Buying A Ghanaian Property With Tenants In It: What You Need to Know

Buying a property in Ghana with existing tenants is one of the easiest ways to grow your property management business. Instead of buying land in Accra and starting from scratch and having to market your property for occupants, you already have tenants and the resulting cash flow. That said, buying a property in Accra with tenants is not without its challenges. 

This blog post talks more about some of the main reasons property managers in Ghana look to grow their portfolios by buying properties with tenants and what you can do to prepare to take on a building where people already live. If you’ve been thinking of buying a tenanted property in Ghana, you’ve come to the right place. This guide covers everything you need to know.

What is a Tenanted Property?

A tenanted property is a property that is currently being occupied by a tenant or tenants who have a legal agreement (a lease or tenancy agreement) with the landlord. This agreement grants the tenant the right to live in the property for a specified period in exchange for rent.

Key Aspects of a Tenanted Property in Ghana

Existing Tenancy Agreement: The most defining feature of a tenanted property is the presence of an existing tenancy agreement. This contract outlines the terms and conditions of the tenancy, including the rent amount, duration of the tenancy, and the responsibilities of both the landlord and the tenant.

Tenant's Rights: Tenants in a tenanted property have certain rights protected by law. These rights may include the right to quiet enjoyment of the property, the right to basic amenities, and the right to privacy.

Landlord's Responsibilities:  Even with tenants in place, the landlord of a tenanted property still has responsibilities. These responsibilities may include maintaining the property's structure, ensuring basic services like water and electricity are available, and addressing any urgent repairs.

Transfer of Tenancy upon Sale:  If a tenanted property is sold, the new owner typically becomes the new landlord and the existing tenancy agreement usually remains in effect. This means the new landlord must honor the terms of the existing tenancy agreement.

What Are the Benefits of Buying a Tenanted Property?

While buying a property in Ghana with tenants comes with numerous benefits, like immediate cash flow, you’ll need to be prepared to deal with potential issues with those tenants in Accra. Property managers in Accra decide to buy tenanted properties for so many reasons. To begin with, because the property is already listed and people are living in it, property managers gain immediate rental income without the difficulties of finding tenants.

Lease agreements in Ghana are also signed, so property managers don’t have to allocate administrative resources to that task. What’s more, purchasing occupied property means that the buildings and structures are up to Ghana's standard building code. However, assuming without verification is an expensive risk you can’t take, so make sure to verify everything. 

Similarly, the tenanted properties in Ghana are likely to be in liveable condition or maybe even recently renovated before the sale. Which translates into lower maintenance and upkeep expenses you might have incurred. Also, because the property is already occupied, property managers in Ghana don’t have to worry about paying out real estate agency fees, enabling them to further protect their pockets. 

What Are the Risks of Buying a Property with Tenants

Unfortunately, tenanted properties in Ghana aren’t always a guaranteed benefit for buyers. Each property purchase has its advantages and disadvantages, so it’s important to weigh these up carefully before becoming a landlord. 

As is typical with most financially rewarding experiences, there are also risk factors to consider when buying a tenanted property in Ghana. These include your inability to evict the tenants if they do not want to leave, or if they don’t meet your standards. The tenants in Accra may not have taken care of the property and now you must repair it, or the tenants may not pay their rent on time or at all.

As you may already know, buying a rental property in Ghana with existing tenants means immediately accepting the number of obligations that come with being a landlord. You're taking over from the previous landlord, and you're expected to honour the responsibilities within the lease agreement.

How To Own a Property With Tenants in Ghana

When planning to purchase a property with tenants in Ghana, you should always be guided by the rent law, which is the Rent Act of 1963. This Rent Act governs tenancy agreements in Ghana. It’s important you also spend some time researching potential legal obligations to understand what you’re getting into. For instance, you can perform a search with the Lands Commission to find out if the land is registered with the same person or if it bears different names.

Again, in Ghana, if you buy a property with sitting tenants, you are obliged to go by the terms of the existing lease agreements until the lease expires. This means that the terms of the existing lease agreement and the quality of the tenants will significantly impact whether or not you will be happy with your investment property. That's why you need to check out the terms of the leases and the existing tenants. 

In the case of tenants with month-to-month leases in Ghana, you may be able to either end the lease or increase the rent as long as you give adequate notice. Tenants with long-term leases have the legal right to stay in the property provided they obey the terms of the lease. The last thing any investor wants is to discover, too late, that they have purchased a problematic property.

Conclusion 

When you’re considering buying a tenanted property in Ghana, it’s important to understand what to look for and what the process might involve. The first step is considering the financials, meaning whether the property in Accra fits your needs and budget. The second thing is to assess the current state of the tenanted property, which includes the tenants, terms of lease agreements, and the prospects.