A Senior Lecturer at the Kwame Nkrumah University of Science and Technology (KNUST), Dr Jonathan Zinzi Ayitey has stressed the need for the regulation of real estate agency services to rid the industry of fraud, laundering of illegal income, and tax evasion.
He said appropriate regulation would minimise the effect of the vices on the national economy and enhance the international image of the country.
Dr Ayitey was speaking at a stakeholders’ workshop organised by the Ghana Chamber of Construction Industry under the auspices of the Ministry of Works and Housing with funding from the BUSAC FUND and donor partners DANIDA and USAID.
In a detailed paper on the Real Estate Agency Bill, which is currently in Parliament awaiting passage, Dr Ayitey said the real estate sector is of great importance to the economy of every country and particularly to the financial market because of the large monetary transaction involved.
The purpose of the Bill he said, is to regulate real estate agency practice, the conduct of real estate agency practitioners, commercial transactions in real estate including the sale, purchase, and rental and leasing of real estate, and other real estate transactions.
The practice of real estate agency has grown considerably in recent years as the property market has become more active with the buying, selling, and leasing of property as an asset class and also for occupation.
“One result of the increase in activities in the property market has been the influx of persons who have introduced fraud into the trade. Many real estate brokers and agents do not have any particular training in real estate agency and many others have no identifiable office accommodation,” he said.
He cautioned that investors in property who deal with real estate brokers have no guarantee against fraud and many have been swindled.
He mentioned that the real estate business shows lack of appropriate internal control mechanisms, policies, training and audit systems, among other things which make the sector attractive to crooks.
Dr Ayitey said the real estate transactions by their nature involved huge sums of money and there was the need to ensure that real estate agency practitioners and parties to real estate transactions keep records of their transactions for tax purposes.
He bemoaned the lack of record-keeping by most real estate practitioners and parties to real estate transactions and their failure to pay tax on the incomes earned from the transactions. This denies the government the necessary income for developmental purposes.
He said in the country’s quest to adhere to international best practices, the Bill seeks to plug the avenues in which real estate transactions used to launder money including the prohibition of the use of cash for real estate transactions will be detailed in tracking transactions and the persons involved in the real estate transactions.
The bill would also help stem the current practice of the promotion of unhealthy competition between legitimate and criminal businesses because investment in the real estate sector offers advantages for legitimate law-abiding individuals and businesses.
Ghana, as a signatory to international conventions on corruption, including the African Union Convention on Preventing and Combatting Corruption and the United Nations Convention against Corruption, needs to adhere to international standards for the prevention of money laundering.
The passage of the Bill will go a long way to strengthen the anti-corruption initiatives in the country and curb money laundering and other financial malpractices in the sector.
“It will also be in the interest of good governance and will give the country an improved standing in subsequent assessments by the International Action Group against Money-Laundering in West Africa,” he said.
“The overreaching effect of the Bill will be the sanitisation of the entire real estate market and the protection of all participants and the enhancement of tax revenue for development,” Dr Ayitey added.
Among stakeholders present were Rent Control Unit, Ghana Institution of Surveyors, Ghana Institution of Engineering, Ghana Real Estate Developers Association, Insurance Brokers Association, Ghana Bankers Association, and Financial Intelligence Centre.