Buying a lodge or guest house in South Africa: land, licences, staff and the books

Three ways to buy a lodge

Before the price, settle what you are buying. A lodge can change hands in three ways, and the choice decides the tax, who employs the staff, and which permissions must be applied for again. Amounts here are in rand (R, or ZAR), South Africa's currency.

A share purchase keeps licences, leases and contracts where they are, but you take on the company's history, so investigate it more deeply: see the due diligence checklist.

Two seller-side steps that protect you

• Notice to the seller's creditors. Under section 34 of the Insolvency Act, if a "trader" transfers a business, its goodwill or property forming part of it outside the ordinary course of business, notice of the transfer must be published in the Government Gazette and in two issues each of an Afrikaans and an English newspaper in the district, 30 to 60 days before the transfer. Without it, the transfer is void against the seller's creditors for six months, and against the trustee if the seller's estate is sequestrated (declared insolvent) in that time. Your attorney confirms whether the seller is a trader as the Act uses the word.
• Shareholders' approval. A company selling all or the greater part of its assets or undertaking (more than half, fairly valued) needs a special resolution of its shareholders under sections 112 and 115 of the Companies Act, and the votes of the buyer and persons related to it do not count. If the lodge is more than half of what the seller company owns, make the agreement conditional on that resolution.

Both steps are explained from the seller's side in selling a business as a going concern.

Who owns the land: freehold, leases, share blocks and communal land

Freehold

The seller, or its company, owns the land, registered in the Deeds Office. Ask the conveyancer (the attorney who registers property transfers) for the title deed and its conditions and servitudes. Under the Spatial Planning and Land Use Management Act, land may be used only for purposes the municipal land use scheme permits, so check that the zoning, or an approval, allows a lodge or guest house.

Leasehold

Where the business leases its land, the lease is the asset: check the remaining term, renewals, escalations and the landlord's written consent to it passing to you. Under the Formalities in respect of Leases of Land Act, section 1(2), a lease of ten years or more (counting renewals the tenant can claim) binds a later purchaser of the land, or the landlord's creditors, beyond its first ten years only if it is registered against the title deed or they knew of it at the time. If the lodge leases part of a farm or other agricultural land, also ask your attorney whether a long lease of it needed the consent of the national Minister responsible for agriculture, and ask to see that consent if it did.

Share blocks and private reserves

Some lodges are held through a share block company. Under the Share Blocks Control Act the share confers a right to use immovable property, so you buy shares and a use agreement, not land. For tax, share block shares are treated like land: the sale attracts transfer duty, or VAT if the seller is a VAT vendor selling in the course of its business, and not securities transfer tax (see the tax section below). If guests are driven across neighbouring properties, check that those traversing agreements pass to you.

Traditional and communal land

In KwaZulu-Natal, land held by the Ingonyama Trust is administered, in the words of the Ingonyama Trust Act, "for the benefit, material welfare and social well-being" of the members of the tribes and communities concerned. The Act says the Ingonyama (the trustee) may not lease, alienate or otherwise dispose of the land, or any interest or real right in it, without the prior written consent of the traditional or community authority concerned. The land belongs to the Trust, so you are buying the business and whatever lease or right of use it holds, not the ground.

Have an attorney who knows Trust land confirm that the lease was granted with that consent, how long it runs, whether it can pass to you, any community agreement it depends on, and whether people living on or using the land hold informal rights to it and how they agreed. In 2021 the High Court in Pietermaritzburg declared unlawful and invalid residential leases the Trust had concluded with people who held customary or informal rights to the land, without complying with the Interim Protection of Informal Land Rights Act, and ordered refunds. The court explained that under that Act, taking away informal rights to land needed the holders' consent or, where land is held communally, a decision under the community's custom, with compensation, approved by a majority at a specially convened meeting. That case concerned residential leases, and we know of no ruling on commercial leases either way.

Elsewhere, communal land may belong to a communal property association, which holds and manages property under a written constitution its members agree (Communal Property Associations Act), or be held in other ways. Whoever holds it, ask the same questions: who granted the right, with what authority and what community consent, and for how long.

Licences and grading that do not move on their own

A lodge trades on permissions granted to a particular person for particular premises. List them early, and agree in the sale agreement who applies for what.

• Liquor licence. Licences to sell liquor to guests and the public are issued under each province's own liquor law. In the Western Cape and KwaZulu-Natal, for example, moving a licence to a new holder needs the provincial authority's approval, and both provinces' Acts have also required consent before someone acquires a financial interest in the licensed business. Both Acts have been amended since, so check the current rule with the provincial authority, even if you are buying shares. In the Western Cape the incoming owner can apply for consent to run the licensed business while the transfer is decided.
• Kitchen certificate. Under the national food hygiene regulations, food may be handled only on premises with a certificate of acceptability from the municipality, issued in the name of the person in charge and not transferable. When that person is replaced, the local authority must be told in writing within 30 days and issues a new certificate; if it is not told, the certificate expires permanently (regulation 3, GN R638 of 2018).
• Star grading. The Tourism Grading Council of South Africa (TGCSA) runs the national star grading system set up under the Tourism Act. Its grading is valid for one year, after which the membership renews and the establishment is assessed again (TGCSA FAQ). Ask the Council how the membership and stars carry over to a new owner. The Council says government departments, among others, use only graded establishments.
• Everything else. Business or trading licences, fire and building approvals, water use, game permits, and the booking-platform accounts with their reviews. Confirm with each authority or platform what passes to a new owner.

