To quote the Economist Adam Smith, “it is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”
By this, he was referring to the advantages of the motivation that the self-interest of these professionals can provide and the importance of collaboration and interdependency to the national economic unit.
This position is, however, not complete without considering the consumer. Whilst some states leave the free market to decide the balance of interests, some necessarily have to regulate to ensure that there is an even playing field that aligns with the national interest.
It is therefore not farfetched that the treatment of Real Estate regulation varies from country to country.
In Ghana, the growth of the real estate industry in recent times has seen a corresponding increase in the number of Real Estate agents, property brokers, and consultants. Their role is to act as intermediaries in negotiating and arranging Real Estate transactions.
The industry has, however, been without a regulator and therefore left to the mercy of the arbitrary practices of industry players.
This has resulted in the sector becoming an avenue where taxable gains are hidden from the state and criminals hide or use their gains to fund terrorism and other unlawful activities.
The sector has also seen undesirable practices where, for instance, prospective tenants have had to pay over the odds to view properties, agents have acted for both sides of transactions and obtained double fees by coercion, and agents have disappeared and left customers with no recourse amongst a host of others.
In a bid to protect consumers, it became necessary for the government to put regulation measures in given the sector’s importance to the economic performance of the country.
This ensures that the services delivered reflect modern-day mutually beneficial practices, standardisation, transparency, and professionalism.
The Estate Agency Act, 2020 (Act 1047) came into effect on the 29th of December 2020. The Act set out the rules and structures to regulate the Real Estate Sector.
In addition to effective regulation of industry practitioners, the Act also seeks to plug the avenues via which Real Estate transactions are used to launder money. It allows for detailed tracking of transactions and those persons involved in the transactions.
The Act further provides a framework within which the Real Estate Agency Council can facilitate, promote and regulate the desired progressive sector practices in Ghana.
The Council is to achieve this end through the provision of courses and exams for persons interested in becoming Brokers, licensing of estate agents, issuing of Real Estate Transaction Certificates, establishing programmmes of continued professional development for both brokers and agents, establishing a code of practice, prescribing the scale of fees, as well as collaborating with other agencies on anti-money laundering to counter the financing of terrorism through Real Estate practices.
The Act creates a number of ways in which one can become a licensed estate agent or broker. Persons who are Valuation and Estate Surveyors registered by the Ghana Institution of Surveyors or Lawyers licensed by the General Legal Council can apply to become brokers or agents.
There is also a route for persons who have continuously practiced as Real Estate brokers in Ghana for at least five years before the Act came into force. A further route is for those who pass a qualifying examination conducted by the Council.
When the Act becomes fully operational, one would require a licence to be able to provide Real Estate agency or brokerage services or engage in any business connected with the provision of Real Estate agency services or Real Estate transactions. Failure to abide by the relevant provisions of the Act will result in criminal penalties.
The Act also makes reference to cashless payments and Transaction Certificates, mandating that, with each Real Estate transaction, payment should be made by bank draft, cheque, or through electronic money transfer exclusively. Cash transactions will no longer be permitted.
Further, a Real Estate transaction will not be complete unless a Real Estate Transaction Certificate has been issued. It is with this certificate that you can register your land or property with the Lands Commission, and therefore it should be taking very seriously.
The Act prevents the Lands Commission from registering any real property or interest in real property which is not accompanied by a Transaction Certificate.
The establishment of the Real Estate Agency Council could not have come at a more appropriate time.
The country has taken the course of regulation and licensing by statute in a drive to sanitise the system and level the playing field.
The sector is a key driver to economic growth, particularly in contributing to job creation for our teaming skilled and unskilled youth.
The Act also has the potential to help increase our housing stock and reduce the price of real estate, as well as open up the sector for both local and foreign direct investment, thereby benefiting developers.
The Act provides an opportunity to streamline a sector that is imperative to the country’s future economic wellbeing.
The Council has now been constituted and is working to ensure that all the structures are in place as quickly as possible. We must all give them our support so that we can reap the benefits in the years ahead.