The Process of Buying a Property For First Time Buyers

The process of buying a property for first time buyers is daunting and a bit confusing. With a helping hand of Estate Agent, the process is made much easier but for a fee. In principle the acquisition process is the same but there may be variations depending on the type of ownership of the property. The process described below is for properties under a title deed.

Decide Budget and Location

Decide which areas you want to live or buy and have a budget that suit the area. The internet will give you an idea of pricing by looking at properties for sale in the desired areas.

The area you choose may be influenced by the reason you are buying the property for. A location for investment purposes may be different to a location for living with your family. Decide the kind of environment you would like to live or invest in.

Approach a Registered Estate Agent to help you search for the property you a looking for.

The Role of Estate Agent

The Estate Agent will help you find an appropriate property.

They will negotiate price and put an offer on your behalf.

Once offer is accepted by seller, an agreement of sale is signed by both seller and purchaser

The Estate Agent will have done a due diligence on the property before marketing it to ensure it is legit

The seller pays for the property to the Estate Agent who holds the money in a trust account until transfer process is complete.

The seller pays 5% estate agents fees which are deducted from the purchase proceeds

The relevant documents are passed on to a conveyancer for property transfer

The Role of the Conveyancer

The conveyancer is normally appointed by the seller

The conveyancer prepares transfer documents for lodging with the Deeds Office

A Rates Clearance Certificate is applied for by the conveyancer from the relevant local authority. The seller settles the bill which is normally all outstanding rates plus three months’ rates in advance.

The seller pays for transfer and legal fees which is roughly 6% of property purchase price. The actual amount varies depending on one’s ability to negotiate legal fees.

Capital Gains Tax

It is the responsibility of the seller to pay capital gains tax. The amount due is withheld by the conveyancer and paid directly to Zimbabwe Revenue Authority (ZIMRA)

Capital gains tax is 5% of the sales value for properties acquired in the Zimbabwe Dollar era i.e. before 1 February 2009 and 20% for properties acquired post this date. (Check current legislation as the government updates it from time to time). Allowable Deductions (expenses deducted from the capital gain amount before capital gains tax can be calculated) are given on case by case basis. Expenses include cost of acquiring the asset, cost of construction, cost of additions/improvements, mortgage interest, estate agents fees. An inflation allowance is also granted on cost of property and improvements.

No capital gains tax is payable if one sells their principal private residence (PPR) and reinvest all the proceeds in another property. If one does not reinvest all the proceeds, then capital gains tax is paid on a pro-rata basis. Citizens over 55 years old do not pay capital gains tax on sale of their PPR.

Registration and Payment of Sale Proceeds

The conveyancer lodges all relevant papers to Deeds Office for the transfer of property from seller to buyer.

Once the title deeds are issued, the sales proceeds are paid out to seller after deducting estate agent fees, capital gains tax and rates clearance fees.

The buyer can now take occupation of their property.