In: Root » Legal and finance » Market and Finances
Most high-income rental properties will have a formal contractual agreement setting out the area and property to be leased and the accompanying terms and conditions for payment and maintenance of the asset. For longterm leases, these can be registered for the protection of the lessee under the Conveyancing Decree, 1973, and the Land Registry Act, 1962. Mediumand low-income renters will normally receive a note from their landlords since they are exempted by the Conveyancing Decree, although enquiries with estate agents tend to suggest there is increasing use of more formal documentation. In many cases, terms and conditions are not described and tenants are left with very little protection from eviction or rent increases. Sometimes it is almost impossible to register a lease for medium-income rental accommodation as required by Section 24 of the Land Registry Act, 1962 (Act 122), as ownership and the legal description of rental property often remains unclear. The Rent Act, 1963, has not helped much. It has seen so many amendments that it is completely disfigured, to the extent that it is difficult to know the true state of the law. In any case, not many people know of the existence of the law. The law was essentially provided to protect tenants from by conferring on them statutory protection under Section 17. It provides that no landlord can eject a tenant arbitrarily. Nevertheless, a more formalized system for private rental agreements is needed to protect tenants from being evicted as a result of market forces driving up rents. Most rental agreements are informal, and many landlords prefer it that way for tax avoidance and ease of eviction reasons. The introduction of taxes would be passed on to tenants. Until the housing supply problem can be addressed, any attempt to regulate the rental market, except for the upper income group, is likely to cause a further increase in rents in urban areas. This will affect the groups in society that can least afford to pay. Land and property in the development of capital For many developing countries, insecurity and inability to capitalize upon land and property severely constrains economic and social development at all levels of society. De Soto (2000) estimated that in the Philippines and Egypt there was in excess of US $133 billion and $240 billion respectively, of so-called dead capital tied up and unable to be used to enhance the economic development of the countries. These assets comprise mainly houses and commercial enterprises built on land for which security of title or occupancy is not secure. In Ghana, it is estimated that there may be as much as US $8-10 billion of dead capital, in the form of land and housing and property assets. Most of this cannot be used as collateral to provide working capital for productive investments because of insecure tenure and the lack of micro-credit to fund land and property development. The inability to use land and property as collateral is significantly undermining the economic development potential, investment and wealth creation capacity of the nation. Security of tenure to land and property are fundamental to efficient land markets and the expansion of the land equity capital base needed to support the long-term economic development of the nation. In developed countries, more than 60% of homes are mortgaged or used as collateral for other investment loans. The ability to use land and property as collateral to raise capital therefore has a significant influence on the productivity and performance of investments, and the generation of personal and national wealth. Stable land markets, property finance, regulated and well-managed land use and land conversion processes are essential to support investment and the accumulation of wealth. Most land markets in developed economies are guided by rules and regulations backed by statutes, which ensure that transactions related to land are transparent and market values used for the purposes of land taxes and other charges are based on an agreed or fair assessment of the value of assets. In Ghana, few of these conditions exist. Land markets are not transparent, the value of property and land is indeterminate, regulations related to land use are weak and not enforced and corruption is a problem. Property market finance is weak. In Accra (the capital city of Ghana), less than 8% of titles have had mortgages registered on them since 1988. In rural areas it is less than 1%, although unsecured borrowing through pledging against land is higher. The government has no record of the value or net worth of land and property assets over which they have control. A register of all state land in Ghana was commenced in 1997, but has still not been completed. No valuation has been made of state-owned assets. Many public assets, especially land, are grossly under-utilized and undercapitalized. Capitalization and disposal of surplus and non-performing state land and property assets could raise substantial capital to support the development of land and housing in Ghana.
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