The Sunday News
THE ownership of most properties in Zimbabwe is described in a document called the Title Deeds. When you buy a property there is a change of ownership that is carried out. This is referred to as “conveyancing” or as the “transfer ofTitle Deeds”. Some properties are covered by a “Sectional Title” or “Share Block” ownerships. We discussed this in the previous article. There are other types of property ownerships that we find in Zimbabwe.
There are many properties which are owned by companies. On the Title Deeds you will not find the name of an individual owner, rather you will find the name of a company.
This type of ownership was very popular just a couple of years ago, but recent rule changes and new regulations have made this type of ownership more difficult.
In the past, you could open up a company, buy a property, and put the property into the name of the company. The company’s sole asset was the property, and did no other business. Zimra used to assess penalties on late filings by charging a percentage of the monies due.
If you didn’t file your taxes on time, you would have to pay an extra amount in penalties. Since these companies were not doing any business, but there were only holding properties they did not have a taxable income. Owners would go for years without filing any documents.
When a sale of the property was eminent, the owner would go in and clear all of this paperwork at one time. It was possible to find owners who were filing years and years of paperwork, at the same time, to get the Zimra up-to-date.
Since there was no money due, the fine was nothing. A couple of years ago Zimra adjusted their penalties on late filings.
A company could be fined US $30 per day (to a limit) for each filing that was late.
Since you are meant to file four separate QPD’s per year, this fine could quickly add up to a substantial amount.
So these companies began to hire book keepers and accountants to file the necessary documents each quarter. So this very easy way to own property very quickly became more complicated and costly.
If a company has a property as its only asset, the owner may choose to sell the property out of the company, or to sell the company, together with the property. If the company is sold, then no Title Deed transfer takes place.
The directors, shareholders, and officers of the company are changed.
The relevant taxes are paid. The new company details are filed with the “Companies Office”.
This process often involves the Real Estate Agent, the accountant, and the lawyers. Because of these changes, we are finding that less people are using the company ownership for properties.
Before you decide to purchase a property that is held by a company, or to purchase the company outright, speak to your registered Real Estate agent and your accountant.
It may be better to transfer the property into your own personal name. It is always better to ask questions and to understand the pros and cons of a purchase, before signing contracts. The more you know, the safer your investment will be!
Jonathan Thompson is a Registered Real Estate Agent who works in Bulawayo. He has nine years of experience in Real Estate in the USA, and another 10 years’ experience in Bulawayo.
He is the founder and the Managing Director of Thompson Properties (Pvt) Ltd.
