Buying real estate involves several steps, from searching for properties to closing the deal. Here’s a brief overview of the general process:

1. Determine your budget and needs: Before you begin your search, it’s important to know what you can afford and what your must-haves are for a property. This will help you narrow down your options and save time.

2. Get pre-approved for a mortgage: If you need a mortgage to finance your purchase, getting pre-approved will give you an idea of what you can afford and make you a more competitive buyer.

3. Start your property search: Once you have a budget and know what you’re looking for, it’s time to start searching for properties. You can work with a real estate agent such as Vibe Real Estate or browse online to find properties that fit your criteria.

4. Visit properties: Once you’ve identified properties you’re interested in, it’s time to schedule showings. This is your chance to see the property in person and get a feel for the neighborhood. If you are not in the country, detailed videos of the property, video calls with a trusted agents, etc. can also help along the way.

5. Make an offer: If you’ve found a property you want to buy, it’s time to make an offer. Your real estate agent will help you draft a contract and negotiate with the seller.

6. Home inspection: After your offer is accepted, you’ll need to have a home inspection to identify any issues with the property.

7. Closing: Once everything is in order, it’s time to close the deal. This involves signing the paperwork, paying closing costs, and receiving the keys to your new property.

Overall, the process of buying real estate can be complex and time-consuming. It’s important to work with a knowledgeable real estate agent who can guide you through each step and ensure you make an informed decision.

When it comes to buying property in Kigali, the neighborhood you choose can greatly impact the success of your investment. As such, it’s important to have a good understanding of the local real estate market and work with a trusted partner who can provide expert advice.

At Vibe Real Estate, we recommend looking beyond the sales price of a property and considering the potential rental income it could generate. This will help you determine the return on investment (ROI) and make a more informed decision.

Kigali offers a variety of options with different characteristics. There are established areas, such as Kiyovu, Nyarutarama or Kimihurura which are upscale and currently in very high demand. These areas are centrally located and offer easy access to amenities like restaurants, shopping and entertainment.

Alternatively, there are upcoming neighborhoods or areas slightly more outside to central locations within Kigali that may offer better value for your money. However, it’s important to always consider the potential rental income in these areas, as it may be significantly lower than in more central locations.

It’s worth noting that prices in Kigali have increased as the city has grown and become more and more desirable. Land prices in Kigali can therefore vary greatly depending on the location. Therefore finding newly built houses with modern architecture in areas with high demand is of course possible but can be very expensive, while upcoming neighborhoods that are just starting to develop may offer cheaper land prices, allowing you to find newly built houses for less than half the price. 

In addition to houses, apartments can also be a great investment option for good rental yields, especially if your budget for a newly built and well-located house in areas with high demand is too low. Buying an apartment can offer a more affordable option and still provide good and steady rental income.

Overall, it’s important to carefully consider all the options to make the best investment decision.

Most real estate agencies in Rwanda are working on success-based fees and usually, there is no up-front payment required. This means that you don’t have to pay anything, if an agent or the agency couldn’t find the right property for you.

Vibe Real Estate follows the same approach and charges a success-based fee. The fees depend on whether you are the owner/landlord or buyer/tenant of the property. Fees for rental contracts typically range between half of one month’s rent to one month’s rent, depending on the contract length, and for sales contracts are 2.5% for buyers and 5% for sellers.

Yes, generally foreigner can buy properties in Rwanda and the process is pretty straightforward. Foreigners can own one property in their name for their residential purposes. Any additional property will be considered an investment and thus will have to be bought in a company’s name, and this company will have to obtain an investment certificate. To make things easier, Vibe Real Estate offers a service package that includes the company registration itself, the preparation of the business plan (which is required for the investment certificate) and the application for the investment certificate. The whole process usually takes around 2-3 weeks. Especially for foreign clients or clients who just don’t have the time to deal with those matters, this can be a real time saver.

Yes, there are various local banks in Rwanda that offer mortgage services to both locals and foreigners.

To apply for a mortgage, of course a bank requires a certain level of security and the length of the mortgage also has an impact on the conditions. Generally, interest rates range from around 14-18% regardless of which bank you choose to work with. To start the mortgage application process, the bank will need to approve the property through an evaluation. Some of the properties or new developments listed on our website as “for sale” have already been preapproved, which tends to speed up the process significantly. Depending on the bank, the evaluation typically costs around $200-$500. As the housing market in Rwanda is dynamic, we always recommend starting your property search as prepared as possible, including having your financing in order to be in a competitive position with other potential buyers.

