A Foreigner’s Guide to Property Investment in Zanzibar

Zanzibar is an island in the Indian Ocean that is off the coast of east-central Africa. Unguja is the main island but people informally refer to it as Zanzibar. It forms the United Republic of Tanzania, together with Pemba Island and other small islands. You may want to read about the history of Zanzibar here: https://en.wikipedia.org/wiki/History_of_Zanzibar

The island is popular for its beaches that are filled with white sand, its stunning landscapes, the tranquil forests, and spectacular sunsets. Tourists usually visit for diving and snorkeling, exploration of the coral reefs, and watching the giant turtles, dolphins, and tropical fish in their natural abode.

There are various exotic markets that visitors can explore as well as historical buildings. And top on that list is Stone Town buildings. The town is currently UNESCO’s world heritage site. It is also the birthplace of Freddie Mercury, the frontman of a rock band Queen. Zanzibar is often called the Spice Island as its main exports include cinnamon, black pepper, nutmeg, and cloves.

This semi-autonomous territory of Tanzania is an archipelago of more than 50 islands. Before now, only bold travelers and backpackers toured the island. But in recent times, it has witnessed the visit of high-end tourists, improvements in infrastructure, and an increase in the number of foreigners who want to invest in property.

So, if you are looking at investing in property as a foreigner in Zanzibar, this guide is for you.

The Process of Buying Property in Zanzibar

Property Investment

In Tanzania, the government owns all lands. Hence, citizens and foreigners do not have private ownership of them. However, the government can grant the occupancy of land and derivative rights. You can get the right of occupancy for a period of 5 to 99 years and it is renewable. On the other hand, you can get the derivative right for 5 to 98 years.

Foreigners need to obtain the right of occupancy in order to receive a Certificate of Incentives from the Tanzania Investment Center (TIC). They also have an option to obtain sub-lease on lands, which has already been given to a private sector via the right of occupancy. You can find out more from this website.

Additionally, you need to know that foreigners can only get land for the purpose of investment. In order to get a permit to occupy a land, you can go through the following ways:

  1. Obtain a derivative right from the Tanzania Investment Center (TIC)
  2. Apply to the Commissioner for lands
  3. Sub-lease
  4. Obtain a license from the Tanzania government
  5. Purchase from people who already hold a right of occupancy

The right of occupancy can be transferred to a foreigner, solely for investment purposes, and with permission from the Tanzania Investment Center.

Furthermore, if you want to purchase the right of occupancy from a holder, you will require the services of an attorney to facilitate the process. The attorney will draft a Sale Agreement while the seller will provide all necessary documents to confirm their right of occupancy over the property.

The Sale Agreement will be taken to the Land Office where you will pay the fees and taxes required for your name to be registered at the Land Registry. Afterward, the attorney will prepare a Transfer Deed which will be submitted to the Municipal Land office together with the Sales Agreement. At this point, you will be sent a Certificate of Occupancy.

You can check out Thirlmere Deacon for more useful information on property investment.

What Are the Transaction Costs Involved in the Buying Process?

The transaction costs cover all costs involved in buying and re-selling a property. It includes the following:

1. Notary Fee

This is estimated at 3 percent of the property’s value. The notary fee is negotiable, but it is regulated. However, it cannot be more than 10 percent of the property’s value.

2. Stamp Duty

This is left at 1 percent of the value of the property.

3. Registration Fee

This fee is about 0.25 percent of the property’s value.

4. Valuation Fee

The valuation fee is about 0.10 percent of the property’s value. Officially, it is calculated using this formula:

(Value of property – 200,000) x (1.25 / 1,000) + 550 + valuation approval fee of 0.01% of the property’s value.

Conclusion

Zanzibar is a beautiful city with a growing economy. So, if you are looking to investing in property, we hope that this guide is useful to you.