Unfortunately, the picture is not completely rosy,
due to increased property taxation which may well
negatively impact growth in this sector. There
are two property taxes on the sale of property in
Zambia, a Property Transfer Tax (PTT) at national
government level and rates at local government level.
The P T T is applicable to both the sales of
immovable property and shares, excluding those on
the Lusaka Stock Exchange. The tax is payable on
either the market valuation or on the sale transaction
value, whichever is the higher. In the 2014 National
Budget the PTT was increased from 5% to 10% with
the aim of raising USD10 million for the fiscus. This
has raised many concerns, primarily that such an
increase, in addition to the already existing 1-10%
conveyancing charge, will slow - if not shock - the
property market.
Due to the fact there is a lack of transparency in the
market - conveyancers could arrange the transactions
at lower prices to reduce the PTT payable, and
valuators are not monitored or held in high esteem
- the actual increase of tax payable to the fiscus
could be negligible. Some critics have suggested that
this hike could lead to an “aggressive underground
property transfer market”.
Supply and demand
With regard to property availability, there is a gap
between the demand and supply of retail and office
space and residential estates. Some of the major
projects include the USD 100 million redevelopment
of Society House in Lusaka’s city centre to include
a hotel, conference facilities, off ice space and a
shopping centre. The Roma Park development
in Lusaka is also underway to include residential
units as well as a shopping centre, restaurants,
warehousing, manufacturing and office space.
The cost of a residential property in Lusaka, the
country’s capital, is one of the highest in Africa.
www.reimag.co.za
Areas such as the copper belt and the North
Western provinces may also attract interest in the future.
Investment options
There are some other interesting property investment
options in Zambia, such as Real Estate Investments
Zambia (“REIZ”), which is listed on the Lusaka
Stock Exchange and is considered to be a leading
diversified real estate investment, development and
management company in the country.
R EIZ caters to international and Zambian
institutional and private investors. It has a long
history, having been originally established as a farm
co-op in the 1920s, and is the only listed property
company on the Lusaka Stock Exchange since 1996.
Dividend income earned by individuals on the
Lusaka Stock Exchange is exempt from tax.
Acquisitions
The process for purchasing land registered and
free of title dispute is fairly simple. Firstly, the
conveyancers draft the deed of sale and their fees are
negotiable, but only up to a maximum of 10% of the
purchase price. The conveyancers then obtain a nonencumbrance certificate at the Registry of Land and
Deeds. This can be done via an electronic search but
for more detail, a manual search is recommended.
All land belongs to the State and estate consent
is required to assign the land. The seller pays the
property transfer ta x to the Zambian revenue
authority and lodges the assignment for registration
at the Registry to complete the process. In total, the
process can take two months to completion.
In conclusion, Zambia and particularly property in
Lusaka present interesting investment opportunities,
underpinned by good macroeconomic factors.
While the lack of capital gains tax, estate duty and
donations tax are advantageous, the PTT is an issue
to consider when investing in Zambia.
Offshore Handbook 2014
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