For many foreign investors looking at land or property in Zanzibar, the term “Government Lease” appears early in the transaction.
It can also cause confusion.
An investor accustomed to a freehold system may wonder why a property is being “purchased” if the underlying land is held under a lease. Others may assume that a Government Lease is comparable to an ordinary tenancy agreement between a landlord and tenant.
Neither description properly captures the Zanzibar position.
A Government Lease is part of Zanzibar’s land-tenure framework. For a foreign investor, understanding the lease is fundamental because it can determine how long the land may be held, what it may be used for, whether the interest can be transferred or mortgaged, and what happens when the lease comes to an end.
Why Government Leases Matter in Zanzibar
Zanzibar’s land system is not based on unrestricted private freehold ownership of land.
The Land Tenure Act establishes the legal framework governing land ownership, occupation and use. It provides for public land and regulates the rights through which individuals and investors may occupy and use land.
Importantly for international investors, the Act, as amended, allows public land to be leased to both Zanzibaris and non-Zanzibaris. It also specifically contemplates leasing land for investment purposes where the investment has been approved by ZIPA or another relevant authority.
A foreign investor therefore needs to distinguish between the Government’s underlying position in relation to the land and the legally recognized leasehold interest held by the investor.
This distinction matters when an investor is considering acquiring bare land for development rather than purchasing a completed residential unit within an approved project.
Our separate guide on Legal Considerations for Foreign Investors Seeking to Acquire Bare Land in Zanzibar considers that wider transaction.
A Government Lease Is More Than Permission to Occupy Land
Calling the arrangement a “lease” can give foreign investors the wrong impression.
A Government Lease used in an investment context can represent a substantial, long-term property interest. Once properly granted, it establishes the terms on which the lessee is entitled to occupy and use the land.
The strength of that interest, however, comes with conditions.
The investor does not receive an unlimited right to do whatever it wishes with the property. The land must be held and developed consistently with the lease, applicable land legislation and, where relevant, the investment approvals associated with the project.
The lease itself therefore deserves careful attention.
For an investor acquiring an existing property interest, it is not enough to establish that a Government Lease exists. The investor should understand what rights that particular lease actually grants and what obligations remain attached to it.
How Long Does a Government Lease Last?
This is one of the most frequently misunderstood aspects of Zanzibar property transactions.
Government Leases encountered in investment transactions are commonly granted for 33 years, while Zanzibar’s land legislation permits public-land leases to extend up to a maximum of 99 years.
The Land Tenure Act provides for a maximum term of 99 years and permits renewal of public-land leases.
The current Zanzibar Investment Act No. 10 of 2023 also specifically provides for a 33-year land lease agreement in relation to qualifying real-estate development projects under its investment framework.
These provisions should not be reduced to the statement that every foreign investor automatically receives a 99-year lease.
The actual term depends on the legal basis on which the lease is granted and the terms appearing in the particular instrument.
For that reason, an investor considering a property advertised as having a “99-year lease” should establish whether the underlying legal documentation actually supports that description.
Renewal Should Not Be Assumed
A long lease can provide substantial investment security, but the expiry date still matters.
The Land Tenure Act, as amended, permits public-land leases to be renewed. The legislation therefore recognizes renewal, but that should not be interpreted as meaning that every foreign investor possesses an unconditional automatic right to a further term regardless of the circumstances.
The condition of the lease, compliance with its terms and the applicable legal framework remain relevant.
For an investor acquiring a property with an existing lease, this is a significant factor to be considered.
A lease that originally had a lengthy term may have considerably fewer years remaining when the property is sold.
The relevant question is therefore not simply:
“Was this land granted on a long Government Lease?”
It is:
“How much of the lease term remains, and what does the lease say about the investor’s position thereafter?”
That can materially affect the value and long-term commercial attractiveness of the property.
The Permitted Use of the Land Matters
A Government Lease should also be read in the context of the purpose for which the land was granted.
An investor acquiring land for a hotel, residential development, commercial project or other investment should not assume that possession of the lease permits an entirely different use.
The 2010 amendments to the Land Tenure Act expressly connect investment leases with development in accordance with the investment plan approved by ZIPA or another relevant authority.
An investor intending to change the nature of the project should therefore establish whether the existing land and investment approvals accommodate that change.
The commercial possibilities of the site and its legally permitted use are not necessarily the same thing.
Development Is Not Merely a Commercial Choice
Leaving investment land undeveloped can have legal consequences.
The Land Tenure Act, as amended, provides grounds on which a public-land lease may be terminated. These include failure to complete development within the prescribed period and failure to develop the land in accordance with the approved investment plan, as well as fundamental breach of the lease.
Investment land in Zanzibar should not automatically be approached as a passive speculative asset that can be acquired and left indefinitely without regard to the purpose for which the rights were granted.
Where development obligations apply, the investor needs to understand them before acquiring the interest.
Can a Government Lease Be Sold or Transferred?
A Government Lease should not be viewed as an interest that can necessarily be transferred informally from one investor to another.
The current Land Tenure framework permits developed public land falling within the relevant investment framework to be sold, assigned, sub-leased, subdivided, inherited or mortgaged, subject to the statutory conditions and required approvals.
