Ghana: Overview
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Ownership issues hound real estate in Ghana
Ghana (pop. 19 million, GDP/cap US$542) is a very poor country. Formerly known as the Gold Coast, it was the first country in sub-Saharan Africa to gain independence from Britain in 1957.
After independence there was a long power struggle between civilians and the military. Jerry Rawlings overthrew the government in 1979, and gained popularity by instituting price controls. He relinquished power to an elected government headed by President Hilla Limann (1979–81), but soon overthew Limann. He then abolished the constitution, suppressed dissent, and established a program of self-sufficiency and austerity, while surviving four coup attempts. He won free presidential elections in 1992 and 1996, serving until 2001
John Kufuor succeeded him, following a victory in the December 2000 presidential elections, and won a second term in 2004.
The economy managed to expand under Rawlings, averaging 4% annual GDP growth from 1992 to 2000. The recovery of global gold and cocoa prices (the country’s major export commodities) helped in the early 2000’s. Better management by the present government has restored macroeconomic stability.
There are no restrictions on foreigners buying property in Ghana. However, there are four forms of land ownership, some of which cannot be privately owned. Each involves differing modes of acquisition. These are: Government Land, Vested Land, Customary/Stool Land, and Family/Private Land.
Potential buyers should first consult the Ghana Investment Promotion Center regarding procedures, and to be directed to the appropriate agencies involved in legally acquiring property, since identifying legal ownership can be a problem.
There are about 40,000 expatriates in Ghana. Most chose to live in the capital, Accra. Expat communities with large, detached houses with gardens and garages can be found just outside the city centre. Most of these are secure, with gates and guards on duty at night.
RENTAL YIELDS
Ghana yields are moderate at 6% - 8%
A 200 sq. m house would cost about US$150,000 (GHC1.43 billion), and would rent for around US$750 (GHC.2 million) per month, giving a gross rental yield of around 6 to 8%. Residential property prices are around US$700 – US$750 per sq. m (GHC6.7 – 7.2 million).
The rental market in Accra is relatively large with 37.5% of all households renting (only 22% for Ghana as a whole). Only about 40.4% of households in Accra claim ownership of their houses (57.4% for Ghana), while another 20.5% live rent-free (19.5% for Ghana). The remaining 1.6% of housing is employer-provided (4.5% for Ghana).
TAXES AND COSTS
Rental income tax is moderate in Ghana
Effective Tax Rate on Rental Income |
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| Monthly Income | US$1,500 | US$6,000 | US$12,000 |
| Tax Rate | 15% | 15% | 15% |
| Click here to see a worked example | |||
Source:
Disclaimer
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Rental Income: For non-residents, tax on gross rental income is withheld at source at 15%.
Capital Gains: Capital gains are taxed at 10%. Exemption is granted if the entire amount is invested in another property of the same nature within a year.
Inheritance: No inheritance tax is levied. However, a tax is imposed on the transfer of properties (or any right or interest in such) by way of gift, at 10% of taxable gifts exceeding GHC500,000 (US$53) in value.
Residents: Residents are taxed on their worldwide income.
BUYING GUIDE
Ghana has a complicated titling system
Beware! Dut to titling problems and cadastral inefficiency, it takes on average more than a year to complete the seven processes involved in registering a property in Ghana, according to the World Bank.
Total round-trip transactions costs, i.e., the cost of buying and selling a property, range widely from 10% to 22% of the property price, due to the multiplicity of land titling issues. The seller pays the 5% real estate agent’s commission. The buyer pays the other costs, including the 2% Stamp Duty, and legal fees ranging from 3% to 10%.
Real estate transactions are negotiated and concluded in Ghanaian Cedi (GHC). English is the official language.
LANDLORD AND TENANT
1 - 3 years rent is paid in advance
Rental market practice in Ghana is pro-landlord.
Rent: Rents can be freely negotiated and rent increases are unrestricted. In practice, a landlord charges one to three years rent in advance, though according to the Rent Act, landlords can only charge six months rent in advance, with succeeding rental payments due every six months.
Pre-termination of Contract: If the tenant wishes to pre-terminate a contract, he must inform the landlord three months in advance. In most cases, the tenant must look for someone to take over the lease for the duration of the contract or wait for the repayment for months.
ECONOMIC GROWTH
The poor Gold Coast
The economy grew 5.1% annually from 2001 to 2005 annually. Real GDP per capita was 61.3% higher in 2005, than in 1983.
But much remains to be done. Ghana is still in the list of Heavily Indebted Poor Countries (HIPC), and the country is heavily reliant on foreign aid. Inflation was 14.3% in 2005, down from 60% in 1995. 90% of the population lives below the poverty line.
RESIDENTIAL PROPERTY AROUND THE WORLD
Asia & Pacific
Bubble fears prompt foreign ownership limits in China
America & Caribbean
The slowdown of the U.S. housing market
Middle East and Africa
Bahrain is open to foreigners and sizzling hot
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| RESIDENTIAL PROPERTY FACTS | |
| Price (sq.m): $700 For a 100 sq. m. property, usually an apartment. | Rental Yield: 6.86% For a 100 sq. m. property, usually an apartment. |
| Rent/month: $400 For a 100 sq. m. property. | Income Tax: 15.00% Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income. |
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Roundtrip Cost:
13.6%
The total cost of buying and then reselling an apartment. Includes: * all transaction taxes and charges: * lawyers' and notaries' fees * agents' fees Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000. |
Cap Gains Tax: 7.9% Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation. |
| Landlord & Tenant Law: Pro-Landlord Rating is based on a detailed study of each country’s law and practice. | |
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