Real Estate Investment

in Zimbabwe
THE LEGAL PERSPECTIVE
REAL ESTATE INVESTMENT IN ZIMBABWE

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Introduction
Following a period of hyperinflation organizations such as CB Richard Ellis The system allows both local and
that gripped Zimbabwe from the and Knight Frank are well represented international entities to become
late 1990s until the end of 2008, the as market leaders in Zimbabwe, registered owners of immovable
period between 2009 and 2012 was including other regional leaders such property in Zimbabwe.
marked by an economic rebound as Pam Golding Properties (who work
following the introduction of the in conjunction with Savills). The shortcomings of the above
multiple currency system, with the is the ability to create innovative
economy growing at an average rate The continued presence of these finance structures for developers
of 11% per annum during this period. international market leaders which would unlock intrinsic value
However, from 2013 onwards, Gross highlights that despite the cash of property in Zimbabwe. Given the
Domestic Product (GDP) growth challenges facing Zimbabwe, the high demand for housing and the
decelerated sharply, culminating in demand for well-priced real estate huge infrastructure gap that currently
GDP growth being at 0.7% annual remains strong because real estate exists, coupled with high investment
change in 2016. Following several is a real hedge asset class for return potentials, Zimbabwe
economic adjustments, GDP growth domestic and foreign investors, continues to offer opportunities
increased substantially to a 3.6% particularly among Zimbabwe’s for investors.
annual change in 2018. Zimbabwe, population in the diaspora, who
however, is currently encountering a maintain a continued, significant It is interesting to note that the
severe cash crisis, with the depletion interest in property investment in ravages of hyperinflation between
of foreign currency which has caused their home country. 2006 and 2008 had the unintended
some scepticism and uncertainty consequence of allowing or
in the market culminating in a There is sizeable land available for creating a property pool that is
separation and differentiation of development in Zimbabwe’s urban unencumbered in both commercial
the rates applicable to payments centers in addition to pre-existing and residential real estate, as the
made in the physical US dollar and market players that are willing to devaluation of the then Zimbabwean
transactions in Real Time Gross partner with international investors dollar enabled property owners to
Settlement (RTGS), bond notes and on new developments. There are settle their obligations and release
coins, and mobile money, which currently several proposed new these encumbrances.
have now been collectively referred developments for shopping malls,
to as RTGS dollars (RTGS$ or ZWL). hotels, retail and industrial parks, This document is intended to provide
In light of the above, the real estate offices and residential complexes a comprehensive insight into, and
sector has taken on an increasingly predominantly promoted by private highlight pertinent aspects involved in
important role as a store of value developers who appear to be more investing in real estate in Zimbabwe,
in Zimbabwe. willing to take the risk. The large which has been produced based
institutional investors (such as on our know-how and practical
All property in Zimbabwe (commercial insurance companies, pension funds, experience with respect to real
and residential), is held in freehold local authorities) remain laden with estate investments in Zimbabwe.
title. Residential property is mostly large commercial property portfolios This document does not however
owned by individuals on freehold, (located mostly in CBDs) developed purport to be exhaustive. As a result,
while commercial property is owned over the years. our highly qualified and experienced
by institutional investors, such as real estate team will be available to
pension funds, insurance companies, Zimbabwe has developed an accurate attend to any further questions which
high-net-worth individuals, local system of property registration which you may have.
government authorities and the aims to provide an efficient transfer
local government itself. Key global process and security of title to land
multinational real estate service and land rights in a free market.

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Contents
1. OWNERSHIP OF REAL ESTATE 05 6.4. Assignments/transfers 13

1.1. Full ownership 04 6.5. Subleases 13

1.2 Other rights over real estate 05 6.6. Termination 14

1.3 Restrictions on ownership by foreigners 05 6.7 Sales of leased property 14

1.4 Expropriation of land by the state 05 7. TAX 15

2. ACQUISITION OF OWNERSHIP 07 7.1. Taxation on acquisitions 15

2.1 Formal requirements 07 7.2. Value added tax 15

2.2 Registration 07 7.3. Other real estate taxes 16

2.3 Assets deals 07 7.4. Taxation of rental income from real estate 16

2.4 Share purchase 07 7.5. Taxation of dividends from a company owning

real estate 16
2.5 Public auctions 08
8. REAL ESTATE FINANCE 17
3 OTHER RIGHTS TO PROPERTY 09
8.1 Enforcement of security 17
3.1 Rights of pre-emption 09
8.2 Fees applicable in the creation of security 18
3.2 Option agreements 09

