REIZ 2017 WINTER SCHOOL ACQUISITION OF LAND TRANSFE

REIZ, 2017 WINTER SCHOOL “ACQUISITION OF LAND TRANSFE; WHERE IS THE ROLE OF ESTATE AGENTS” By Eng O. Sawadya CBZ Holdings – Head of Group Projects & Estates) (B. Tech Eng, MBA, MPM, Msc Real Est & Prop Mgt, CIPM, MIIPM, FAAPM, MZIPM)

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CONTACT DETAILS 5 th Floor, Union House, 60 Kwame Nkrumah, P O Box 3313, Harare, Zimbabwe Tel: (04) 748050 -79/ 705001 -5, Fax: (04) 759387, 755136 Whatsapp: 0774460460 /0774461461 E-mail: contactcenter@cbz. co. zw, Website: www. cbz. co. zw Econet Toll-Free: 460 Tweeter: @cbzholdings Facebook: CBZ Holdings 22

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“ACQUISITION OF LAND TRANSFER; WHERE IS THE ROLE OF ESTATE AGENTS”

“ACQUISITION OF LAND TRANSFER; WHERE IS THE ROLE OF ESTATE AGENTS” 1. INTRODUCTION DEFINITIONS What is Land Acquisition? Land acquisition refers to the process by which the state or private entities acquires private land for the purpose of industrialisation, development of infrastructural facilities or urbanisation of the private land.

2. SOME STATISTICS Zimbabwe’s housing market: q Zimbabwe’s current housing demand is estimated to be 1. 5 million. Below is a table that indicates housing waiting list per city/town. Harare Bulawayo Mutare Gweru Masvingo Kwekwe Marondera Chitungwiza TOTAL 500, 000 100, 000 59, 000 35, 000 10, 000 15, 000 18, 000 4, 500 741, 500

2. SOME STATISTICS What is the value of investment that has been channelled towards infrastructure developments in Zimbabwe in the last 5 years? According to a study undertaken by the African Development Bank on Zimbabwe’s infrastructure in 2011, approximately US$14. 2 billion is required for the sector and split as follows; Water & Sanitation (including irrigation)- $4. 2 billion Energy - $4. 3 billion Transport (air, railways and roads) - $5. 6 billion ICT - $0. 1 billion

2. Some statistics (Cont’d) The Table below outlines the actual funding by government on subinfrastructure segments based on the Blue-Book. Source: Zimbabwe IPSRP Strategy Paper (2016/18)

4. THE ROLE OF ESTATE AGENTS The role of Estate Agents in acquisition of property/land its transfer has traditionally been Sales Agency dealing with titled land or property. Land for housing in Zimbabwean cities towns has been the responsibility of respective local authorities in conjunction with Central Government where necessary. Before allocation to beneficiaries [usually on the Councils waiting lists] the land would be planned surveyed and developed as per stipulated conditions to warrant issuance of certificate of completion hence title deeds for the developed housing stands.

4. THE ROLE OF ESTATE AGENTS (Cont’d) In other special arrangements especially in response to urgent need for accommodation by the general population Ministry of Local Government and Respective Local Authorities would all non-title surveys and then parallel development of availed land. This means title would be issued at a later stage upon satisfaction of all development conditions. Before discussing the situation prevailing in Zimbabwe regarding acquisition of land its transfer it’s useful to discuss first the usual development processes, creation of and transfer of title for any undeveloped land offered for residential housing ;

5. Development processes for creation and transfer of title a. Base Mapping/Topographical survey This process is done by surveyors to determine the terrain, natural and man-made features on the proposed land. This is used by both civil works engineers and town planners b. Subdivision Layouts/ Permits /Detailed Land use The services are offered by Town Planners and approved (thorough subdivision permits) by either the Department of Physical Planning or respective local authority with capacity and mandate.

5. Development processes for creation transfer of title (Cont’d) and c. Title Survey/Dispensation Certificates and General Plans Done by Registered Land Surveyors and approved by Surveyor General, this is basically the physical projection of the approved layout on the ground. Soils tests and geotechnical investigations This is done by and nominated laboratories and the information is used by Civil and Structural Engineers to carry out designs for the works. e. Other Stakeholders The approved Survey is normally submitted to service providers like ZESA, TELONE etc for their input on servitudes and other requirements.

