buying guides for african women
author
Joanna M.
Business
09 / 2020

Buying Real Estate In Ghana: Everything You Need To Know

ghana

The real estate industry in Ghana has been experiencing some real growth in recent years. There has been a great increase in the demand for land in the country as each year, the population grows exponentially. Locals as well as expatriates both share interests in acquiring real estate either for commercial and business purposes or simply to set up foundations for a home. Regardless of whether you’re a foreigner looking to invest in the Ghanaian real estate industry or a local looking to obtain a new property or land, the question of how to go about the process is one that is very common. The good news is that you’ve come to the right place, as this article will address all your pressing questions and concerns and enlighten you on everything you need to know about buying real estate in Ghana.

Types of land in Ghana

For both locals and foreigners, there are no set restrictions on purchasing property or land in Ghana. One very important thing to note though before you rush ahead to make your purchase is that there are different types of land in Ghana, and some of them cannot be privately owned. 

There are currently four types of land in the country: Government land, Vested land, Customary land and Private land. When it comes to government land and vested land, acquiring these kinds of real estate require an application that must be filled and submitted to either the executive secretary of land commission or the regional lands officer. The party that your application must be submitted to depends on the location of the land. 

In the case of customary land, these types of land usually belong to different stools in Ghana and these people are the ones with the authority to grant you ownership of the customary land which they are responsible for. If you are granted the permission by the stool to own a customary land, the Ghanaian 1992 constitution works in your favor as it states that ‘there must be no free hold interest granted in land’, meaning that you are not obligated to pay any additional interests to stools after they have granted you their customary land.

Finally, we come to private land, which is basically customary land that has been given to private individuals or families before the 1992 constitution was established. With this type of land, in order to acquire it, you as the buyer must go directly to the owner of the land. 

Regardless of the type of land you want to buy, it is strongly advised that you obtain the services of a real estate agent as well as a lawyer as these can help the buying process go so much smoother for you. One very essential way in which a real estate agent can help you go about this process is by carrying out a title search for you. In Ghana, a title search is used to determine the type of land which you as the buyer is interested in purchasing as well as determining the current ownership of that land. Finding out the correct owner of the land cannot be overemphasized, as there have been occurrences where the same land has been sold to different buyers by people who are not the real owners of the land. Once all of this information has been correctly ascertained, you can then, alongside your real estate agent, agree upon a buying price and settle all agreements with the owner. Sometimes though, in the process of the land title being reviewed at the government office, a land valuation can be performed so that you will know the real worth of the land you want to purchase. This is also done in order to avoid being scammed by the owner of the land. Keep in mind that there is a fee for this valuation which would be at your expense as the buyer. Upon the settlements, a deed of conveyance (or another relevant document of transfer) is then drawn up by your lawyer. Once all these have been successfully signed, the land title is then transferred to you, the buyer, who then proceeds to pay for the property. 

The change of title from the original owner’s name to your own name is carried out and registered at the Lands Commission Secretariat. The process of property registration takes roughly around 48 days to be completed and tends to involve about five procedures.  

It is important to note that the legal fees that you are obligated to pay your lawyer are determined by the Ghana Bar association with the maximum rate you should pay being 10% on a property valued between 11,500 to 40,000 dollars. On property valued up to 11,000 dollars, maximum legal fee rate is 0%. It is 7.5% on property valued between 40,000 to 85,000 dollars, 5% on property valued between 85,000 to 180,000 and 3% on property valued over 180,000 dollars. 

Real estate developers and development

There are different ways to go about purchasing land or properties in Ghana such as through agents. But here’s a very helpful tip that you might want to consider: purchase from developers. One great advantage of purchasing land or properties from developers is that this process comes at no commission costs, plus the prices are lower and fairer compared to if you bought from an agent. More so, going about buying real estate from a developer, especially when it comes to land is quite advantageous as land bought from a developer is free from litigation. This simply means that when you buy property from a developer, they cannot take legal action against you in the court of law over that property. Also, in the rare scenario that the developer was not equipped to sell you the land, the court would act in your favor and order for them to pay you back in full what you paid for the purchase. In Ghana, too many people have gone about buying property from questionable sources and this has often led to disputes over ownership that has had to be settled in court. Ghana experiences a lot of land litigation that is now becoming more and more rampant, and this has caused trouble amongst families, friends and even communities. To play it safe, it is much better to buy your land and properties from developers and other reliable sources. 