4. ZONING AND PLANNING LAW PERMITS 10

4.1 Designated use 10

4.2 Permission for new construction or change of

designated use 10

4.3 Objections and review by other bodies 11

5. ENVIRONMENTAL LIABILITY 12

6. LEASES 13

6.1. Duration 13

6.2. Rent 13

6.3. Operating expenses 13

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1. Ownership of real estate

1.1 Full ownership A real right is an exclusive interest section of the public; any rural land,
Any business or individual may hold or benefit enjoyed by a person in where the acquisition is reasonably
real estate assets in Zimbabwe. The a thing. It is an absolute right and necessary for the utilization of that
right of full ownership is protected entitles the holder to enforce it or any other land for settlement for
under constitutional provisions as against other persons. Real rights agricultural or other purposes, for
well as The Deeds Registries Act are registrable, while personal rights purposes of land reorganization,
(Chapter 20:05) (the Deeds Act) are not. Real rights include long forestry, environmental conservation
which states that every person has leases and servitudes. or the utilization of wildlife or
the right in any part of Zimbabwe to other natural resources or for the
acquire, hold, occupy, use, transfer, A personal right is a right that relocation of persons dispossessed
hypothecate or dispose of all forms is enforceable against only a in consequence of the utilization
of property; and may only limited in particular person and is based of land for these purposes.
terms of the law. on the existence of a special legal The acquiring authority and the
relationship, such as a contract. It is party affected may enter into an
Furthermore, the Deeds Act does a right from a person to a person. agreement for the acquisition,
not stipulate that only citizens of An example of this would be short- or the formal process in terms
Zimbabwe can hold title in respect term leasehold. of the Land Acquisition Act may
of title deeds and the owner of a be followed.
title deed capable of registration 1.3 Restrictions
is defined merely as any person, on ownership by Where the land is acquired, the
company or trustee. However, foreigners Land Acquisition Act allows for
from an investment structuring There are no restrictions on the eviction of the owner or the
perspective, foreign investors who ownership by foreigners. Section occupier of such land once the
wish to invest in real estate through 71(2) of the Constitution of relevant procedure has been
a corporate vehicle may elect to Zimbabwe, 2013 (the Constitution) followed in terms of the Act and an
do so though unit trusts, limited states that every person has a order obtained. The formal process
liability companies, and public right, in any part of Zimbabwe to in terms of the Act must be followed
limited companies. acquire, hold, occupy, use, transfer, and an order obtained. Once the
hypothecate, lease or dispose of all order is obtained, it is then served
Expropriation is possible in forms of property either individually upon the occupier or owner of the
Zimbabwe, particularly in respect or in association with others. land, and they are then given three
of agricultural land, which may months’ written notice to vacate. If
be compulsorily acquired by 1.4 Expropriation of the land is agricultural land, notice
the state in the event that it is land by the state in writing is given to the owner or
necessary for public purposes, In terms of the Land Acquisition occupier to cease to occupy, hold
without compensation except for Act (Chapter 20:10), the President or use that land 45 days after the
improvements effected on the land of Zimbabwe or any Minister duly date of service of the order upon
prior to the acquisition. authorized by the President, may the owner or occupier. If they fail
compulsorily acquire: any land, to do so, they shall be guilty of an
1.2 Other rights over where the acquisition is reasonably offence and liable to pay a fine or
real estate necessary in the interests of to imprisonment for a period not
Zimbabwe recognize two categories defense, public safety, public order, exceeding two years. The Act states
of property rights: real rights and public morality, public health, that fair compensation shall be paid
personal rights. town and country planning or the within a reasonable time by the
utilization of that or any other acquiring authority.
property for a purpose beneficial
to the public generally or to any