Staff and section 197

If the lodge is sold as a going concern, section 197 of the Labour Relations Act makes you the employer in every contract of employment in existence immediately before the transfer. Service is unbroken, contracts continue on the same terms (or terms that are, on the whole, not less favourable), and dismissing someone because of the transfer is automatically unfair. A different arrangement needs a written agreement with the staff's union or representatives, not just with the seller.

Seller and buyer must also value, as at the transfer date, accrued leave pay, the severance pay that would be due on a retrenchment and other accrued amounts, agree in writing who is liable, and disclose it to the staff who transfer.

List every contract, including fixed-term and seasonal ones, and note which will be running on the transfer date. Calling the deal a property sale does not settle the question: the Constitutional Court has held that whether a business was transferred as a going concern turns on substance, not form. If you buy the buildings and carry on the same lodge with the same staff, take labour advice on the basis that section 197 may apply.

Reading the books: occupancy, rate and the seasons

Annual figures hide what matters in a lodge. Ask for monthly figures for at least three years, from the booking system and the accounts, and check them against the bank statements and any VAT returns.

Three numbers to work out yourself

• Occupancy rate. Room nights sold, divided by the rooms available multiplied by the nights in the period: the definition Statistics South Africa (Stats SA), the national statistics agency, uses.
• Average rate. Income from accommodation divided by room nights sold, with meals and bar income kept out, as Stats SA does.
• Revenue mix. Accommodation, food and drink, activities and other income, month by month.

What the national figures show

Stats SA's monthly survey of tourist accommodation gives a benchmark. Its July 2026 release shows that from February to July 2026, guest-houses and guest-farms sold between 22.2% and 29.1% of their available room nights each month, at an average of R1,138 to R1,396 a room night. "Other accommodation", which includes lodges, bed-and-breakfasts and self-catering establishments, ran at 32.5% to 39.4%, at R2,322 to R2,650. These are national averages, not targets, but a seller's figures far above them deserve a closer look. The survey covers only businesses registered for tax, so very small guest houses may sit outside it, and Stats SA revises recent months and moves to a new sample each year, so check the latest release.

Seasons and what the profit leaves out

Set the months side by side across the years and judge the pattern against the lodge's own history, not a rule of thumb. Then adjust the profit for:

• the work of an owner who lives on site and runs the place: price in a manager's salary;
• deposits taken for future stays: those guests are owed their nights, so agree how the deposits move with the bookings;
• one-off good or bad years, and dependence on a few tour operators or booking platforms;
• deferred maintenance: thatch, roads, vehicles, generators or solar, water and waste systems.

For how those figures become a price, see how to value a business in South Africa.

VAT, transfer duty and other tax on the deal

The South African Revenue Service (SARS) treats the three routes differently.

• Going concern. The sale is zero-rated for VAT under section 11(1)(e) of the VAT Act (SARS Interpretation Note 57) only if seller and buyer are both VAT vendors, the assets needed to run the lodge pass to the buyer, and the parties agree in writing, when they sign, that it is sold as a going concern, will be income-earning on the date of transfer, and that the price includes VAT at 0%. A buying company not yet registered must have applied before the agreement is concluded, and be registered, so a buyer from abroad sets up the South African company and its VAT registration before signing (see below). Otherwise a vendor seller charges VAT at the standard rate, currently 15% (SARS: VAT).
• A seller that is not a VAT vendor. No VAT; the purchaser is liable for transfer duty on the land. SARS is clear that a property sale attracts VAT or transfer duty, never both.
• Shares. Usually securities transfer tax of 0.25%, on the price or the market value of the shares, whichever is higher (SARS: securities transfer tax). Two exceptions matter for lodges. Shares in a share block company count as property for transfer duty, so their sale attracts transfer duty, or VAT if the seller is a VAT vendor selling in the course of its business, whether the property is residential or not. And shares in a "residential property company", one where residential property makes up more than half the value of its assets, attract transfer duty. A guest house can be residential property for this test: only a guest house or similar of five or more units, let to five or more people not connected to the owner, or property a VAT vendor uses in its business, is left out. Where transfer duty or VAT applies to a share deal, securities transfer tax does not (SARS, Taxation in South Africa 2026, sections 15 and 17). Ask your tax adviser which applies before you price the deal.
• A seller who lives abroad. If the seller is not resident in South Africa and the price exceeds R2 million, the purchaser must withhold 7.5% of the price (seller an individual), 10% (a company) or 15% (a trust) and pay it to SARS, unless SARS has issued a directive for a lower or zero rate (SARS: section 35A withholding; rates as at 30 September 2026 in SARS, Taxation in South Africa 2026, section 2.15). This applies to land, to share block shares, and to shares in a company whose value lies 80% or more, directly or indirectly, in South African immovable property such as land and buildings, where the seller holds at least 20%.

