INVESTING IN PROPERTY IN BOTSWANA
Category Investing in Botswana
Botswana gained independence from Britain in 1966, having previously been a British
Protectorate, without any form of revolt or civil strife. Independence was negotiated
and in the 39 years since independence, Botswana has been recognised and praised
as a stable and model democracy.
In addition, Botswana has an open economy. Botswana obtained its first international
credit rating in early 2001. It was awarded ratings of “A2” and “Single A” by Moodys
and Standard and Poor’s respectively. Both awards were maintained throughout 2002,
2003 and 2004. These ratings are the highest awarded to any country in Africa.
The 2004 World Competitiveness Report rated Botswana as the most competitive
country in Africa and the most recent Report released at the recent World Economic
Forum (May 2004) ranked Botswana the most competitive in Africa and the 26th most
competitive country in the world.
Botswana covers an area of 582 000 sq km. Of a population of 1.68 million, 52% live
in urban areas concentrated along the eastern side of Botswana along the line of rail
south to north.
With a relatively small population, there remain vast tracts of land which are completely
unexploited both peri-urban and rural.
Prior to Independence the land tenure system in Botswana was very similar to that in
neighbouring states. However, after Independence, the system was substantially
modified by statute and now a distinct system of land tenure and ownership exists as
regards land in urban areas, land in tribal areas and agricultural land.
During the early 1970's the Government of Botswana enacted the State Land Act in
terms of which it was decreed that all land not privately owned in terms of the titles
registered in the Deeds Registry would be dealt with as state land. After the Act was
introduced, the state divided up the various urban areas into extensions for industrial,
commercial and residential purposes.
All extensions in townships and urban areas are delineated in general plans reflecting
the co-ordinates and areas of each individual plot of land and the general plans are
filed at the Deeds Registry in Gaborone.
Tribal land is under the control of the various land boards and they have, subject to
approval by the Ministry of Local Government and Lands, rights of allocation to citizens
and non-citizens.
Agricultural land is subject to control under the Land Control Act and there are
restrictions on non-citizens owning agricultural land.
A brief account of the salient features of each form of tenure follows:
URBAN AREAS
FREEHOLD LAND
Freehold land is held in perpetuity under a deed of transfer and the owner is free to
sell, lease and mortgage the property to citizens and non-citizens without any
restriction. No time limit is set on this kind of title. However save for purchasing such
land from existing owners, it is no longer possible to obtain freehold title of land
presently belonging to the state as land held by the state is allocated in terms of Deeds
of Fixed Period State Grant.
DEED OF STATE GRANT
After the enactment of the State Land Act, Deeds of State Grant were issued in terms
of which the holder of the Deed to all intents and purposes became the full owner in
perpetuity of the property. The holders of Deeds of State Grant are also free to sell,
lease or mortgage their properties to citizens or non-citizens and there is no time limit
to this kind of title. Towards the end of the 1970's the issuing of Deeds of State Grant
was discontinued and it does not appear that any further Deeds of State Grant will be
issued.
DEED OF FIXED PERIOD STATE GRANT
Where plots of land in urban areas are surveyed, Deeds of Fixed Period State Grant
are issued in terms of which absolute rights of disposal over the relevant property are
granted by the State, subject to compliance with the development covenant in the
Deed during the period of the Grant, which may be for 50 or 99 years.
Until the development covenant is complied with, the holder of the Deed may lease or
mortgage the property but he is not permitted to transfer it except to the State. The
development covenant usually requires a building up to a specified value to be
completed within a period of two years following the registration of the Deed.
On the specified development being completed, a certificate of compliance is issued by
the Department of Surveys and Lands. On the certificate of compliance being issued
the holder of the Deed is at liberty to sell.
If the holder fails to comply with the development covenant, he is obliged to offer the
property back to the government at 80% of the original purchase price.
Each Deed of Fixed Period State Grant specifies that on the period of the Grant
expiring, the property will revert to State without any compensation being paid therefor
whether in respect of improvements thereon or otherwise.
REGISTERED LEASES
In terms of the Deeds Registry Act of Botswana, any registered lease over land,
capable of running for 10 years or more is regarded as immovable property. Mortgages can therefore be registered against such leases. It is unusual for property
in urban areas to be leased for lengthy periods but incidents of such leases do exist.
However, there being no restrictions on the sale of land in urban areas, it is
recommended that an outright purchase be preferred to a lease. If only a portion of the
land is to be leased under a long-term lease, then a diagram preferably approved by
the Director of Surveys and Mapping must be prepared. Such a lease is not granted
by the State but may be granted to a citizen or a non-citizen by the owner of the land
held under a Deed of Grant, a Deed of Fixed Period State Grant or a Deed of Transfer.