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2. Acquisition of ownership
2.1 Formal Registration of the transfer is satisfied as well as comprehensive
requirements required to be effected as soon as a warranties by the seller in respect of
A written agreement must be transfer is completed. the property.
executed between the purchaser
and the seller in order to acquire The transfer to title fees to the title In all asset deals, whether it is
ownership over any real estate. It by the conveyancer is payable by an asset purchase or a share
is not required in Zimbabwe that the purchaser, and the fees are purchase, sharing of transaction
the agreement be in the form determined by the Law Society of costs between the parties is on the
of a notarial deed signed before Zimbabwe at a fixed tariff, payable agreed terms; however, liability for
a registered notary republic in at a sliding scale rate of between taxes and costs is required to be
Zimbabwe. This formal requirement 1% to 4% of the purchase price. paid as follows in terms of the laws
will however not be necessary The purchaser is responsible to of Zimbabwe:
in instances where the property pay for the transfer fees unless
is transferred pursuant to an otherwise agreed by the parties in • Stamp duty is payable on the
inheritance, expropriation by the the Sale of Property Agreement. registration of transfer of
state or where the property is immovable property. The owner of
disposed of or transferred pursuant Any outstanding city council rates or property is liable for the payment
to a court order. bills applicable to the property must of stamp duty.
be cleared, and an advance payment
• A rates clearance certificate is
2.2 Registration of three months must be paid
required to be obtained from
A draft deed is prepared by the before a transfer can be processed.
the local authority. This is the
conveyancer, together with a In the event that a business will
obligation of the seller to obtain.
power of attorney to pass transfer be conducted on property, trading
and the declarations for signing licences must also be obtained. • Capital gains tax is levied on
by the purchaser and the seller. the gain where the immovable
The seller is required to apply for 2.3 Asset deals property is sold. This is a cost
a rates clearance certificate to Asset deals in Zimbabwe typically borne by the seller. In the event
the local authority under whose take place either as a direct that the property is a new
jurisdiction the property falls. The acquisition of the asset (asset development, value added tax will
seller must also apply for a capital purchase) or through the sale of be levied upon the purchaser.
gains tax clearance certificate from a company which holds title to
• Conveyancer fees are also payable
the Zimbabwe Revenue Authority the property (share purchase).
and are determined according
(ZIMRA). After an assessment is Typically, the process in asset
to the Law Society of Zimbabwe
completed by ZIMRA, the seller deals would involve the signing
By-laws S.I. 24/2013 effective of
is required to make payment for of a preliminary agreement in
March 1, 2013. The conveyancing
capital gains tax (CGT) and obtain respect of the deal, followed by
fees are payable by the purchaser.
a CGT clearance certificate. The the purchaser conducting a due
transfer documents are then diligence on the property. Upon the 2.4 Share purchase
lodged for registration of title conclusion of the due diligence on Share purchases occur in the
with the Registrar of Deeds Office terms satisfactory to the purchaser, event that a legal entity holds title
(the Registrar). All transfers of titles a sale of property agreement will to the property. In this regard, a
are effected through the Registrar be executed in order to effect the share purchase agreement will be
and a record is kept at the Registrar. transfer of the property, containing executed between the purchaser
various conditions precedent to be and the seller in respect of the
sale of the shares. In this regard,

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however, there is a limitation on 2.5 Public auctions the auction. The debtor, until such
foreigners acquiring shares in a Public auctions of properties owned time as the property is auctioned,
Zimbabwean company, as in terms by debtors will take place in the may settle the debt in full in order
of the Exchange Control Regulations event that a creditor institutes legal to prevent the property from
(Statutory Instrument 109 of 1996) action against the debtor, and a being auctioned. If the property is
(the Exchange Control Regulations) court order is obtained to proceed auctioned and the debtor is of the
no person is permitted to issue to with the execution of the property. opinion that the property was sold
a foreign resident or nominee of A writ of execution is prepared to for less than its value, the debtor may
a foreign resident, security (being instruct the Sheriff of the Court request for the property to be valued
shares, stocks, bonds, debentures to attach the respective property by an estate agent and may institute
and debenture stocks) which for service upon the debtor. Upon proceedings to set aside the sale.
security is registered in Zimbabwe service on the debtor, the Sheriff
unless otherwise authorized by the will indicate the date on which the
Exchange Control Authority. property will be auctioned. Upon
A foreign resident is defined serving the writ of execution, the
as a person who is not a Sheriff will inspect the property
Zimbabwean resident. to value it and will then advertise

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3. Other rights to property

3.1 Rights of to offer the property to the other The option agreement terms are
pre-emption owners on the same terms and determined on a case-by-case basis
Rights of pre-emption are personal thereafter obtain a written refusal and will indicate the conditions
rights which grant a person a from each of the current occupiers for exercising of the option by the
right of priority in relation to the before continuing with a sale to a purchaser. The basic principles
purchase of an asset. This right is third party. applicable to the common law of
an exception from the freedom of contract will be applicable in order
contract principle, meaning that In respect of rural land, the Land for the contract to be valid, and
the seller cannot freely dispose of Acquisition (Disposal of Rural Land) upon the purchaser exercising the
the property to another purchaser Regulations (Statutory Instrument option timeously and in accordance
without first complying with the pre- 287 of 1999) provides that the with the terms of the agreement,
emption right. This is also referred Minister of Lands, Agriculture and the ownership of the property will
to as a right of first refusal. Rural Resettlement shall be given be transferred to the purchaser.
the right of first refusal when Should the purchaser opt to not
Pre-emption rights in Zimbabwe disposing of rural land. In terms exercise the option or does not
are not imposed by the statute, but of these regulations, a person exercise the option timeously and
instead this is a matter subject to would therefore be required to in accordance with the terms of the
contractual agreement between obtain a certificate of no present option agreement, the option will
the parties. For example, where interest from the Minister of Lands, then fall away and the seller will be
there is a sale of an apartment in a Agriculture and Rural Resettlement able to sell the property to a
block of residential flats, it may be in order to dispose of the rural land. third-party purchaser.
a condition imposed by the home
owners’ association in the home 3.2 Option agreements
owners’ agreement that one owner Option agreements in real estate
offers a right of first refusal to allow the purchaser the exclusive
other owners in the complex before right to purchase the property from
opening up the sale to members of the seller within a certain period of
the public. In an instance such as time and at an agreed price and is
this, the seller would be required a common practice in Zimbabwe.

