Steps to Buying a House in Zimbabwe

miko_rwayitare_house_sandhurst_johannesburg_south_africaStep 1: The conveyancer prepares the draft sale of agreement as well as declarations for signing by buyer and seller

Completion Time Frame: 1-3 days
Completion Costs: 2%-4% property value (Conveyancer’s fees + VAT and Sundries)
Points to Note:
Upon payment of transfer fees to the conveyancer, he will draft a proposal deed of transfer (in triplicate) 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.

The documentation shall include:

  • Original copy of the holding title deed (proof of ownership) provided by seller
  • Sale agreement
Step 2: The seller applies for a capital gains tax clearance certificate upon transfer.

Completion Time Frame: 5 days (simultaneous with Step 3)
Completion Costs: The Capital Gains Tax shall be calculated at a rate of 20% of the capital gain determined in accordance with the CGT Act. Where a specified asset that was acquired prior to 1 February 2009 is disposed of after that date, CGT shall be calculated at a rate of 5% of the selling price. The rate of capital gains withholding tax for unlisted securities is 5%. In the case of a sale of a listed marketable security (e.g. listed shares), the rate of Capital Gains Withholding Tax shall be 1% of the price at which the security was sold.
Points to Note:
The capital gains tax is assessed by the Zimbabwe Revenue Authority (ZIMRA), which determines how much is payable by way of capital gains tax. The tax is paid by the seller. This application is done by the seller, his accountant or the Conveyencer (entitled to charge an additional reasonable fee for applying for and obtaining the certificate). The tax is calculated on the basis of the difference between the original cost price (which includes cost of improvements, subsequent estate agents’ commission, original transfer duties and basically any cost which can be related to the acquisition, disposal and improvement of the property) and selling price. The Capital Gains Tax shall be calculated at a rate of 20% of the capital gain determined in accordance with the CGT Act. Where a specified asset that was acquired prior to 1 February 2009 is disposed of after that date, CGT shall be calculated at a rate of 5% of the selling price if the seller is under 55 years of age. If the seller is 55+ years, is selling his principal residence (which he can prove to the satisfaction of ZIMRA) then he is exempt from CGT. If he is deemed to be selling a secondary home then his CGT liability is 10% of the capital gain assessed. The seller under 55 years may opt to tender 15% of the gross as a withholding tax pending a detailed assessment by ZIMRA in order to obtain the clearance certificate (or prove he is exempt if 55+ and selling his principal residence or tender 10% for payment after transfer if selling a secondary property). Alternatively in order to obtain the clearance certificate he can approach ZIMRA before transfer to have the assessment done and then must pay the CGT assessed within 30 days or risk incurring draconian penalty interest irrespective of when transfer may happen.

The documentation shall include:

  • Copies of the sale agreement
  • Holding deed
  • Copy of National ID which operates as his tax identification number
  • Where applying for an assessment: Any supporting document for expenses incurred by the transferor on making improvements to the property, agents commission, fees incurred, etc.
Step 3: The seller applies for the rates clearance certificate to the local authority under whose jurisdiction the property falls

Completion Time Frame: 14 days (simultaneous with Step 2)
Completion Costs:  Varies from Council to Council plus what is outstanding on the Rates bill for the property in question.
Points to Note:
This application is performed by a Conveyencer (fees already covered by Step 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. 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 whether there 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. 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.)

The documentation shall include:

  • Recent rates bill
Step 4: Draft transfer documents are lodged for registration of title with the Registrar of the Deeds’ Office

Completion Time Frame: 14 days
Completion Costs: 2%-4% property value (Transfer fees, registration fees and stamp duty)
Points to Note:
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. If there are 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 Ministry 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. Then the deed is returned to the Conveyencer. 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 Conveyencer to the Deeds Office for further examination. 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 is filed in the Office of the Registrar of Deed and the second one sent back to the Conveyencer for onward transmission to his/her client (the new property owner).

The documentation shall include:

  • Rates clearance certificate (obtained in Step 3)
  • Capital gains tax clearance (obtained in Step 2)
  • Two copies of the draft deed
  • Power of attorney to pass transfer
  • Declaration by seller and buyer
  • Original holding deed

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