Buying from outside South Africa

Use a South African attorney, a tax adviser and your bank. These are the rules you meet first; for more, see buying a business in South Africa as a foreigner.

• Exchange control. The South African Reserve Bank (SARB) runs exchange control, through banks appointed as Authorised Dealers. A non-resident (normally resident, domiciled or registered outside South Africa, Lesotho, Namibia and eSwatini) may freely invest, provided the deal is at arm's length, at a fair market price, and financed in an approved way, such as foreign currency brought in through a South African bank, with documents to show it. A loan between you and the South African company needs the Reserve Bank's prior written approval. If you borrow in South Africa yourself to buy residential or commercial property, a South African bank may lend you only one rand for each rand you bring in, against security, and no more than 100% of what you introduced; a South African company that is 75% or more owned or controlled by non-residents has its own limits (SARB manual section I.1). Agree the funding with your bank before you sign. The bank endorses unlisted share certificates bought with money brought in "Non-Resident"; the proceeds of a later sale may be regarded as freely transferable, so keep those records. Replacement regulations are only in draft, so the current rules apply. See exchange control for foreign investors.
• Company. A buyer abroad can buy through a South African company, registered with the Companies and Intellectual Property Commission (CIPC), the national companies registry. Foreigners can be directors and shareholders; CIPC checks a foreign director's passport first, and every company must keep an office in South Africa. Set up the company, and its VAT registration, before you sign. If a foreign company buys the lodge business itself instead, taking on the staff under section 197 makes it party to employment contracts here, which the Companies Act treats as conducting business in South Africa: it must then register with CIPC as an external company within 20 business days (Companies Act, section 23). Ask your attorney which structure suits you.
• Visa. To live in South Africa and run the lodge yourself, look at the business visa. Home Affairs normally requires R5,000,000 in cash from outside South Africa invested in the business (GN 560 of 15 July 2014), an accountant's certificate, a recommendation from the Department of Trade, Industry and Competition (the dtic) and, for an existing business, proof that at least 60% of the staff are South African citizens or permanent residents in permanent jobs (regulation 14). The amount can be reduced or waived for a business in the national interest, or at the dtic's request (Immigration Act section 15(3)). Reform is planned but is not law yet. See the business visa guide.
• B-BBEE. Broad-Based Black Economic Empowerment (B-BBEE) measures black ownership and participation in a business, and organs of state must apply its codes when they buy and when they issue licences. Tourism has its own sector code: as gazetted in 2015, an exempted micro enterprise earns under R5 million a year (R10 million in the general codes), and the ownership target is 30% plus one vote (25% plus one vote generally), according to the amended tourism code gazetted in 2015. A new owner can change a lodge's level.
• Tax on the way out. Dividends tax is 20% on dividends paid on or after 22 February 2017 (SARS: dividends tax; SARS, Taxation in South Africa 2026, section 7), which a tax treaty may reduce, and your bank needs SARS tax compliance evidence before it sends dividends abroad. When you sell, SARS taxes a non-resident's gain on South African land, on the assets of a business you run in South Africa through a permanent establishment there, and on shares in a company whose value lies 80% or more in South African land and buildings where you hold at least 20% (SARS capital gains tax guide, chapter 4). A tax treaty may change this, so ask your tax adviser.

How we sell businesses, and how buyers abroad take part

Dynamic Business Sales, the business sales division of Dynamic Auctioneers, sells trading businesses as going concerns, on auction with a reserve or by private treaty. Every buyer signs a non-disclosure agreement before receiving the information pack (in a private sale, before learning the business's name), and shows proof of funds before seeing the books.

Our auctions take bids online, and if you are not a South African citizen, the sign-up for our online auction room takes your passport number (see how to register and bid online). Like every bidder, you complete FICA verification before bidding opens. FICA is the Financial Intelligence Centre Act, South Africa's anti-money-laundering law: banks, attorneys and property practitioners must identify and verify their clients, so expect to give a certified passport, proof of address, the documents of every company in your ownership chain, and where the money comes from. Auctions on our bidding platform run in rand: bids, deposits and fees. A listing sold by private treaty states its own price and terms on its page.

Start with buying a South African business from abroad or browse the businesses for sale.

Selling a lodge or guest house?

Dynamic Business Sales sells trading businesses as going concerns, confidentially, by auction with a reserve or by private treaty, to buyers in South Africa and abroad. What selling costs is set out in writing before you sign. Start a confidential enquiry, see how we handle business sales, or read selling your business to a foreign buyer.