| Ghana:
Real Estate Buying Process |
| 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’s 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. |
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It’s 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.
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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. |
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| 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. |
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| 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 ‘SAFE’ - 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. |
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| The real estate
agent will find land and property that match the property buyer’s 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’s 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 ‘social searches’ on the credibility of the vendor’s
claims that he owns the land being sold. |
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| 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’re 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’s 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.
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