Ghana: Real Estate Buying Process
By Rhiannon Williamson
Ghana is a nation that offers an investor an unrivalled wealth of choice and potential, and a property investor considering this emerging market will likely be overwhelmed by the weight of opportunity for profit and gain.
But because the Ghanaian investment real estate sector is in its absolute infancy there are many critical factors that a property buyer must bear in mind before committing to purchase land or real estate; this is a guide to the property buying process in Ghana to assist foreign buyers.
First things first it‚Äôs important to note that there are currently no restrictions on non-Ghanaians owning land and property in Ghana and this situation is unlikely to change because the government of Ghana is committed to promoting maximum inward foreign direct investment and is working with a body called the Ghana Real Estate Developers Association to restructure the entire property sector in the country.
It‚Äôs also worth noting that a foreign property investor who makes purchases in Ghana can benefit from a series of government incentives including taxation breaks, and that currently upon the resale of property and the release of profits no taxation is levied against capital gains and all profits can be transferred out of Ghana.
The main issue with the entire property sector in Ghana is land registration however, and it is critical to take a moment to understand the fundamental problems Ghana is facing at the moment with respect to this.
According to a report written by Oxfam less than 2% of all land in West Africa is correctly registered. This means that it is almost impossible to legally determine whether a vendor has the right to sell his land or property – which naturally presents a property buyer with something of a headache. Because resolving this fundamental issue is critical to the development of a competitive real estate market in Ghana the government has started to implement a compulsory Land Title Registration scheme throughout the country.
The scheme has already begun around the capital city of Accra and it will be rolled out in stages across the country and it will force the correct registration of all parcels of land. It will also seek to satisfy any current disputes over various parcels of land so that when the scheme is completed there will be a central record of land registration that can easily be searched. This will enable a property buyer to register as the new legal owner of land or real estate and avoid any potential claims against that property.
As you can imagine the implementation of such a scheme is a massive undertaking and it will take many years to complete – therefore there are certain ways a property investor must protect his legal interests when buying real estate in Ghana today.
This guide to the property buying process in Ghana combines the purchasing guidelines as issued by the Ghana Real Estate Developers Association (GREDA) as well as our own advice. GREDA list the four most critical stages of the property buying process under the acronym ‚ÄòSAFE‚Äô – namely Search, Advice, Follow up and Elicit and the whole process works as follows: – Firstly an investor needs to employ the services of an established and reputable real estate agent and a solicitor who specializes in property. Without these two critical support elements in place a property investor in Ghana will struggle to make progress and may in fact fail to purchase anything legally.
The real estate agent will find land and property that match the property buyer‚Äôs investment objectives and the lawyer will help with the whole search process. In terms of the searches that have to be carried out on any parcel of land or piece of property that a buyer is considering making an offer on, they must include: –1) Searching for proof of the vendor‚Äôs legal ownership of the property at the nearest Lands Commission Office.2) Doing a technical search at the Town and Country Planning and Geological Survey Department to find out about any proposals to develop on or near the land and also to find out about the geological format of the land with respect to issues like earthquakes, flooding etc.3) Conducting what are known as ‚Äòsocial searches‚Äô on the credibility of the vendor‚Äôs claims that he owns the land being sold. These take the form of speaking to neighbours and locals about the vendor and his claim to own the property.
Once these searches have been conducted, if their findings are satisfactory an offer to purchase can be made. If any element of doubt arises from the searches the property investor would be wise to walk away.
Either way a buyer should take the advice of the lawyer, experts at the Town and Country Planning and Geological Survey Department as well as the real estate agent before deciding whether to proceed or not. These experts in their field all have local knowledge of the Ghana property market and will likely give decent advice about whether a particular parcel of land or property is worth pursuing.
Follow up means that the buyer should consider conducting his own due diligence on the property he is interested in and double checking the findings of his solicitor. While one often operates with a great degree of trust in real estate transactions in many countries in the world, it is not usual to blindly trust lawyers and estate agents in Ghana.
Elicit as much information about the vendor, the land and property from as many local sources as you can because currently this is the only way you can be sure that you are about to legally acquire the real estate you‚Äôre interested in.
One way to ease the stress is to use a reputable and well established real estate agency and lawyer who trade on their reputation and in whose best interests it is to make their customers are happy.
Once an investor is committed to a parcel of land or a piece of property in Ghana the estate agent will usually enter into negotiations with the vendor to reach an agreeable asking price. Once a price has been agreed upon the property investor‚Äôs lawyer will prepare the appropriate instrument of transfer – whether that is a Deed of Conveyance, Deed of Lease, Deed of Sub-lease or Deed of Assignment. The appropriate deed will be signed by all parties involved in the transaction and then registered with the Lands Commission Secretariat.
Once the execution of transfer is complete the property has to be paid for and for anyone requiring finance there are at least two local banking institutions in Ghana who offer finance for property purchase. Both HFC and Standard Chartered Bank have a range of mortgages for resident and non-resident Ghanaians as well as expatriate purchasers, although an investor might like to secure funds outside of the country as interest rates tend to be quite high in Ghana.
And finally, once the property has been paid for the title will be registered in the name of the buyer by the Lands Commission Secretariat and all statutory fees will need to be paid.