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4. Zoning and planning law permits

Physical and spatial planning in With regards to the appearance, and The state, through local authorities,
Zimbabwe are directed by the method of construction of a new is responsible for regulating the
Department of Physical Planning. building, The Housing Standards development and designated use of
The department is a technical arm and Control Act (Chapter 29:08) and parcels of land. All land in Zimbabwe
of the government that is in charge Model Building By-laws constitute vests in the President, who exercises
of managing the spatial planning the policy instruments governing control over the land through
system and giving technical housing unit development and government ministers. Agricultural
advice for the implementation defines the council’s powers to land is under the purview of the
of the development planning monitor housing development Minister of Lands. Agriculture and
systems to the Minister of Local and to order demolition where Rural Resettlement, while communal
Government, Public Works and necessary. These two instruments land is under the purview of the
National Housing. The department work in conjunction with the Minister of Local Government.
has oversight of the country’s local Regional Town and Country
authorities, who must adhere to Planning Act (Chapter 29:12), which The Regional Town and Country
the provisions of the Regional, Town together guide the enactment of Planning Act (Chapter 29:12)
and Country Planning Act (Chapter council by-laws. The Factories and regulates designation of site
29:12), the Urban Councils Act Works Act (Chapter 14:08) specifies planning, whilst the Rural District
(Chapter 29:15) or the Rural District the minimum building standards Councils Act (Chapter 29:13)
Council Act (Chapter 29:13). for a factory. The government is empowers rural district councils
empowered to deal with buildings to manage and permit the use of
The Department of Physical of unsatisfactory standards, issues land by third parties on application
Planning is also involved in of overcrowding and control of on behalf of the state. The Urban
facilitating sites for the development harmful use of premises, including Councils Act (Chapter 29:15)
of government, state enterprises, as the protection of the rights of empowers urban councils to
well as parastatal activities and the neighbors. Structures which are regulate buildings and construction
detailed planning of housing estates substandard may be demolished. of related infrastructure such as
on state land. It also carries out sewers, water pipes and roads.
technical evaluation of plans (master 4.1 Designated use
plans, local plans and layout plans) Legal restrictions are put in place Other applicable permits would
originating from local planning on the designated use of a new depend on the specific designated
authorities to aid the minister in building. These restrictions are in zonal use of land. Thus, based on
making decisions on the plans, the form of city by-laws, and other the type of development that one
mediating in stakeholder conflicts use-specific legislation such as the seeks to embark on, the specific
arising from spatial planning Factories and Works Act (Chapter permits would be issued based on
decisions that interfere with other 14:08) and the Environmental environmental considerations.
people’s land rights. Management Act (Chapter 20:27).
It is therefore required to inform 4.2 Permission for new
Furthermore, the department and get approval from the city construction or change
provides technical assistance council of any change in the of designated use
relating to the planning of designated use of a building before An application for change in use of
preparation structures for the the change takes place. land would need to be lodged with
development planning system, the responsible authority. Depending
which the Provincial Councils Other laws regulating the on the land, the responsible authority
and Administration Act (Chapter designated use would fall under the may be the Minister of Lands,
29:11) prescribes; manages urban National Museums and Monuments Agriculture and Rural Resettlement,
public transport and carries out Act (Chapter 25:11), which seek to the Minister of Local Government or
tachometric surveys and the protect some culturally important the relevant local authority.
pegging of state land. places that are viewed as sacred in
light of tradition and culture.

