front premium in addition to periodic rent (sometimes used to lock in favourable long-term rent levels or to compensate the lessor for fitting out costs), that premium is also a taxable supply when the lessor is a VAT vendor. The premium is consideration for the grant of the lease right (a service) and is standard-rated at 15% on the earlier of invoice or payment.
Residential letting — the exempt carve-out
The position is entirely different for a lease of a dwelling. Section 12(c) of the VAT Act exempts the supply consisting of the letting of a “dwelling” (a residential unit) from VAT. A lessor who lets only residential property is not carrying on a taxable enterprise for VAT purposes and cannot register as a vendor in respect of that activity; conversely, a registered vendor who derives income from both commercial and residential lettings must apportion input taxes accordingly, since the residential letting income is exempt. This is the opposite of the commercial letting position: commercial rent = standard-rated; residential rent = exempt.
Practical checklist
- Confirm whether the lessor is a registered VAT vendor. If not, no VAT is levied on the rent (though the lessor may be required to register if the rental income will exceed the R1 million registration threshold).
- Ensure the lease agreement states clearly whether rent is inclusive or exclusive of VAT. Ambiguity here can cause significant disputes — a lessor who quotes rent exclusive of VAT and then adds 15% will receive more than the lessee budgeted; a lessor who quotes rent inclusive of VAT effectively absorbs the VAT out of the agreed amount.
- Check whether the lessee is a VAT vendor who can recover input tax. If so, VAT on rent is a timing and cash-flow issue, not a net cost. If the lessee makes exempt or non-taxable supplies, the VAT on rent is an irrecoverable cost.
- For any premium, agree upfront how VAT is calculated and who bears it. The time of supply rule (s 9(3)(a)) means VAT is due on the invoice date or payment date, whichever is earlier — the lessor must account for it immediately.
- This page is general orientation and does not constitute tax advice. VAT rules on property transactions can be complex — involve a tax practitioner when structuring the deal.
The registration process page notes that Deeds Registry fees and any applicable VAT are payable at lodgement. The Deeds Registry itself does not levy transfer duty on an ordinary long lease (as explained above), but the lessor must ensure its VAT obligations are met separately — through SARS, not through the Deeds Registry.