Another thing to be addressed is the development of real estate. Sometimes, you might purchase a piece of land and begin work on it immediately. Other times, you might want to wait a little while before beginning to develop the land, or you might even want to leave the land as it is so that it can increase in value over time for the purpose of resale. In Ghana though, one thing you might not be aware of is that there is a timeline that has been set by the government for you to develop your land. When you purchase land that is bare or underdeveloped, the government requires you to begin work on that land within the first two years of your purchase. This may mean that you would need to put up a basic infrastructure such as a foundation or a small building to be able to pass the governments’ requirement, even if your goal was to purchase the land to resell it. More than simply meeting with the governments’ rules about purchased land, putting up a small building or a foundation on your land prevents you from having to face questions asked about the ownership of the land. It also prevents the unauthorized planting of trees and crops on your property as well as the wrongful harvesting of assets and trees that were there when you purchased, as sometimes people tend to take advantage of bare land to either grow food and other plants or harvest useful assets. Before buying your land, you should go about finding out some of these specific requirements from the government office. 

Ownership of land

In Ghana, the land is based on a lease. This, simply put, means that even when you have completed the purchase of your land, you, as an individual or a company cannot own it indefinitely. So even when you buy the land and build on it, once the lease expires, the building along with the land go back to being owned by the allodial land owner. Alease may be as short as one year or it may be as long as agreed by the two or more parties involved. Usually, a very common practice is a 99-year lease, but on rare occasions, there have been times where the lease has been much longer than that. However, as a foreigner looking to purchase land in Ghana, you must know that according to the 1992 constitution in article 266, the maximum interest that a non-Ghanaian can have on a land in Ghana is 50 years. It is possible for you to have your lease on the land renewed once the 50 years is over if that is what you want to do, but at a time, the longest you can have a lease remains 50 years. 

Another quite relevant piece of information to have is that if you are a foreigner that wants to purchase land in Ghana for the purpose of establishing your business, there are certain requirements that you must fulfill. The GIPC Act of 2013 gives a specific minimum contribution that a foreigner must make in the form of equity participation if their company is holding real estate in Ghana. If the company is wholly owned by a non-Ghanaian national, then the foreigner’s minimum equity capital must be equivalent to 500,000 US dollars. If the company is a joint firm between a foreigner and a Ghanaian, then the minimum equity capital by the foreigner must be equivalent to 250,000 US dollars. This rule obviously does not apply to people of Ghanaian nationality, so if you are a local, there is no problem in this area.

In agreeing upon a lease, the person who creates the lease is known to be the lessor, while the person who is granted the lease is regarded as the lessee. When a lease has been agreed upon, it create a relationship between the lessor and the lessee similar to that of a landlord and a tenant. There are specific features that make up a lease. It must include:

  • A set/definite period of time. This means that the start date and the end date of the lease must be clearly stated. This set time then implies that the lessor has the right to repossess the leased land along with any building that has been set up on the land once the lease comes to an end/expires. 
  • Explicit possession of the leased land to the lessee for the period of time agreed upon and clearly stated
  • The full names of both parties of the lease agreement, that is, both the lessee and the lessor
  • The specific details of the land/property being leased including location and full address (this is usually portrayed by the site plan)
  • The conditions that need to be fulfilled for either a possible renewal of the leas or non-renewal as well as other important compacts. 
  • A well detailed consideration (which could come in the form of a lump sum or a type of periodic payment like ground rent) that will allow for the granting of the use of this land. 

