Key takeaways
- Decide first what you are selling: the land and buildings alone, the business as a going concern, or the shares in the company that owns it. The choice decides the tax, who employs your staff after transfer, and which licences must be applied for again.
- Have at least three years of monthly figures ready, traceable to bank statements: occupancy (room nights sold over room nights available), average rate (accommodation income over room nights sold) and RevPAR (accommodation income over room nights available).
- In a sale of the business or the property, licences do not pass by themselves. Liquor licences fall under each province's own Act, and the kitchen's certificate of acceptability is not transferable: when the person in charge changes, the local authority must be told in writing within 30 days (GN R638 of 22 June 2018, regulation 3).
- In a going concern sale, unless a different arrangement is agreed in writing with your staff's union or representatives, your staff become the buyer's employees automatically under section 197 of the Labour Relations Act, and you and the buyer must value their accrued leave and severance pay and agree in writing who is liable for it.
- The sale is zero-rated for VAT only if you and the buyer are both VAT vendors, the assets needed to run the business pass to the buyer and you agree the going concern terms in writing. Otherwise a vendor accounts for VAT at 15% (SARS: VAT), the standard rate since 1 April 2018 (SARS pocket guide), out of the price unless the agreement lets the price be increased. A seller who is not registered, and not required to be, has no VAT to account for.
- Dynamic Business Sales sells trading businesses as going concerns, by auction with a reserve or by private treaty. Buyers sign a non-disclosure agreement before they receive the information pack and show proof of funds before they see the books.
Property, business or shares: decide what you are selling
Each route treats tax, staff and licences differently.
| Property only | Business as a going concern | Shares in the owning company | |
|---|---|---|---|
| What the buyer gets | Land and buildings, perhaps the furniture | The trading business: property or lease, equipment, name, bookings, goodwill and staff | The company, with everything it owns and owes |
| Tax on the transfer | Transfer duty, or VAT if you are a VAT vendor and the property is part of your enterprise | VAT at 0% if every going concern condition is met; otherwise VAT or transfer duty | Usually securities transfer tax; share block shares, and certain shares in companies owning residential property, attract transfer duty or VAT instead (SARS, Taxation in South Africa 2026, sections 15 and 17) |
| Staff | Turns on the substance of the deal | Move to the buyer under section 197 | Stay with the company |
| Licences | New applications, or a transfer application by you | Transfer applications, or new ones | The liquor licence stays with the company, but in the Acts we checked the authority must consent before the shares change hands; if the person in charge named on the kitchen certificate changes, the local authority must be told within 30 days |
Get the books ready: occupancy, average rate and RevPAR
Prepare at least three years of monthly figures from the booking system and accounts, traceable to bank statements and, if you are registered, VAT returns.
- Occupancy rate: room nights sold, divided by the rooms available multiplied by the nights in the period, as Statistics South Africa (Stats SA) defines it.
- Average rate (ADR, average daily rate): accommodation income divided by room nights sold, with meals and bar income kept out, as Stats SA does.
- RevPAR (revenue per available room): accommodation income divided by room nights available, which equals occupancy multiplied by the average rate.
Show the mix of rooms, food and drink, and activities. Stats SA's tourist accommodation release for July 2026, published on 29 September 2026, put guest-house and guest-farm occupancy at 22.2% to 29.1% a month from February to July 2026, at R1,138 to R1,396 a room night; "other accommodation", which includes lodges and bed-and-breakfasts, ran at 32.5% to 39.4% and R2,322 to R2,650. These are national averages, revised with each year's new sample; if yours sit well above them, have the evidence ready.
Then adjust the profit: price in a manager's salary if you run the place yourself, take out personal costs run through the business, list the forward bookings and the deposits guests have paid, and have the maintenance records ready. See how to value a business in South Africa.
Land and zoning: what the buyer's attorney will check
- Freehold. The title deed with its conditions and servitudes, and approved building plans. Land may be used only for the purposes its land use scheme, or an older town planning scheme not yet replaced, permits (Spatial Planning and Land Use Management Act, section 26), so if rooms or a restaurant were added over the years, confirm that the zoning or an approval covers today's use.
