How to invest in Ghana Real Estate is a question both Ghanaian and foreign investors have to grapple with. Ghana is a country that is fast growing with lots of natural resources that include real estate, oil and gas. Several foreign owned development companies have made their way into the country to take part in the real estate scramble. In this article, we’ll highlight several ways, procedures and requirements for Ghanaian Real Estate Investments
Here’s How to Invest in Ghana Real Estate
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Important facts to note before you buy
This is a fast growing sector over the last few years. It has a lot to offer to travellers, Ghanaians and the expatriate community that wants to invest in it. You will need to ascertain who owns the land and ensure that you are buying from the correct owner. Land here has been sold to different buyers and by those who are not the bonafide owners. You will need to get the land title reviewed at the government office and have a land valuation performed. There is a fee for these activities which is at the buyer’s expense.
Secondly you will need to review the documents yourself and be involved in all steps pertaining to the purchasing of the property. Engage an independent lawyer to review the documents as a precaution before you make any payments.
Requirements for Ghanaian Real Estate Development
When you purchase undeveloped land in Ghana, there are timelines set by the government for developing it. You may need to put in basic infrastructure like foundation, well or a building in the first two years. This also reduces questions being asked about the land’s ownership, or the unauthorized harvesting of assets on the property or trees. You should find out these requirements from the government office before buying the land.
Ghanaian land is mostly on a leased basis. This means that you cannot own the land as a company or individual indefinitely. The leases vary from 25 to 150 years. The terms for foreigners are shorter than those for Ghanaians but they are all negotiable. It is important to discuss this with your land buying agent before you make your purchase.
It is prudent to use the services of a Real estate agency that is officially registered. They should be reputable and offer you sound advice to help you negotiate your way around purchasing real estate in Ghana. Foreigners are not restricted from buying land or property in Ghana. There are four modes of land ownership in Ghana. This depends on the method used to acquire them. These are Government Land, Customary /Stool Land, Family /Private Land and Vested Land.
Procedures in Property Investment in Ghana
The buyers should consult the Ghana Investment Promotion Centre to ascertain what procedures should be followed. They will be directed to the agencies responsible for legally acquiring property so that they can identify the legal owners. The transaction costs (cost of buying and selling property) are between 8.25% to 16 % of the price of the property. This is because the land titles are difficult to verify. Property sellers pay the agents a commission of 5% and the buyer pays stamp duty of between 0.25% and 1%. The legal fees are between 3 to 10%. These transactions are negotiated and paid in Ghanaian Cedi (GHC). All transactions are conducted in the official language English.
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Ghana has a population of 40,000 expatriates most of whom live in the Accra the capital. They live in detached houses which are large and have gardens and garages just outside the city center. These are usually rented and yield a rate of between 6-8%. One 200square meter house costs US$ 150,000 which is about GHC 504,719. This is rented out at US$ 50 per month (GHC 168). The residential properties retail at between GHC 6.7 to 7.2 million (US$ 1.9- 2.1 million) per square meter. The rental market in the capital is big at 37.5 %. Income on rental tax is low. The rental income for non residents is 10% and withheld at source. This is tax on gross rental income. Capital gains is taxed at 15% and there is none levied on inheritance. Gift tax is levied at 5% for the transfer of properties as a gift. Residents are taxed at between 0 to 25 on the income at progressive rates.
The rental income is paid between one year to three years in advance. This is not the legal position but because the rental market favors the landlord he can do so. The normal practice is six months in advance and then paid every six months. Termination of rental agreements before it is due must be done with a three month notice in advance. In some cases they must get a tenant to replace themselves for the remaining duration or wait for the refund of the payment for several months. The real estate investment in Ghana is lucrative with a ready market for rental property. It is however important to conduct your due diligence carefully and be very involved in the property purchase.