Procedures for property investment in Ghana

Did you know that you can invest in real estate in Ghana, and that real estate investments are a very lucrative business opportunity? If you are interested in investing in real estate in Ghana, there are first of all a couple of things that you must do. To start with, you as the buyer would need to consult the Ghana Investment Promotion Centre (GIPC). This is especially important as this consultation can help you become aware of the specific procedures that you would need to follow. The GIPC would then direct you to the relevant agencies that are responsible for safely and legally obtaining property so that they can first of all identify the true and legal owners of the land that you are interested in. The transaction costs of these agencies are typically between 8.25 and 16% of the total price of the land or property you are purchasing. You may think to yourself that these rates are quite high, however they cost this much because in Ghana, the land titles are very hard to both obtain and verify, especially because there are a lot of scammers who claim to own land so as to get money from unknowing buyers. The property sellers are obligated to pay these agents a commission of about 5 percent, while you as the buyer pays a stamp duty that is between 0.5 to 1 percent. Other fees to look out for are the legal fees, which as previously mentioned, can be anywhere between 3 to 10 percent depending on the value of the land or property. All transactions are carried out in the local Ghanaian currency, the Ghanaian Cedi (GHC) and are all carried out in their official language of English. 

Once you have succeeded in buying your property, you can then use it as an investment. The real estate industry in Ghana is booming due to the growing demand for living apartments and office spaces. This growth in demand is as a result of the mass migration from rural areas of the country to more urban cities and not enough home and office buildings to accommodate the fast-moving population. So, if you have been able to purchase a piece of land, your only option isn’t to just build a space for yourself. You can also build an apartment complex or an office space that you can rent out in order to receive a steady stream of income over time. And if instead of buying bare land, you purchased a home or an apartment, the same still applies. You can make money off that property by renting it out. You have the choice carrying out the task of finding tenants and managing the building by yourself, or you can leave the building to developers to manage for you. This is especially beneficial to you as you can simply earn money on your investment and still have the time to focus on other important things such as business and personal life while building developers carry out the hard tasks for you. You can relate this buying shares in a company but having your shares being managed by a stock broker. 

Investment potential of real estate 

Ghana’s real estate industry has great potential, so if you’re looking to buy land or property for the purpose of investment, this is where you get the nitty gritty details. In the country, they have a population of around 40,000 expats who for the most part, live in the capital called Accra. It is common for expats and people who are migrating from rural areas of Ghana to the urban cities to live in large, detached homes with gardens as well as garages, and these homes are mostly located outside of the city center. These types of homes are usually rented out and produce a rate between 6 and 8 percent. A single typical 200 square meter house is valued at about 505,000 Ghanaian cedi, which is equivalent to about 150,000 US dollars. This is rented out at about 50 dollars a month, equal to 168 cedi. Residential properties in Accra retail at about 6.7 to 7.2 million cedi (or 1.9 to 2.1 million dollars) per square meter. In this area of Ghana, the rental market is particularly big at about 37.5%, and income on rental tax is relatively low. The rental income tax for non-residents of Ghana is valued at 10%, meanwhile the income tax for Ghanaian residents is between 0 to 25%, increasing at progressive rates.

Rental income on properties is paid between one year to three years in advance and although this is not legally established, as a landlord, the rental market works in your favor and so you are at liberty to do this. Normal practice in Ghana is that rent is collected up to 6 months in advance and then continues to be paid every six months. If the landlord or the tenant wishes to terminate their rental agreements, this must be done up to 3 months in advance. In some cases, the tenant is required to find a replacement that will take up the space during the remaining duration of the agreement. Other times, the tenant can choose to wait for the refund of their payment for the months they would not stay at the property, which can take several months to come through. 

In general, real estate in Ghana is very lucrative and it even comes with a market that is ready for rental property. Ensuring that you follow through on all the important procedures required to obtain your property as well as making sure to be involved in every step of the property purchase is key, but once you legally have your property, you can put it to good use. Buying property in Ghana can even be recession proof. A property that generates high cash flow is certain to ride the waves of uncertainty during times such as a recession. This is simply because rental properties meet a basic human need—housing. And due to Ghana having a huge housing deficit, real estate is an industry that will continue to grow and boom regardless of the economy. People are always going to need a place to live, even in the hardest of times. People will be willing to forego some other unnecessary luxuries just to have a place to sleep. This is where you can put the real estate you buy to good use. By investing your bought land and property in real estate, you can not only meet a need, but also in the process, gain massive profits and interests, all from making the simple decision to buy real estate in Ghana.

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