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Structures and plans need to be of the building. The process 4.3 objections and
prepared by the property developer ordinarily takes approximately review by other bodies
and approved by the responsible one month. A second inspection Third parties have the right to
planning authority. The actual by the Building Inspectorate upon object to official permissions for
construction process only begins completion of drainage installation the development or carrying on a
after the approval of the dwelling is then sought, which normally designated use of real estate by
plans by the planning authority, takes one business day. Upon submitting their statement to the
which will follow the below process. completion of the structure there decision-maker, who will review
will be a further inspection by the them before making a final decision.
The project would firstly require Building Inspectorate which typically In the event that third parties
the approval from the Inspector takes approximately two weeks to believe they have been treated
of Factories (if it is a commercial obtain. Upon completion of the unfairly, they may appeal to the
factory) in terms of the Factories construction, a final inspection from Administrative Court.
and Works Act (Chapter 14:08). the Building Inspectorate will be
The process takes approximately conducted, which will normally take There are circumstances in which
one month. Approval of the one month. an application for permission for
construction plan is then sought development of the carrying on of
from the local authority. Before a The next stage would be to request a designated use or the permission
plan is approved, the local authority and obtain: itself is reviewed by another body,
would ordinarily circulate the for example, in situations where a
request in almost all its departments • a sewage connection from party is aggrieved by a decision by a
that are related to the proposed the Zimbabwe National Water local authority to designate a certain
construction. For example, Authority. This process will take use for the land. The decision on the
Chemical Laboratory and Trade one day; and development may be reviewed by
Waste, Department of Works, Land the High Court of Zimbabwe in the
• a connection to the national
Survey and Valuation among other event that one party believes that
electricity grid from the Zimbabwe
departments. This process takes they have been treated unlawfully,
Electricity Supply Authority.
approximately ten months. rendering the relevant application
Finally, the occupancy certificate under review. In such an event, that
The Building Inspectorate then from the City of Harare would be party can appeal to the High Court
inspects the building on application obtained. This process will normally or the Administrative Court.
upon completion of the foundation take one or two months.

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5. Environmental liability
Environmental protection issues are developments, and commercial Power is also granted to them to
provided for in the Environmental industrial plants, tourist resorts and effect closure of a premises for a
Management Act (Chapter 20.27). recreational developments among period of three weeks or to serve
The Environmental Management other developments require an an order requiring the individual to
Agency (EMA) does however take Environmental Impact Assessment take preventative measures against
the lead role in ensuring that to be conducted by the EMA. the harmful activities against the
individuals and companies comply environment. An investigation is
with this legislation. According to the Environment normally conducted, depending
Management Act (Chapter 20.27), on the circumstances of the case,
Owners and occupiers of real estate the Director General, inspectors in order to ascertain the source of
are typically held liable by the EMA for and officers are responsible the pollution or contamination of
any pollution or environmental harm for ensuring that policies and the building. In the event that the
caused on the real estate. Lenders programs in respect of land, purchaser is served with an order
holding or enforcing security over real air, water and soil pollution and in this instance where the fault was
estate will not be liable as they have hazardous waste management not his own, the Act makes provision
no real right over the property. are coordinated. This Act provides for an appeal process and for the
them with many powers, including Administration Court to hear the
In terms of the Environmental to enter specified land, examine matter and make a decision based
Management Act (Chapter 20:27) any activity considered to be on the evidence submitted.
and the Environmental detrimental to the environment,
Management (Environmental take or remove samples, or seize
Impact Assessment and Ecosystems items considered to be used in
Protection) Regulations (Statutory the commission of an offence.
Instrument 7 of 2007), housing

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6. Leases
6.1 Duration Where the parties cannot reach an The landlord is responsible for
Lease agreements in Zimbabwe do agreement pertaining to a rental insuring the structural property
not have a prescribed period, and increase, or where the increase against fire and related perils, while
the length of the lease is subject is excessive, the Housing and the lessee would be responsible for
to contractual agreement between Building Rent Regulations (Statutory insurance of the remainder against
the parties. The market trend in Instrument 32 of 2007) and the all claim including public liability
real estate currently sways towards Commercial Premises Lease Control insurances, for example, glass, signs
shorter-termed leases, ranging from Act Rent Regulations (Statutory and supports, fittings and fixtures
anything between one to ten years. Instrument 676 of 1983) states that affixed to the buildings or the
The current economic challenges either party may approach the rent contents. The parties would contract
in Zimbabwe have forced landlords board to decide the matter and that the lessee would not do or
to grant shorter commercial leases. thereafter issue an order. fail to do anything which would
For long-term leases, that are cause an increase in the insurance
more than ten years, the Deeds 6.3 Operating expenses premiums, or keep any hazardous
Registries Act provides for the lease There are no further costs payable goods on the leased premises.
to be registered. by a lessee at the start of a lease,
apart from the deposit and the 6.4 Assignments/
6.2 Rent rental. For the duration of the lease, transfers
There are no mandatory legal the lessee will be responsible for Normally the agreement would
requirements governing the paying rates to the local authority, make provision regarding whether
indexation on rent in lease such as water, electricity, municipal the lessee can cede or assign its
agreements. However, The rates and service charges. rights and obligations, transfer,
Commercial Premises Lease Control make over, alienate or pledge any
Act (Chapter 14:04) states that once If the lease needs to be registered of its rights under the agreement.
a fair rental has been determined with the Deeds Office in terms of Should it be permitted, the
and is in force, the landlord will not the Deeds Registries Act (Chapter landlord’s prior written consent
be permitted to charge a rental in 20:05), stamp duty will be payable. would be required. A deviation
excess of that amount. The parties from this would result in a
still have contractual freedom and With regards to communal costs, breach of the contractual terms
may in their agreement include a the parties are free to contract as and the landlord would then be
rental review clause to state that the they wish in this regard, but typically, permitted to terminate the lease
rental will be subject to an increase the landlord is responsible for the agreement in accordance with the
of a certain percentage after a maintenance and repair of the termination provisions.
certain period of time, or that it will roof, the structure, exterior and
increase in accordance with the all common areas of the leased 6.5 Subleases
comparable market rates. premises. Where the gardens The parties have contractual freedom
form part of the leased premises in this regard to allow the lessee to
The lease agreement may make only, for example in a garden flat, sublease the property, and will include
provision for the rental to be the lessee is normally responsible a right or limitation to cede or assign
reviewed after a certain period of for maintaining it. However, the its rights and obligations, transfer,
time or it may state that the rental common grounds and garden make over, alienate or pledge any
will increase on an annual basis by a areas are normally maintained by of its rights under the agreement.
certain percentage, or in accordance the lessor. Should subletting be permitted,
with the comparable market rates. the agreement typically requires
The parties are, however, free to Ordinarily, where there are several subletting to be conducted only with
contract as they wish in this regard. lessees within a complex, a levy is the landlord’s prior written consent.
chargeable per month over and
above the monthly rental. This levy
then goes towards the maintenance,
repairs and safety of the complex.