- Leased land. The lease is the asset: its remaining term, renewals and the landlord's consent to it passing. A lease of ten years or more binds a later purchaser of the land beyond its first ten years only if it is registered against the title deed or the purchaser knew of it (Formalities in respect of Leases of Land Act, section 1(2), in force since 1 January 1970).
- Traditional and communal land. In KwaZulu-Natal, the Ingonyama, as trustee of Ingonyama Trust land, may not lease or dispose of it, or any interest or real right in it, without the prior written consent of the traditional or community authority concerned (Ingonyama Trust Act, section 2(5), quoted in CASAC v Ingonyama Trust [2021] ZAKZPHC 42, paragraph 34; reported copy). A lodge there sells its business and its right to the land: a lease from the Trust, a permission to occupy or another right. Expect the buyer's attorney to ask for that document, proof of the consents it needed and whether it can pass. On land held by a communal property association, its written constitution governs (Communal Property Associations Act).
Liquor licence, kitchen certificate and star grading
Agree in the sale agreement who applies for each, by when, and what happens if one is refused.
Liquor licence
Liquor licensing is an exclusive provincial power (Schedule 5, Part A of the Constitution), so your province's own Act applies. In both Acts we checked, you, as holder, apply for the transfer. Under the Western Cape Liquor Act (2008 text, 2010 amendments), the incoming owner, who must qualify to hold the licence, can apply for consent to trade while the transfer is decided. Under the KwaZulu-Natal Liquor Licensing Act, the annual fee is shared pro rata, and the transfer certificate is issued only once you have paid your share. Both Acts also require the authority's consent before certain financial interests in a licensed business, shares included, change hands. Both have been amended since, so confirm the current forms with your provincial liquor authority.
Kitchen certificate
Food may be handled only on premises with a certificate of acceptability, issued in the name of the person in charge (the person responsible for the premises, or the owner) and not transferable. When that person changes, the local authority must be told in writing within 30 days and issues a new one; otherwise the certificate expires permanently (GN R638 of 22 June 2018, regulation 3).
Star grading and the rest
Star gradings from the Tourism Grading Council of South Africa (TGCSA), under the Tourism Act, sections 28 to 30, are valid for one year, after which the membership renews and the establishment is assessed again (TGCSA FAQ, read on 9 October 2026). We found no published rule on a change of owner, so ask the Council how the stars carry over. List the other permissions and accounts (booking platforms, website, fire and building approvals, water use, game permits) and confirm what can pass.
Your staff and section 197
In a going concern sale, section 197 of the Labour Relations Act makes the buyer the employer in every contract of employment in existence immediately before the transfer, with service unbroken and on the same terms or terms that are, on the whole, not less favourable (the same terms, where a collective agreement sets any of them). Dismissing someone because of the transfer is automatically unfair under section 187(1)(g). A different arrangement needs a written agreement with the staff's union or representatives, not just with the buyer.
You and the buyer must value accrued leave pay, the severance pay that would be due on a retrenchment and other accrued amounts as at the transfer date, agree in writing which of you is liable, and disclose those terms to each transferring employee. For 12 months after the transfer you stay jointly and severally liable for those amounts if a transferred employee is retrenched or the buyer is liquidated or sequestrated, unless you show you complied with section 197 (Labour Relations Amendment Act 12 of 2002, in force since 1 August 2002).
Calling the deal a property sale does not settle it: the test is the substance of the transaction, not its form (NEHAWU v University of Cape Town, paragraph 56). Speak to a labour attorney before you tell your staff.
VAT and tax on the sale
- Going concern. The sale is zero-rated only if you and the buyer are both registered VAT vendors (a buyer not yet registered must have applied before the agreement is concluded, and the registration must then be granted), the assets needed to run the business pass to the buyer, and you agree in writing 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% (SARS Interpretation Note 57). Hold the signed agreement, a tax invoice and the buyer's VAT notice of registration within 90 days of the earlier of the invoice or the first payment, or account for VAT out of the price (SARS Interpretation Note 31, Issue 5, 17 July 2026, Table A item G and paragraph 6).