This means that an investor purchasing an existing leasehold interest should distinguish between:
The seller agreeing to sell, and
The legal requirements necessary for the interest to be validly transferred.
They are not necessarily the same thing.
Our broader article on Land Purchase in Zanzibar discusses the wider legal framework surrounding land transactions.
A Government Lease Can Have Financing Value
For a commercial investor, another relevant consideration is whether the leasehold interest can support financing.
The amended Land Tenure Act recognizes mortgage dealings in relation to developed public land within the applicable framework, subject to the required approvals and conditions.
That does not mean every Government Lease will automatically be acceptable security to every lender.
A financier may consider the remaining lease term, permitted use, compliance status, development conditions, transferability and other features of the particular title.
For an investor expecting to finance development or refinance the property later, the legal quality of the lease can therefore have consequences beyond the initial acquisition.
Buying Property Subject to an Existing Government Lease
Not every foreign investor obtains a Government Lease directly at the beginning of a new investment project.
An investor may instead acquire a property whose underlying rights already derive from an existing Government Lease.
That creates a different set of questions.
The purchaser should understand the original term, the remaining duration, the purpose for which the lease was granted and whether material conditions have been complied with.
Any proposed transfer must also be considered against the approvals required under Zanzibar land law.
This is where legal due diligence becomes particularly valuable.
A title document may confirm the existence of a lease, but the investor’s concern is broader: whether the lease remains legally suitable for the transaction the investor intends to undertake.
Our guide to Legal Due Diligence in Zanzibar Land Transactions examines this issue more broadly.
Government Lease and Condominium Ownership Should Not Be Confused
A foreign investor purchasing a villa or apartment within an approved development may encounter a different property structure from an investor acquiring bare land for a standalone development.
Zanzibar’s Condominium Act No. 10 of 2010 provides a framework for individual ownership interests within condominium developments together with rights associated with common property.
Accordingly, references to a Government Lease in one type of transaction should not simply be carried across to every foreign property purchase as though the structures were identical.
The investor should establish what interest is actually being acquired in the particular development.
Our guide to Legal Structures for Foreigners to Own Residential Property in Zanzibar considers these distinctions in greater detail.
What Happens When the Lease Expires?
Expiry deserves particular attention for a non-Zanzibari investor.
The amended Land Tenure Act distinguishes the position of a Zanzibari from that of a non-Zanzibari where a public-land lease expires without renewal. Under the amended framework, where there is no renewal, the position of the land and improvements for a non-Zanzibari is materially different from the perpetual right that may arise for a Zanzibari.
This is why lease duration should never be treated as a minor administrative detail.
An investor contemplating a long-term development, intergenerational property holding or future resale should understand the expiry position from the beginning.
It also reinforces why statements such as “99-year ownership” should be approached carefully.
A leasehold interest can be commercially valuable and legally robust without being described as perpetual ownership.
Government Lease, Property Purchase and Investment Approval Are Different Layers
Foreign investors can encounter several legal instruments in the same transaction.
There may be a sale agreement between buyer and seller, land-transfer approval, a Government Lease, ZIPA investment documentation and, depending on the project, planning or development approvals.
Each performs a different legal function.
A sale agreement does not itself replace the Government Lease.
Likewise, obtaining a Government Lease does not necessarily mean that every regulatory approval required for the intended development has been secured.
A well-structured investment should therefore be considered as a whole rather than assuming that one document resolves every land, investment and development issue.
The Lease Should Be Read as an Investment Document
For a serious investor, the Government Lease is not simply a title document to be filed away after acquisition.
Its terms can affect the economics of the investment.
Duration affects the investment horizon. Permitted use affects what can be developed. Development obligations influence timing and capital deployment. Transfer conditions can affect exit. Mortgage rights can influence financing. Renewal and expiry can affect long-term value.
Those issues are more relevant, where substantial capital will be committed to improvements that cannot easily be separated from the land.
The more valuable the proposed development, the stronger the case for understanding the lease before, not after, the investment is made.
Legal Support for Government Lease and Property Investments in Zanzibar
Eden Law Chambers advises foreign investors acquiring land and property interests in Zanzibar, including transactions involving Government Leases and investment land.
Our work includes assessing the legal basis of the property interest, reviewing existing leasehold rights, advising on land-transfer and investment implications, reviewing transaction documentation and supporting investors through the legal stages of acquisition and development.
Investors considering land or property in Zanzibar can learn more through our Zanzibar Land and Real Estate Legal Services or contact Eden Law Chambers before committing to a transaction.
A Government Lease Should Be Understood Before the Investment Is Priced
The fact that land is held through a Government Lease does not, by itself, make a Zanzibar property investment insecure.
What matters is the quality and terms of the particular lease.
For a foreign investor, the relevant questions include the duration remaining, permitted use, development obligations, transferability, compliance position and what happens when the term comes to an end.
Government Leases encountered in investment transactions are commonly structured around 33-year terms, while the statutory framework permits public-land leases up to a maximum of 99 years. The particular instrument, however, remains decisive.
A purchaser who understands those rights before acquiring the property is in a far stronger position to assess both the legal security and the commercial value of the investment.