The holder of the registered lease may sublet the land or register a mortgage bond
against such lease provided the lease is registered.
SELF HELP HOUSING AGENCY
In order to assist the lower income groups to obtain houses the Self Help Housing
Agency (SHHA) in each town in Botswana allocates portions of land averaging
approximately 400 square metres to citizens. Such land is not subject to title deeds
registered at the Deeds office and is held in terms of certificates of rights. The owner
is, with the consent of the relevant township authority, at liberty to sell, lease or
otherwise alienate such property. However a mortgage bond cannot be taken over
such property as it is not subject to any formal diagrams. Machinery does however
exist for the converting of certificates of rights to Deeds of Fixed Period State Grant on
the property being properly surveyed and being connected to the basic water,
electricity and sewerage services. At present the cost of such services is approximately
P2000.00. Once the site has been surveyed and serviced, the occupier is entitled, on
application to the Attorney General's department to have the certificate of rights
converted to a Deed of Fixed Period State Grant.
RURAL AREAS
All land in rural areas, with the exception of land owned in freehold title under a
registered title deed, is owned by the government of Botswana through the various
land boards. Each land board has a specific area of jurisdiction and subject to the
approval of the Ministry of Local Government and Lands has rights to allocate land to
citizens and non-citizens.
CUSTOMARY GRANTS
This form of grant is available only to citizens and is made by the land board to citizens
only for a period of up to 50 years. The rights under Customary Grants are not
transferable and property held under a Customary Grant is not capable of being
encumbered. However, on application being made to the Land Board and subject to a
survey of the property having being conducted and a diagram in respect thereof having
been approved by the Director of Surveys and Mapping, a Customary Grant may be
converted to a Common Law Grant of lease.
AGREEMENTS OF GRANT OF LEASE
Common Law Grants of lease are referred to as agreements of grant of lease and are
made by the land board with the specific consent of the Minister of Local Government
and Lands. Such a grant is not valid without the Minister's consent. Such leases are
granted for periods of anything between 15 to 99 years and once they are registered in
the Deeds Registry, mortgage bonds may be registered in order to secure loans.
However it is absolutely essential that the lending institutions ensure and satisfy themselves that the lease has been duly registered. The mere fact of holding such a
lease does not entitle the holder to procure the registration of a mortgage as the lease
must first be registered. In order for the lease to be registered, the leased area must
be surveyed by a registered surveyor and the diagram approved by the Director of
Surveys and Mapping. Even thereafter there are several problems to overcome in that
most leases are not drafted in terms of the requirements of the Registrar of Deeds and
need extensive amendments. The exercise of procuring the registration of a lease is
therefore a lengthy one and care must be taken by the financial institution to ensure
that all documentation is in order before any advances are made to the Lessee.
AGRICULTURAL LAND
Agricultural land in Botswana is usually held under Deeds of Transfer and is freehold
land. However in areas adjoining urban areas, long leases over portions of agricultural
land are often granted by the Lessor and such leases may be mortgaged.
Agricultural land may not be sold or leased to a non-citizen or a company in which less
than 51% shares are held by non-citizens except with the consent of the Minister of
Local Government and Lands.
SECURITIES
The only tangible security over immovable property would be a mortgage bond.
The rights capable of being mortgaged are as follows:
Rights under a Title Deed to freehold land.
Rights under a Deed of State Grant.
Rights under a Deed of Fixed Period State Grant
Rights under a Registered Lease for more than 10 years.
Rights under Registered Agreements of Grant of Lease in rural areas.
SECTIONAL TITLES
The Sectional Titles Act, No. 7 of 1999 (“the Act”) has introduced a new form of
ownership of real rights in immovable property in Botswana. Real rights in a portion of
a building, combined with a type of co-ownership (undivided shares) of the land on
which the building is built and the common areas of the building.
Sectional ownership may be increasingly used, due to the growing shortages of land in
the cities and the fact that it can be suitable for residential, industrial or commercial
fields. Sectional ownership also more efficiently utilises the available land resources.
Although the Sectional Titles Act was enacted in 1999, the Regulations are still to be
promulgated. The Act provides for a number of matters to be prescribed by Regulation,
but the unique forms of land tenure in Botswana have created difficulties in prescribing
Regulations. It is, however, believed that promulgation of the Regulations is imminent.
Author: http://www.armstrongs.bw/uploads/Property%20Review.pdf