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6.6 Termination agreement or upon a failure to 6.7 Sales of leased

When a lease agreement has been rectify a breach of a condition property
entered into for a fixed duration, of the lease agreement, having The sale of a property which is being
the lease agreement would then received written notification to do leased does not affect the lease or
terminate upon expiry of the term. so. The contract will also provide for the validity of the lease agreement,
The parties may contract to permit termination of the lease agreement and the new lessor would be
a renewal of the term, but this will if the tenant absconds, deserts or required to see the lease agreement
be subject to agreement between vacates the property without giving through to its expiration. Typically,
the parties. The lease agreement proper notice. the parties to the lease agreement
typically makes provision for the would have made provision for the
circumstances in which the lease In the event that one of the instance where the property may
can be terminated earlier than circumstances mentioned above be sold in the foreseeable future,
the expiration date, which would has occurred and the agreement sometimes even making provision
normally apply in the case of non- is terminated, but the lessee still for the lessee to be offered a right
payment of the rental or operating remains in occupation of the of first refusal to purchase the
costs, a failure to comply with the property, the eviction process would property. This is especially apparent
obligations in terms of the lease then need to be followed. in respect of commercial leases.

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7. Tax
7.1 Taxation on The amount of CGT payable may the purchaser upon making
acquisitions also be reduced by expenditure payment to the seller or the seller’s
The transfer of land which has incurred on the acquisition or conveyancers. Payments from the
already been developed by a construction of properties that conveyancer’s trust account to
registered property developer is are sold during that year of the purchaser are exempt from
subject to value added tax (VAT) assessment. Further expenditure the tax in terms of the Thirteenth
at the rate of 15%, for which the incurred on additions, alterations Schedule of the Income Tax Act
purchaser is responsible for paying. or improvements to properties (Chapter 23:06).
which are not deductible from gross
Gains realized from the sale of income in terms of the Income 7.2 Value added tax
real estate are subject to CGT Tax Act (Chapter 23:06) may be VAT in Zimbabwe is only chargeable
calculated by ZIMRA in terms of deducted from CGT. on commercial rent under the terms
Section 6 of the Capital Gains of the VAT Act (Chapter 23:12), at a
Tax Act (Chapter 23:01) at the Share deals are subject to capital rate of 15% VAT is not charged on
rate of 20% of the capital gain gains withholding tax payable by residential rentals.
for real estate acquired after the shareholder at the rate of 5%
February 1, 2009. Where acquisition for unlisted shares. In the case VAT is also payable on the acquisition
was prior to February 1, 2009 and of shares that are listed on the of real estate from a property
is disposed of after that date, CGT Zimbabwe Stock Exchange, the rate developer when the developer is a
shall be calculated at the rate of shall be 1% of the price at which VAT-registered taxpayer.
5% of the selling price. The seller is the shares were sold.
responsible for the payment of CGT. VAT is, however, recoverable through
Property acquired through donation input tax claims.
Companies can offset or reduce tax is also subject to CGT and a detailed
as provided by Section 15 of the valuation report of the property is The Income Tax Act (Chapter 23:06)
Capital Gains Tax Act (Chapter 23:01) required to be submitted to ZIMRA also states that where an individual is
when transferring property between in this instance. an informal trader, they must notify
companies under the same control. the Commissioner of ZIMRA of their
Further, in terms of section 10 of the A trust is also assessable to CGT on status as an informal trader in writing.
Capital Gains Act (Chapter 23:01) the sale of real estate. A presumptive tax, equal to such
receipts and accruals of a licensed percentage of the rent paid must
investor from the sale of a property Land and building transactions are then be paid to the commissioner,
forming the whole or part of the subject to stamp duty payable by unless the landlord is in possession
investment to which his investment the purchaser at the standard rate of a VAT tax clearance certificate. An
licence relates are exempt from ranging between 1% and 4%. informal trader for these purposes
payment of CGT. A licensed is described at a person who: carries
investor is a foreign investor who Acquisition of real estate for on a trade for their own account from
has obtained a licence from the deceased estates is subject to which they derive a gross income
Zimbabwe Investment Authority to estate duty, the amount of which is of less than USD6,000; has not in
invest in Zimbabwe. calculated in accordance with the the most recent year of assessment
Estate Duty Act (Chapter 23:03). for which they could have done so,
In addition, in the event that the furnished a return for the assessment
individual disposing of the property Further, an intermediated money of the income derived for their own
is over the age of 55 and the transfer tax of 2% is payable on account; hawker or street vendor;
property is their principal private every electronic transaction in terms sells articles at a place commonly
residence, then the proceeds of section 22G of the Finance Act known as a “people’s market” or a
from the disposal of the sale may (Chapter 23:04). Where a transaction “flea market”; or who manufactures
be exempt in terms of section exceeds the sum of ZWL500,000 or processes any articles in or from
10 of the Capital Gains Tax Act a flat rate of ZWL10,000 will be residential premises.
(Chapter 23:01). payable. The tax is payable by

