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Landlords & Tenants

TENANTS

RESIDENTIAL & COMMERCIAL – GHANA
Ghana’s real estate market is full of exciting properties that offer great amenities and location perks. To make the most of these options, there are certain questions particular to the Ghana all property hunters–renters and buyers–ought to ask, some of which might not seem apparent at first. Renting a property requires some level of interaction with the owner of the property, who becomes your landlord/landlady once the tenancy agreement is signed. Very good tenancy agreements spell out exactly what the terms of the relationship are, detailing who is responsible for what. It’s advisable to read your rent agreement thoroughly. Here is an information that should be captured if you are renting or leasing a property in Ghana.

LEASE AGREEMENTS

Space Measurement Measurement Areas are quoted in square metres (m²).
Term Leases are typically for 2–5 years
Right to sublet Subletting is permissible, but this should be done with the consent of the landlord, which should not be unreasonably withheld.
Renewal Renewals are negotiable. Depending on the terms and conditions in the lease agreement. The tenant has the first option to renew at the prevailing or negotiated market rental rate when the lease expires.
Break clause Either party can exercise a break option with notice served on the other party. Typical notice period is 3 months to which consent may not be unreasonably withheld.
Option to expand & right of first refusal These options are negotiable particularly if the tenant occupies a large proportion of the lettable space.
Late delivery by landlord Penalties may apply should a building not be ready for occupation by the agreed date as set out in the lease agreement.
Holdover by tenant Leases do not effectively cover holdover by tenants and so eviction and other penalties require court action. Additionally, holdover by tenants is generally not encouraged as a statutory tenancy will be created. Statutory tenants cannot be evicted and have absolute security of tenure.
Signage and naming of building
Building signage and naming are negotiable and depend on the conditions stipulated in the lease agreement or are governed by a side agreement.
Standard lease Each landlord has their own standard lease drafted in accordance with the 1963 Rent Act. Standard leases are generally used with some variation to reflect special circumstances.
Laws and practices Leases are governed by the 1963 Rent Act. Generally, there are standard lease terms recognized by the courts. It is advisable that leases are stamped and registered with the Lands Commission or with the courts by way of “oath of proof” which is a legal recognition of the parties who have entered into the lease agreement.

Definitions
Net internal area
Measured in line with the RICS Code of Measuring Practice, i.e. the usable area within a building measured to the internal face of the perimeter walls at each floor level and includes as well as excludes a list of varying parameters, e.g. excludes aspects such as lift rooms, plant rooms, internal structural walls, walls enclosing excluded areas, columns, piers, stairwells, lift-wells, permanent lift lobbies, etc.

OCCUPATION COSTS

Rent basis: Landlords always split their rental into a net rental with service charges being additional to the quoted rent.
Parking: In some properties, parking is free, but where parking is charged, this is billed separately at a specific rate per bay per month.
Rents quoted: Generally, rents are quoted as net rents in US$/m²/month.
Rent payable : Typically, rents are payable in advance. Depending on the lease agreement, it could be 3 months, 6 months or 1 year in advance. The current norm is around 3 months to 6 months. There is a statutory Withholding Tax of currently 8% on all rentals. Office rents exclude VAT of 17.5% which is payable in addition to rent.
Rent free period: Rent free concessions are rare, however, tenants are usually allowed between 1 to 3 months period for fit-out prior to the commencement of the lease in the form of an early access arrangement.
Rent escalation: Average rental escalation rates are approximately 4 – 5% per annum.
Rent review periods: Commercial leases may provide for periodic rent reviews at an agreed annual percentage increase, typically between 5–10%, and sometimes higher. If the tenant leases vacant land from the government, the rent is considered commercial rent, and it is reviewed as with commercial leases. Government Ground Rents (rents paid to the government for occupying and developing Government land) provide for rental reviews on a five yearly basis.
Currency for rent payable: Rents as stated in lease agreements are normally quoted in US$ which are payable in the local Ghanaian currency, the cedi (GH¢ or GHC), converted at the prevailing inter-bank exchange US$ rate at the time of signing the agreement.
Operating costs: Operating costs, also called Common Area Maintenance Fees (CAM)or Tenant Service Charges (T/S), are a tenant’s proportional contribution towards building maintenance and services, based on the tenant’s specific area under the tenancy agreement.
Operating costs are billed separately from net rent in the lease. The purpose of the split is to enable the application of separate escalation rates to the operating costs and to the net rent. Operating costs vary and are usually between 10 – 15% of net monthly rentals. The escalation rate applied to operating costs is generally higher than the rate applied to the net rent. Operating costs generally cover some of the landlord expenses such as maintenance, cleaning of the common areas, security, insurance, assessment rates and other levies. However, operating costs may or may not include utilities such as electricity and water consumption as this will be dependent on how the building was developed and if space is individually metered.
Taxes
Property taxes, known as “Property Rates”, are assessed on the capital value of the property and are payable by the property owner.
There is VAT of 17.5% added to the rental amount, however landlords need to be registered with the Internal Revenue Services (IRS) to be able to charge VAT on rent. Additionally, the Government has proposed a Rent Tax of 8% on all rents payable to the landlord. The tenant, by law is required to deduct this rent tax unless the landlord produces a valid certificate of exemption from the IRS.

