ZAMBIA Tenant Handbook Broll 2014

Transcription

1 ZAMBIA broll.com Broll Tenant Handbook 2014

2 Introduction Because we understand how busy you are, we have put together this tenant handbook packed with quick snapshot information on what to expect when renting commercial property. The information in this handbook has been prepared in consultation with our commercial property experts on what the retail sector rental market is like. Expect to find useful information on what the lease term periods are, who is responsible for tenant fit-out, how lease renewals and agreements work, what you can expect from the landlord as a tenant as well as what your responsibilities are as a tenant among other things. Disclaimer: All care has been taken in the preparation of this document and the information contained herein has been derived from sources believed to be accurate and reliable. Broll Property Group (Pty) Ltd will accept no responsibility for any error, action or omission, any opinion expressed or any investment decisions made and/or based on this information. Information contained herein may in some cases relate to Broll managed buildings only. Neither the whole nor any part of this document, nor any reference thereto may be included in any published document, circular or statement, nor published in anyway without Broll s prior written approval as to the form or context in which it may appear. Zambia Tenant Handbook 2014

3 Zambia Broll Office: Manda Hill Mall, cnr Great East & Manchinchi Roads, Lusaka Tel: /50 Web: Divisional Director SADC: Ronel Judin i COUNTRY FACTS Capital City Population Unemployment GDP Lusaka 14.5 million (2014 estimate) 14% (2012 estimate) 7.1% (2013) Term Break clause Renewal 3-5 years Not a standard feature Most leases provide an option to renew and the tenant has to provide 6 months GDP per capita Inflation rate Interest rate Corporate tax Sales tax Currency Business language Ease of doing business Global competitiveness US$822 8% (August 2014) 12% (August 2014) 35% (January 2014) 16% (January 2014) Kwacha (ZK) English 83 out of 186 countries 96 out of 144 countries Rent basis Rent free period Escalation Deposit Fit-out Right to sublet Brokerage written notice to renew Net + service charges days 6-8% p.a. 1-2 months rent Tenant s responsibility unless agreed otherwise Not allowed unless the landlord has given written consent Landlord pays Legal fees Payable by both landlord and tenant Transparency Limited market data ZambiaTenant Handbook 2014

4 LEASE AGREEMENTS Term Break clause Renewal Right to sublet Option to expand & right of first refusal Late delivery by landlord Holdover by tenant Signage and naming of building Standard lease Leases are generally between 3 5 years with fixed annual rental escalations. Terminations or breaks are not a standard feature in lease agreements. Most leases provide an option to renew and the tenant has to provide 6 months written notice to renew. If not then the landlord is not obliged to renew the lease agreement. The renewal period is defined, however, rentals are not and will be market related. Subletting is not allowed unless the landlord has given written consent. Options to expand and rights of first refusal are not automatic unless specified in the lease agreement. Late delivery is negotiable in terms of the lease agreement. Dependent on the conditions stipulated in the lease agreement. Is in accordance with the tenant signage and criteria document which forms part of the lease agreement. Lease agreements tend to be landlord specific and aspects such as rentals, lease periods and terms are negotiated as part of the lease agreement. Commercial lease agreements are governed by specific property laws, such as the Landlords and Tenants (Business Premises) Act as well as Company law. Laws and practices Another interesting statute is the Authentication of Documents Act, Chapter 75 of the Laws of Zambia, which stipulates that a lease must be authenticated if entered into between a foreign tenant (such as a South African tenant) and the landlord. Section 3(d) of this Act sets out the procedure for authenticating a document executed in a foreign country, such as South Africa. SPACE MEASUREMENT Measurement Rentable space is quoted in square metres (m²). Zambia Tenant Handbook 2014

5 Definition Rentable area Rentable area is generally measured according to the South African Property Owners Association method or is measured as per the architects plan. OCCUPATION COSTS Rent basis Net rental, service charges and marketing fees are charged separately as per the agreed rates in the lease agreement. Parking Parking is charged at an additional cost to rental at a specific rate per bay per month. Rent Rents quoted Rents are quoted in US$/m²/month and exclude VAT payable of 16%. Rents payable Rents are typically payable monthly in advance and VAT of 16% is payable on rental figures as is a Withholding Tax of 10%. Rent escalation Escalations range between 6 8% per annum. Rent free period Usually, rent free periods range between days. Operating costs Operating costs and/or service charges are negotiated as part of the lease agreement and where applicable the cost is over and above the net rental. Assessment rates These rates are recoverable from the tenant on a pro-rata basis in terms of the lease agreement. Taxes VAT Rental figures exclude VAT of 16% which is payable by the tenant. Withholding tax There is a 10% Withholding Tax which is applicable to the retail sector. A tenant will withhold a certain portion of their rental amount and will pay this over to the Zambia Revenue Authority. The tenant will then present the receipt of such payment to the landlord for accounting purposes. ZambiaTenant Handbook 2014

6 Utilities Fit-out Restoration Deposits and/or guarantees Parking Other occupancy costs Water and electricity are separately metered in most cases or recovered from the tenant on a pro-rata basis based on the percentage of space occupied in relation to the size of the building. Tenants receive a white box and they are responsible for their own fit-out unless the landlord has agreed to provide the tenant with an installation allowance. The tenant has to restore the premises back to a white box when they vacate. One or two months basic rental is required as a deposit. Parking is charged separately at a rate per bay per month. Insurance The landlord is responsible for the building insurance and the tenant is responsible for insuring the inside of his/her premises as well as all contents therein. TRANSACTION COSTS Brokerage New leases Commission is payable by the landlord in terms of an agreed mandate on new lease agreements. Generally, two month s rental is payable as commission or approximately 70% of the tariff structure used in South Africa. Renewals Commission on lease renewals is determined by the management contract which is in place and is generally paid to the managing agent by the landlord. Legal fees Other transaction costs Legal fees are payable by the tenant in the event of a breach and subsequent legal action resultant from such action. The landlord is liable for their own costs if not recoverable from the tenant in terms of the lease agreement. Lease administration fees Such fees are generally charged by the landlord or its agent for generating lease agreements and are payable by the tenant. Lease registration fees Such fees are payable to the Ministry of Lands and are calculated at approximately 1 to 2 % of the rental value. Zambia Tenant Handbook 2014

7 GENERAL LEASING MARKET Transparency Building classification Limited market information is available. No formal classifications for the retail market are prevalent in Zambia. ZambiaTenant Handbook 2014

8 CONTACT ZAMBIA Broll Office: Manda Hill Mall, cnr Great East & Manchinchi Roads, Lusaka Tel: /50 Divisional Director SADC: Ronel Judin General Manager Manda Hill Centre: Vusumzi Mdwara Assistant Centre Manager: Zoe Kaseka Broll s full spectrum of property-related services Office Broking Industrial Broking Retail Leasing and Projects Investment Broking Project Management Research Asset Management and Consulting Valuation and Advisory Services Shopping Centre Management Property Management Corporate Real Estate Services Facilities Management Zambia Tenant Handbook 2014