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REAL ESTATE INVESTMENT IN ZIMBABWE

7.3 Other real 7.4 Taxation of 7.5 Taxation of

estate taxes rental income from dividends from a
Stamp duty is payable by the real estate company owning
purchaser at a sliding scale rate Income derived from letting real estate
of between 1% to 4% of the property is subject to income tax, In the event that a company owns
purchase price. levied at the rate of 25% in terms of real estate, dividends distributed to
the Income Tax Act (Chapter 23:06). the shareholders will be subject to
In a case of new land development, As indicated above, VAT will only be a taxation rate of 10% for dividends
deduction fees are payable to the applicable on rental derived from derived from listed shares and 15%
Surveyor General’s office and are commercial premises and will not be for other dividends. The distribution
calculated according to size of applicable on residential rentals. of dividends to shareholders that
the land. are non-resident in Zimbabwe is
subject to non-resident withholding
tax at the rate of 10% for dividends
from listed shares and 15% for other
dividends, unless an applicable
tax treaty reduces the tax to a
lower level.

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8. Real estate finance

The typical form of security over transfer of funds arising out of the If the borrower is a company in
real estate is a mortgage bond, purchase of immovable property by financial difficulty, lenders have
registered against the real estate or a foreign resident shall be submitted the option of either applying to
land that the investor is acquiring or to the Reserve Bank of Zimbabwe the court for an order placing
borrowing. The other common type through an authorized dealer for the company under judicial
of security in respect of real estate is approval. Exchange Control approval management or a scheme
a surety bond which is a mortgage must be obtained prior to obtaining of arrangement.
bond placed over the property of such loans. The tenure, repayment
a third party, who stands as surety periods, security and interest In terms of the Companies Act
for the borrower. An agreement terms etc. of such loans must be (Chapter 24:03), a company may be
is executed between the lender, registered and must be in line with placed under judicial management
the borrower and the surety in the exchange control guidelines and for mismanagement or if for any
this regard. parameters for external borrowings. other cause the company is unable
to pay its debts or there is a
The Companies Act (Chapter 24:03) If the security has not been probability it will unable to pay its
states that it is generally unlawful validly perfected, the lender debts. There must be a “reasonable
for a company to provide financial is not considered a secured probability” that should the
assistance for the purpose of a creditor should the borrower company be placed under judicial
person acquiring, or proposing to become insolvent or fails to meet management, it will be able to pay
acquire, shares in a public company its obligations. its debts and meet its obligations.
unless such assistance is given in Furthermore, the decision to
accordance with a special resolution 8.1 Enforcement of place a company under judicial
of the company and it is able to security management must be deemed
pay its debts as they become In order to enforce the security just and equitable to all interested
due in the ordinary course of its in the event that the borrower parties by the High Court.
business. Furthermore, before a defaults in its obligations, the lender
company can give valid security will need to place the borrower in When a company is granted a
over its real estate, for example, in mora through a letter of demand. judicial management order, the
the case of debenture registration This letter contains deadlines and assets of the company are placed
(if a debenture binds movable and highlights the consequences of the under the control of the judicial
immovable property), registration borrower’s failure to meet those manager, who is then tasked with
should be effected at the Deeds deadlines, including proceeding the responsibility of restructuring
Office. In terms of corporate in terms of its rights with respect the company and resuscitating
benefit, directors are bound by their to the mortgaged property. If the business. More importantly,
fiduciary duties under common law the borrower fails to meet those creditors’ payments are suspended,
as well as the Companies Act to act deadlines, the lender will apply and the company is protected from
in good faith for the benefit of the to the court of law to obtain a legal action against it by creditors.
company and its members. judgment, authorising for the
attachment of the property. The A scheme of arrangement is also
There are no restrictions on messenger of court will then attach, provided for in the Companies Act
granting security to foreign lenders. remove and sell by public action, (Chapter 24:03) and involves giving
However, such security must be the property of the borrower, the the company flexibility to reach an
registered with the Exchange process of which is detailed above agreement with shareholders and
Control authorities. Additionally, under paragraph 2.5. After the sale, creditors. The lender will be one of
according the Exchange Control Act the messenger of court will pay the the creditors involved in the scheme
Regulations (Statutory Instrument lender the amount due to them. of arrangement.
109 of 1996), any application for the