LANDLORDS

How To Perform 5 Imperative Checks When Screening Prospective Tenants Screening is mandatory for all landlords as bad tenants are like bad stains on clothes that are difficult to wash-off or leave a blot behind. Hence screening of tenants is inevitable to protect properties. Apart from eliminating the risk of having troublesome tenants, screening helps landlords to be more familiar with tenants. Mentioned here are some basic checks that should be performed and related questions every landlord should ask prospective tenants before renting his property.

1. Basic Information

When screening the tenants, you should start with questions relating to their biographical
information such as:
a.  What is your name, current address, email id and contact number?
b.  How do you earn your living and how much money do you earn.
c.  Where are you current employment, length of employment, etc.?
d.  How many residents will be living in the apartment? It is an important question to ask as overcrowding can be a safety threat to the property. Owing to the economic meltdown,  families tend to live together as a cost saving way of living.
Besides, other questions to inquire include:
e.  Do you plan to keep pets with you? If so, what kind?
f.  Do you possess any vehicles? If so, how many and what kind?
g.  What are the ages’s of people who’ll be occupying the house?
h.  For how long do you intend to stay in the house?

2. Rental History Check

It is very important to know about the rental history of the tenant in order to get an insight into the type of your  tenant. The landlord should find out where the tenant is living as of now and the reason for vacating the previous house. Following questions lend you a hand to know about the rental history of the prospectus tenants.
a.    Have you stayed in rented accommodation before, if so where? Please provide contact
details of your current and previous landlords
b.   Were you ever driven out by a landlord?
c.   What made you search for a new accommodation?

Listen carefully as the answers to such questions help you to get acquainted with the nature of the individual. Besides, you may call previous landlords to enquire about the person’s credibility.

3. Credit check

The details of the financial credibility of the prospective tenant are very important to know whether the tenant can pay the monthly rent. Credit ratings can be checked through a reputed agency. The report should reflect a healthy credit pattern. The credit information should include
a.    Is there any outstanding loan?
b.    Have you ever skipped debts or filed for bankruptcy
c.     Name of bank and present bank statements

4. Identity verification

The landlord should check the prospective tenants’ identification to confirm really they are the same people as they are posing to be. For that they need to check their documents such as:
a.    Photo ID
b.    Driving License
c.     Social Security Number

5. Criminal Background Check

Apart from being able to pay, your prospective tenant should be free from crimes or any violations. You may also put a straight question to the tenant:
Have you ever been convicted? And, if so what was the reason behind.
To ensure the person is telling the truth, it is important to have their criminal background checked. This helps you to avoid people previously accused on charges of drunken assault or robbery. Inquiring the previous landlord about the person helps to know whether the person is a good tenant or not.
Once, you have finalized the tenant, let your tenants know of your expectations and rules they
need to adhere to.