5. Development processes for creation transfer of title (Cont’d) and f. Infrastructural Designs and Tendering Using the above information, registered consulting engineers then carry out the designs which are approved by the respective local authority or ministry of local Government. g. EIA This process is carried out by EIA consultants and certified by EMA and is a statutory requirement for all construction projects in Zimbabwe. h. Works Contract. Civil and Structural Works Contractors carry out the actual works supervised by both Consulting engineers and also the local Authorities.

5. Development processes for creation and transfer of title (Cont’d) i. Certificate of Compliance and Title Deeds When a local authority is satisfied that the land has developed according to the development permit, it issues a certificate of compliance which is submitted to the Registrar of Deeds. The title is issued in the name of the owner of the Land/ Developer and the subdivision created would be transferred to individuals once all transfer requirements are met. j. Transfer Process

6. TRANSFER PROCESS a. The conveyancer prepares the draft deed, power of attorney to pass transfer as well as declarations for signing by buyer and seller Upon payment of transfer fees to the conveyancer, he will draft a proposal deed of transfer (in duplicate) deriving the powers to do so from the signed and witnessed agreement of sale. In drafting the proposal transfer deed the conveyancer will always refer to the deed from the seller and other information from the Deeds Office. The proposal must also refer to the diagram deed which will be annexed to the first transfer deed.

6. TRANSFER PROCESS (Cont’d) The documentation shall include: - Declaration by seller and by purchaser (for stamp duty purposes) Sale agreement - Power of Attorney to make the transfer A search of the property title is conducted by the Lawyer at the Land Registry Agency: Real Estate Agent /Conveyancer

6. TRANSFER PROCESS (Cont’d) b. The seller applies for a capital gains tax clearance certificate (either withholding tax or Capital Gains tax) The capital gains tax (CGT) is assessed by the Zimbabwe Revenue Authority (ZIMRA), which determines how much is payable by way of capital gains tax. The rate is 20% on the gains and is paid by the seller. The Conveyancer will deliver the file in person to ZIMRA customer service helps with the computation.

6. TRANSFER PROCESS (Cont’d) The documentation required: - Capital Gains Tax Clearance Application [C. G. T. 1] Form - Copy of Title Deed - Copy of Seller and Buyer C. R. 14 (The current list of Directors as registered at the Companies Office) - CR 6 form (The company’s registered address) - Agreement of Sale signed by both the buyer and seller (which will provide the sale price, the expenses of the conveyancer)

6. TRANSFER PROCESS (Cont’d) The documentation required: - Copy of certificate of incorporation for both companies - Proof of payment - Directors’ resolution to buy/sell this warehouse by both the buyer and seller (must be signed by the 2 Directors and the Public Officer/Company Secretary) - Copies of the ID's of the people mentioned in the Resolution - Contact details of the representative of both companies - Copy of Deed of Transfer

6. TRANSFER PROCESS (Cont’d) - ZIMRA will conduct physical interviews on two directors; one from the selling, and one from the purchasing companies separately and normally on the day when the documents are submitted. The representatives from each company who are interviewed by ZIMRA are those who sign the Resolution of the Company and are the directors. - After verification, ZIMRA will tabulate what is the actual cost of the CGT and will inform the conveyancer of the amount to be paid. A notice of payment is delivered to the Conveyancer providing details of ZIMRA bank account where the payment is to be made.

6. TRANSFER PROCESS (Cont’d) c. Payment of Capital Gains Tax and obtain CGT certificate with ZIMRA - When the assessment is issued the seller is given a Business Partner No. which enables to pay capital gains tax. The conveyancer will pay the amount representing the CGT at a commercial Bank. When payment is made one has to wait until the payment is reflected in the ZIMRA account after which a receipt is issued. The receipt will be surrendered to the ZIMRA official who did the interview for him/her to complete and issue the relevant certificate. Agency: Zimbabwe Revenue Authority (ZIMRA)

6. TRANSFER PROCESS (Cont’d) d. The seller applies for the rates clearance certificate to the local authority under whose jurisdiction the property falls. This application is performed by a conveyancer (fees already covered by Procedure 1. The local authority will provide an assessment of how much is payable by way of advance rates and outstanding rates, if any. In Zimbabwe there is at the moment no land tax, instead rates are paid to the local authority.