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REAL ESTATE INVESTMENT IN ZIMBABWE

In the event that more than one However, when two creditors’ then dividing that figure by 1,000.
creditor holds a security interest security interests conflict, the Therefore, if the value of a mortgage
over the same real estate asset, creditor who financed the property bond is USD200,000 that amount
the provisions of the Insolvency Act is entitled to preferential rights. is multiplied by four (USD800,000)
(Chapter 6:04) will be applicable, Furthermore, secured creditors are and then divided by 1,000 to equal
which states that preference is given first priority before tax and all a stamp duty total applicable of
given to creditors who prove other claims. To secure the property, USD800. Conveyancing fees are also
their claim before the court has the creditor would also have to take applicable and are charged based
given judgement concerning the physical control of it. on the tariffs imposed by the Law
repossession and sequestration Society of Zimbabwe on a sliding
of an estate. A creditor of an 8.2 Fees applicable in scale from 1% to 4% based on the
insolvent estate who intentionally the creation of security value of the bond. In the event
delays proving their claim until the Fees and levies charges in the that a debtor has been declared
court has given judgment in those granting of security are applicable insolvent, and has surrendered the
proceedings may not be entitled for stamp duties and notarial property for auction, the creditor
to share in the distribution of any fees. Government stamp duties will be required to pay sequestration
money or the proceeds of any are levied in terms of the Stamp costs, tax on sequestration,
property recovered as a result of Duties Act (Chapter 23:09). The CGT and VAT.
those proceedings. stamp duty is calculated by taking
the value of the mortgage bond,
multiplying the figure by four and

Manokore Attorneys, a member of DLA Piper Africa, is a

dynamic Pan-African law firm with a core focus on corporate,
commercial and financial transactions. Our team consists of
diverse multi-lingual lawyers with extensive experience in
both local and cross-border transactions. Our key strengths
include investment inflows from foreign capital source
markets, and a comprehensive understanding of corporate and
financial transactions and structuring in various spheres of
the commercial sector. We are a service focused and solution
driven law firm.

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 WWW.DLAPIPER.COM/AFRICA

Contacts
Manokore Attorneys
DLA Piper Africa member firm in Zimbabwe
A 61 Princess Drive
Cnr Glenara Avenue
Newlands, Harare
Zimbabwe
T + 263 242 746 787

Lloyd Manokore Antoine Mercier

Managing Partner Partner
T +263 772 570 403 Global Co-Chair, Real Estate
lmanokore@manokore.com T +33 1 40 15 24 09
F +33 1 40 15 24 01
antoine.mercier@dlapiper.com

Manokore Attorneys is a member of DLA Piper Africa,

a Swiss Verein whose members are comprised of independent
law firms in Africa working with DLA Piper.

The information contained in this guide is reflective of the position as at the date of preparation
(March 2019) and may be subject to change. Manokore Attorneys does not take liability for any losses
incurred by reliance placed on the information contained therein.

Visit www.dlapiperREALWORLD.com – DLA Piper’s online guide to international real estate.

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Manokore Attorneys is a member of DLA Piper Africa, a Swiss Verein whose members are comprised of independent law firms in Africa working with DLA Piper.
DLA Piper is a global law firm operating through various separate and distinct legal entities. Further information on DLA Piper Africa can be found at www.dlapiper.com/
africa. This publication is intended as a general overview and discussion of the subjects dealt with, and does not create a lawyer-client relationship. It is not intended to
be, and should not be used as, a substitute for taking legal advice in any specific situation. Manokore Attorneys will accept no responsibility for any actions taken or not
taken on the basis of this publication. This may qualify as “Lawyer Advertising” requiring notice in some jurisdictions. Prior results do not guarantee a similar outcome.
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