23rd November, 2020

Buying Property in Mauritius: Everything you should know

Buying Property in Mauritius: Everything you should know

Imagine life of crystal-clear waters, white sandy beaches and natural forest reserves; Where a diverse culture lives together in harmony, tax is low and there are over 300 days of sun each year. It may sound like a dream, but life in Mauritius makes this a reality. From far and wide, a growing number of people are finding a home in the exceptional country.

Our fifth Worldwide Wanderlust Webinar took place on Thursday 19th November, where we were joined by Bénédicte Duvivier, Manager of Fine & Country Mauritius, who took us through the process and costs of buying, residency permits, the ROI of a rental property, and the notable benefits of relocating or investing in Mauritius.

If you are interested in living on a paradisal island, we reveal everything you need to know about buying property in Mauritius.

WATCH THE WEBINAR

Benefits to living in Mauritius

An elevated lifestyle

Surrounded by clear waters, in a backdrop of lush tropical forests, those looking to relocate are sure to elevate their lifestyle. It is no wonder why Mauritius has become increasingly popular with Western expats over recent years.

Located in the Indian Ocean, off the eastern coast of Africa, the island enjoys a mild and tropical maritime climate throughout the year. Mauritius has two main seasons: A warm humid summer extending from November to April and a relatively cool and dry winter from June to September. The summer temperature is around 25 degrees Celsius and, in winter, the temperature is around 21 degrees Celsius.

A modern, safe island

Mauritius is a well-developed country with a modern infrastructure and a dynamic banking and business sector, benefitting from an island lifestyle. Travel to Perth or Singapore in only seven hours, as an international airport provides excellent links to Africa, India, Asia, and Australia. The country also has a bi-lingual population - speaking good English and French.

Mauritius is known as one of the most peaceful countries in the world, in terms of political stability. For families considering relocating, there is a community of expats in Mauritius, good private healthcare, as well as high standards of education facilities, including international schools.

Tax benefits

Income tax for individual residents and businesses is only 15 per cent, while dividends and Capital Gains are exempt from tax. There is also no inheritance tax or tax on profits when selling a property.

Individual taxation

Non-residents are taxed only on Mauritius-sourced income, so for those using a Premium Travel Visa can work remotely, living the Mauritian lifestyle, with no tax implications.

All that holders of a Residence Permit or a Permanent Residence Permit earn in Mauritius is taxable at 15 per cent - this includes:

• employment income

• pensions

• income from a trade or profession

• rental income

• interest

More information on International Tax in 2020 can be found here. Further details on residency in Mauritius can be found below in this article.

Secure and reliable investments

Due to all the above reasons, Mauritius offers an idyllic residential investment. It has been recognised as the leading and fastest growing economy in Sub-Saharan Africa and has built a solid reputation for business as an investment destination.

Read on to find out how to find the right property investment for you.

Residency in Mauritius

When moving to Mauritius, there are a number of permits and schemes that allow someone to reside and enjoy the benefits of living in this tropical island.

Premium Travel VISA

For those wishing to test out the lifestyle in Mauritius, a Premium Travel Visa welcomes any non-citizen to live on the island for up to one year. Travellers using this visa can holiday as a tourist, retiree or even work remotely during their stay.

Occupation Permit (OP)

The Occupation Permit, also known as a Residence Permit, is a combined work and residence permit, applying to investors, professionals, self-employed non-citizens working in the services sector and retired non-citizens.

OP holders, after a consecutive three years, may be eligible to apply for a Permanent Residence Permit.

Permanent Residence Permit

In Mauritius, a Permanent Residence Permit can be obtained through purchasing a property, at the value of US $500,000 or higher, which is part of a Property Development Scheme (PDS). Property owners are eligible for their 20-year residency permit from the moment they have signed for a property– even in cases where the home is still being built or if it was purchased for investment purposes only. In order to take advantage of fiscal residency, permit-holders must spend at least 183 days a year in Mauritius. This residency applies to immediate family members, including children and those under the age of 24, and dependents of the residency holder. As the permit for residency is only maintained through the ownership of a property, if the property is later sold, the owner will lose residency.

Overview of the market

The Mauritius property market has evolved a lot over the past decade. In 2001-2002, the Government implemented an integrated resort scheme to allow foreigners to buy luxury property in Mauritius and benefit from the Permanent Residency Permit. The effects of developers and investors have greatly improved the economy over the last few years. Currently, a notable amount of people are still hoping to move to Mauritius, post-COVID-19.

Costs of buying

Before delving into the buying process, it is important to understand the costs involved when it comes to purchasing a property in Mauritius, as there is more to consider than the value of the property. There are also differences in costs when buying a new build or a resale property. An estate agent will be able to provide a breakdown of all costs before a buyer starts their search. Here is a brief breakdown of the buying costs:

New build properties

Newly built properties are mainly sold by developers. For buyers, there are no estate agency fees as the fees are built into the price.

Resale

Any existing properties that have previously been purchased and later brought back onto the market are known as resale properties. Estate agents will charge fees to the buyer and seller – which are two per cent + 15 per cent VAT of the purchase price of the property.