The mortgage application itself is straightforward. You will need to submit several documents to the bank, and then they typically process your request within a 10-15 days. Normally, the required documents include:

• copies of national ID
• a request letter
• a valuation report done by the bank’s valuer
• copy of your employment contract
• bank statements for the past six months
• the last six pay slips from your employer
• a marital status certificate
• an employer undertaking indicating that your salary will pass through your account in NCBAR
• loan contracts duly signed upon approval
• loan protection for the facility upon approval
• and fire insurance for the house to be financed upon approval.

At Vibe Real Estate, we have a trusted financing partner in I&M Bank Rwanda, and we have had good experiences working with them in the past. If you are interested in a mortgage, please let us know and we would be happy to assist you by connecting you with the right point of contact to get you approved as quickly as possible.

The difference between a leasehold property and a freehold property lies in its ownership. In a leasehold property, the ownership remains with the concerned local authority or the government and is leased to the beneficiary. The lease period typically varies between 49 year to 99 years and is renewable.

A leasehold does not prevent the beneficiary from selling, letting, or performing other transactions with the property, provided the lease deed is registered. Rwanda is committed to ensuring that leasehold properties are protected and that owners have the right to renew their leases and in our view, the fact that the country is able to manage its limited land resources effectively and well-organized is a good sign for both local and international investors.

In the case of a freehold property, the owner of the property is the legal owner of the land and can also sell/lease/rent the property as per their wish

The ownership transfer process is pretty straight forward in Rwanda. It is done by the local administration and can be done as a one-stop process. Essentially, the buyer and seller bring the relevant documents (passports, marriage certificates, proof of ownership, etc) and fill out a form requesting the transfer. This form then gets notarized by the notary on duty right at the local administration. After that, the transfer is processed and the new title will be issued within a few day to up to 3 weeks (depending on the workload at the local administration).

The costs of transferring the ownership of a property are very limited in Rwanda compared to other places and a budget of around USD 200 to 300 for the title transfer fees, notaries, copies, etc. and you will be fine.

No, in Rwanda there is no stamp duty. So aside from the few transfer and notary fees, you don’t have to plan for any additional costs. 

By Akash Ladha, Managing Partner of ALCPA – A leading Audit & Advisory Firm in Kigali and Vibe Real Estate’s partner for accounting and investment consulting.

Three Property Taxes You Need to Know

There are mainly 3 taxes on Immovable Property – Immovable Property Tax (IPT), Rental Income Tax (RIT) and Value Added Tax (VAT). All the taxes are assessed and paid by the owner. If the owner is not based in Rwanda a proxy may be appointed in Rwanda for tax purposes. Taxes must be declared and paid every year (IPT – before 31 December of that year; RIT – before 31 Jan of following year).

Immovable Property Tax (IPT)

Immovable Property tax (IPT) is assessed separately for land and the building thereon every year. The tax rate for land is prescribed by respective district councils, basis location of land and its use, and is up to Frw 300 per square meter. This tax rate is multiplied to the whole surface area of land plot to calculate IPT on land.

The tax rate for buildings varies from 0.1% to 1% depending on type of building. The tax rate is multiplied by the market value of building to calculate IPT on building. The market value of a building needs to be assessed by a certified valuer every 5 years.

Rental Income Tax (RIT)

Rental Income Tax (RIT) is the tax on rental income for leased properties. Any individual earning only rental income with no income from any other business in Rwanda must register for RIT and submit rental contracts within 15 days to RRA.

RIT is calculated by applying RIT rate to taxable rental income. RIT is not charged on gross rental income. Taxable rental income is calculated after deducting certain allowed expenses from gross rental income. Firstly, a flat 50% of gross rental income earned during the year is allowed as deduction. This is assumed to be maintenance and repair expenses for which no supporting documents are required. Secondly, Interest on a bank taken for purchase and construction of the asset is also allowed as a deduction. RIT is a progressive tax wherein there are different RIT rate brackets (ranging from 0% to 30%) depending on taxable rental income.

If the person is registered under Corporate Income Tax (CIT), the rental income can be consolidated with other business income under CIT. In such case, no RIT would be applicable. A flat CIT tax rate of 30% is levied on total business profit (including the rental profit). Business profit is calculated after allowing for deductible business expenses. These expenses should be incurred for the direct purpose of the business and substantiated with proper purchase receipts.  A depreciation allowance at 5% of the cost of the building is also allowed as a deductible expense. No depreciation allowance can be claimed on the cost of land. Interest expenses for the direct purpose of the business are also an allowable deduction to compute business profit.

Value Added Tax (VAT)

Finally, Value Added Tax (VAT) at 18% is levied on rental income earned on properties leased for commercial purposes. VAT rate of 18% is applied on rental amount exclusive of VAT. VAT is a tax burden on the lessee, hence lessee pays to lessor amount inclusive of VAT. The lessor is required to collect VAT and pay it to the tax authorities. The lease contract should clearly state rental amount exclusive of VAT and rental amount inclusive of VAT.