6. TRANSFER PROCESS (Cont’d) - So every property in Zimbabwe is subject to these rates paid by the property owner to the municipality or any other local authority for the services provided, like refuse, sewage etc. - - Before one can transfer a property all the rates due should be paid to the local authority, so it depends on outstanding amount due to the municipality. - The rates in Zimbabwe are based on the value of the property, size and whethere are improvements or not. It is also important to note that the value of the property is a function of the location of the property. - For the property we are talking about the rates would therefore be around ZWD 500.

6. TRANSFER PROCESS (Cont’d) - When the seller pays the outstanding rates payment he receives what is known as the rates clearance certificate. - These rates are paid by the purchaser as pro forma costs, which will then be reimbursed by seller on the date of the transfer for the advance rates paid calculated on pro rata basis from the date of payment to date of transfer (where purchaser does not have vacant possession or occupation prior to transfer since in this event risk and profit in the property has usually passed in terms of the agreement of sale. )

6. TRANSFER PROCESS (Cont’d) The documentation shall include: - No documentation is required in applying for this certificate. The local authority will only need to be furnished with details of the seller and buyer and their present postal or physical addresses, and description of the property being transferred. Agency: Local Authority

6. TRANSFER PROCESS (Cont’d) e. Transfer documents are lodged for registration of title the Registrar of the Deeds’ Office with The stamp duty is paid upon lodging at the Deeds Office. The copies of the deeds are lodged with the Registrar of Deeds for examination upon payment of the registration fee and the stamp duty (according to Finance Bill 2009, for payments made in foreign currency). If there any errors observed by the Deeds Office in form, typographical or in content for amendments/ corrections, OR is the resident property valuer seconded from the Min of Local Government and Housing is of the view that the declared sale price does not sound genuine, then he will carry out an onsite inspection.

6. TRANSFER PROCESS (Cont’d) q Then the deed is returned to the conveyancer. Once the corrections have been attended to and/or valuation has been carried out and additional duties/fees based on this increased value have been obtained from the purchaser, the copies are again returned by the conveyancer to the Deeds Office for further examination. q If there are no more errors the deed is signed (registered) by the Registrar of Deeds or his/her designate. One copy of the deed second one sent back to the conveyancer for onward transmission to his/her client (the new property owner).

6. TRANSFER PROCESS (Cont’d) The documentation shall include: - Rates clearance certificate (obtained in Procedure 3) - Capital gains tax clearance (obtained in Procedure 2) - Two copies of the draft deed - Power of attorney to pass transfer - Declaration by seller and buyer - Original holding deed Agency: Deeds Office

7. Current Land Acquisition Trends The process of acquisition of land Zimbabwe has not been consistent with past practice. Some acquisitions has been characterised by acquisition, subdivision and transfer without following the due processes. Some of the land has been acquired by private players usually without proof of ownership. Some of the new owners of acquired prime housing did not have the capacity of will to carry out the above mentioned processes in the land development processes.

7. Current Land Acquisition Trends This has posed a serious question particularity to Real Estate Agents who should drive the land selling and transfer process for land as their business. In the past few years vast tracts of land in peri urban areas have been acquired for residential areas either by government or by individuals who may have benefitted from the fast track land distribution programmes but then decide to subdivide the land for residential housing. The subdivision, development and title registration of created housing units has not always followed the conventional procedures which Real Estate Agents used to deal with.

7. Current Land Acquisition Trends This has led to Real Estate Agents who should be key stake holders in developing and selling of real estate being side-lined on this particular type of real estate. Despite the above mentioned shortcuts or incomplete processes, land is still being “developed” and “transferred” to new owners. It is therefore up to the Real Estate Agents to force their way into the picture and assist in sanitising the processes. It also ensures that land in particular titled land as a finite resource remains bankable for purposes of borrowing against the same land thus driving economic development of the country.

8. THE BIG QUESTION THEN? ? ? ? “WHERE IS THE ROLE OF ESTATE AGENTS IN ALL THIS” “THE PEOPLE’S PROBLEMS MUST BE YOUR GOLD MINES” “YOU NEED TO MINE THE GOLD”

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