Registration tax

Buyers of a property must pay Registration Tax, which varies depending on the scheme they are under. The Registration Tax could amount from USD $70,000 down to USD $25,000 or a flat rate of five per cent of the property value.

Notary fees

A Notary is required to purchase a property and are paid upon the signing of contracts. Notary fees are calculated on a cumulative basis and are usually around 0.5 per cent to two per cent (+ 15 per cent VAT) of the property value.

Mortgages

Non-residents fitting a certain criterion, determined by financial institutes and banks, can qualify for a mortgage in Mauritius. Generally, they can borrow up to 60-70 per cent of the value of property.

If the property is being purchased for investment purposes, there is no difference to the mortgage.

Taxation of reselling

When reselling a property in Mauritius, any profit made on the sale is exempt from taxation. However, there is a Transfer Tax for selling a property, which is calculated depending on the scheme the seller is under. Also, sellers relocating out of Mauritius are required to pay exit tax, as they are leaving a scheme, even if they are repurchasing a property in the country. If a homeowner has a Permanent Residency Permit linked to the property, they will lose their residency permit.

Return on Investment

A safe property investment in Mauritius is guaranteed to earn a return. The average NET rental yields, the rental yield after expenses, are around three-four per cent per annum.

To find out more about the potential ROI on a property in Mauritius, contact Fine & Country Mauritius.

VISIT FINE & COUNTRY MAURITIUS

The Buying Process

Due to a range of programmes introduced by the Mauritian government, investing in property is a relatively simple process that can take around three months. Here we reveal the process of finding a property through to completion:

Finding the right property

Whilst Mauritius is a small island, there are differing regions, offering various lifestyle benefits. The reason for buying will guide the location and type of property.

The north and west regions of Mauritius are highly touristic areas offering beautiful, sandy beaches, plenty of water activities and a host of amenities including shopping, restaurants, bars and nightclubs. These areas are popular with high-income individuals and property investors, as it is an ideal location for holiday makers.

The east coast of Mauritius is a more ideal place for buyers looking for a second home. Whilst it is further away from the main tourist activities, there are long stretches of sandy beaches, clear waters for water sports, the Bras d'Eau forest, golf courses and restaurants. Properties here generate fewer rental leads than the east but are generally more prestigious and benefit from a high quality of life.

Bénédicte’s top tip: Find an estate agent that you trust and can rely on throughout the process. Fine & Country Mauritius only work with reliable property developers and can recommend lawyers to advise you on the legal structure and tax implications when buying as an individual or a company.

SEARCH FOR PROPERTIES IN MAURITIUS

Choosing the best estate agent

Particularly for international buyers, choosing an experienced, knowledgeable estate agent is important to help guide a buyer throughout the entire purchasing process and act as an intermediary between the buyer and seller.

An estate agent will be able to explain all the costs and documents associated with a property purchase before a buyer starts their search. Once you have found your dream property, speak to your estate agent to ensure the property specifications and documents, such as the owner’s title deeds, are valid.

What you will need

Personal documents – such as personal identification documents, birth certificate, marriage certificate, proof of address, profession, etc.

A reference letter from your local bank – This is to get authorisation for the purchase from the Government.

A bank account in Mauritius - Before purchasing a property, an international buyer must open an account with a bank in Mauritius. This can be done without visiting the country.

To decide on the process of buying – Either by cash or with a mortgage in Mauritius (read more on borrowing mortgages under ‘Costs of buying’).

Hiring a notary

A notary is present from the beginning of negotiations through to the completion of the sale, to advise buyers and sellers of a property and ensure all the relevant documents are in order. The notary is responsible for drafting the property deed, ensuring all documents are present and that there are no taxes, mortgages or other costs on the property to ensure the security of a sale. A buyer must have a notary to purchase a property and can hire a notary of their choice.

Sign a reservation contract

A reservation contract is a document between the buyer and the property developer and is accompanied by a deposit to reserve a property. The reservation contract for the unit can be completed and sent by mail without the need for visiting the country. The deposit is made into an escrow account at the bank or at the notary – this will usually be between 5-10% of the property value.

When buying a new property, the developer will have a reservation contract already drawn up. With a resale property, a contract will be drawn up by a notary, which usually takes around two weeks.

From the moment a reservation contract is signed, the buyer will need to go through a process of letter-authorisation by the Economic Development Board (EDB), part of the Mauritian authorities, which can take around four to six weeks. The EDB will carry out a screening of any development plans and the reason for the purchase.

The Title Deed

Once the Reservation Contract has been authorised, the buyer can sign the Title Deed. For off-plan developments, the buyer will need to attend the Title Deed signature, whereas with a resale property, the buyer is not required to be present.

From the moment a buyer signs the Title Deed, they can begin their application for a Permanent Residency Permit. Gaining the PRP can take up to six months.

Contact us

If you have more questions regarding a property investment or plans to relocate to Mauritius, contact Fine & Country Mauritius today to start your journey.

VISIT FINE & COUNTRY MAURITIUS

Discover how to buy and invest in property elswhere in the world, such as Spain, Portugal, Germany and France, with our previous Worldwide Wanderlust Webinars here.

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