This change, embodied in the Majority Act, came into effect on 1 July this year.

“In the past a person had to be 21-years-old to legally purchase or sell property or apply for a mortgage bond without the assistance of their legal guardians or parents,” says Tony Ketcher MD Seeff Properties Randburg.

“Although there are not many 18-year-olds in a position to buy or invest in property, this new aspect of the Act will certainly be reflected in the more affluent segment of the market where young people are often assisted by their parents with their first home acquisitions – even if the person is under 21, the property can now be registered in their name.”

Ketcher says that there are also several other positive aspects of the changes to the Act, for example, it may be more beneficial, in terms of both transfer duty and donation tax, to register an immovable property into a child's name instead of a trust.  “Because the age of majority has now dropped to 18 taxable income or capital gains can be distributed to a beneficiary with a lower tax rate than the original donor.”

Prior to the Act’s amendment, any income or capital gains distributed to a minor child, where the trust was funded by a donation or interest free loan by the parent of the minor child, the distributed income or capital gains were then considered to be income in the hands of the parent.  Trustees had to wait until the child of the donor was 21 before they could make any distributions to the child without creating a corresponding tax liability in the hands of the parent.

When reaching the new age of majority at 18, all minors whose inheritances have been paid into the Master of the High Court Guardians Fund may now claim their inheritances from the Fund.  “In terms of estates, the amendment to the law is also beneficial to children over 18 but not yet 21, who have inherited fixed property and want to sell or bond the property,” adds Ketcher.  

Now that it is possible for 18-year-olds to contract without the assistance and even the knowledge of their parents or guardians, they will need to be better informed of the responsibilities involved in property and other contractual transactions.  “At Seeff Properties Randburg, we welcome any young person who requires advice,” says Ketcher.  It is essential that they obtain as much information as possible and an experienced estate agency is often a good starting point.  We are only too happy to provide any property related advice with no obligations.”