- If the zero rate fails. VAT is due at 15% (SARS: VAT), the standard rate since 1 April 2018 (SARS pocket guide), and is treated as included in the price unless the agreement lets the price be increased (Interpretation Notes 31, paragraph 6(b), and 57, paragraph 4.3): include that clause.
- Not a VAT vendor. If you are not registered and are not required to be, there is no VAT (selling the business does not by itself make you liable to register), and the purchaser is liable for transfer duty on the land: a property sale attracts VAT or transfer duty, never both (SARS FAQ). If your turnover means you should have registered, take tax advice before you sell (Interpretation Note 57, paragraph 4.2).
- Also your home. The primary residence exclusion from capital gains tax is for a home owned by an individual or a special trust, not a company, close corporation or ordinary trust, and covers only the part used as your home, on up to two hectares. In SARS's guesthouse example, guest rooms are business use even when empty and the gain is split by floor area; shared rooms count too if you claimed their costs, and in SARS's view more than half in business use loses the exclusion. Each case is judged on its merits (SARS capital gains tax guide, Issue 9, sections 11.1, 11.5 and 11.8). Ask your tax practitioner before you sign.
- Living abroad. If you are not resident, the purchaser may have to withhold part of the price for SARS unless SARS issues a directive (SARS: non-resident sellers): see selling property on auction.
Notices and consents to line up before transfer
Make the agreement conditional on what only others can give (the landlord's or Trust's consent, the liquor transfer or consent to trade, the shareholders' resolution, the buyer's VAT registration), and time the creditors' notice to the transfer date. The full list, with deadlines, is in selling a business as a going concern.
- Creditors' notice. If a "trader" transfers a business, its goodwill or its assets outside the ordinary course of business without advertising the intended transfer in the Government Gazette and in two issues each of an Afrikaans and an English newspaper in the district, 30 to 60 days before transfer, the transfer is void against the trader's creditors for six months (Insolvency Act, section 34, as last substituted in 1991). Once it is published, creditors can demand fixed debts that fall due later. Your attorney confirms whether you are a trader.
- Shareholders. A company disposing of all or the greater part of its assets or undertaking needs a special resolution of its shareholders (Companies Act, sections 112 and 115).
Keeping the sale quiet
A guest house is easy to identify and easy to damage while it is for sale. In a private sale, release information in stages: anonymous marketing first (the region, not the town, the size in broad terms and the broad figures, with no photographs of the buildings or views, which booking sites already carry); the name and the information pack only after a signed non-disclosure agreement; the detailed books only after proof of funds; supplier terms, rates by channel and staff details last. On a public auction the catalogue may name the business, so the agreement protects the pack and the books instead. See the confidential business sale process.
Guest lists, booking histories and payroll are personal information, and the Protection of Personal Information Act, section 10, allows it to be processed only where it is adequate, relevant and not excessive for the purpose. Show buyers occupancy and revenue by channel rather than guests' names, and payroll by role before names. Your staff should hear about the sale from you.
Selling through Dynamic Business Sales
Dynamic Business Sales, the business sales division of Dynamic Auctioneers, sells trading businesses as going concerns, confidentially, to buyers in South Africa and abroad. After a confidential first call we look at the financials, the lease, the asset register and the staff complement, and tell you what a buyer is likely to pay and why. What selling costs, and who pays it, is set out in writing before you sign.
We recommend auction or private treaty on the first call and explain why; the choice is yours. Auction, with your reserve as the floor, tends to suit a seller who needs a firm date, and a business with premises, where bidders can see the value of the property beneath the price. Private treaty tends to suit a long due diligence, staged payments or a handover period with you, or a business where even anonymous public marketing carries a risk. See the reserve price explained.
Our auctions take bids online, and buyers who are not South African citizens sign up with a passport number (see buying a South African business from abroad). The property can be sold with the business or separately through our property auctions, and a closed business's furniture and equipment are sold as movable assets. Start a confidential enquiry.