Mauritius ticks a lot of boxes, combining white-sand beaches and a tropical climate with the sort of services and entrepreneurial culture usually associated with dynamic European capitals. While the traditional draws for international buyers, such as asset protection and favourable taxation remain strong, there’s a growing trend of investors waking up to the investment potential and long-term security of Mauritius’s luxury property market. Young families with kids are also increasingly attracted to the island as an alternative to Europe’s high cost-high stress living.
A CULTURAL QUILT
Something of a cultural patchwork quilt, bi-lingual Mauritius combines elements from both colonizing cultures, with a French legal system, a British parliamentary system and strong trade ties with both. While it’s the French and Belgians who make up a substantial percentage of the expat market, numbers of British and South Africans are on the up.
A BOOMING MARKET
Foreigners have only been able to buy property in Mauritius since 2004, sparking a steady surge of interest and an annual rate of international sales in the region of 350-400. Thanks to the relatively limited supply of luxury products, demand has remained high, supported by a growing global interest in Mauritius as both a luxury travel destination and alternative lifestyle and business hub.
A SOUND INVESTMENT
Now, a series of new luxury developments have signified the maturing of the market, offering interested investors a level of variety that was previously lacking. Also, Mauritius’s property market has showed a robust approach to the global down-turn and is now on the up, with the first wave of villas specifically created for the foreign market achieving double their original selling price on re-sale.
In order to promote foreign direct investment in the local real estate sector (at the moment it represents 63%), in 2002 the Mauritian government implemented a legal framework governing the acquisition process – the Integrated Resort Scheme (IRS), followed a few years later by the Real Estate Scheme (RES).
After the IRS and RES, in 2016 the government introduced new plans for real estate investment known as the Property Development Scheme (PDS) and the Smart City Scheme (SCS), both of which also allow non-citizens, citizens and members of the Mauritian Diaspora to acquire property in the country.
The PDS legal framework allows foreigners to buy freehold property within an integrated development scheme. The amount invested to buy a residence of the PDS type must exceed 500 000 USD (excluding taxes), which permits the new owners to apply for residency. There is no minimum selling price for the PDS to the SCS. However, for the buyer to benefit from the Mauritian residence permit and potential status of fiscal resident, the value of the property bought must exceed 500 000 USD.
All PDS properties are sold by the provision of a VEFA (Vente de l’Etat Futur d’Achèvement).
In order to undertake a professional activity on the island, the holder of a residence permit obtained under the PDS can apply for a work permit, usually granted without much difficulty.
A residence permit obtained under the PDS is valid only as long as the holder remains the owner of his property and is passed from one owner to the next.
A non-citizen is eligible for a residence permit upon the purchase of a villa under the PDS scheme when he has invested more than USD 500,000 or its equivalent in any freely convertible foreign currency.
The PDS is also a demarcation from the IRS and RES in as much as it does not differentiate between small and big landowners and harmonizes the registration duty to a single rate of 5% instead of USD 70,000 on registration of a deed under IRS and USD 25,000 under RES.
VEFA / OFF PLAN
Vente en l’etat futur d’Achevement
A real estate property is sold by the provision of a VEFA. The VEFA permits a method of payment in instalments, is governed by the French Civil Code and must be validated by a contract: the VEFA contract.
According to article 1601-3 of the French Civil Code, which is applicable in Mauritius, the VEFA is the contract by which the seller transfers immediately to the buyer his rights to the land as well as the ownership of existing structures. Future constructions become the property of the buyer as they are built. The buyer is legally bound to pay what is due as the work progresses. The seller retains the powers of project manager until the work is completed.
FINANCIAL GUARANTEES FOR OFF PLAN MAURITIUS PROPERTY
Under the terms of the VEFA contract the developer is obliged to provide a bond or financial guarantee that secures completion of the dwelling in the event of bankruptcy or liquidation of the business or failure to complete.
The guarantee is arranged via a bank or insurance company and takes the form of either a garantie de remboursement or a garantie d'achèvement.
The garantie de remboursement provides for reimbursement of all sums paid by the purchaser in the event of default by the developer before works have started on site.
Thus, where the developer is seeking planning permission that does not arise in time, or does not start on site on the due date, the contract can be terminated by the purchaser. This guarantee ensures all sums paid are reimbursed.
This guarantee is not obligatory and is not offered by all developers.
However, the developer has no discretion but to take out garantie d'achèvement, which guarantees completion of the building works where the builder becomes bankrupt or otherwise fails to complete the building on time or to the agreed price.
Both of these guarantees are expensive and some developers actually use both in order to reduce costs, i.e. a garantie de remboursement at the early stages when payments are low and the garantie d’achèvement in the latter stages when there is less to complete.
You should ask to see the financial guarantee provided by the developer and check with the notaire that it is paid up and satisfactory.
Whilst these guarantees will ultimately provide you with the assurance you need that, if things go wrong, you are protected do not assume that the process of getting your money from the insurer will necessarily be an easy one. Particularly in the event of bankruptcy the whole legal process could drag on for years, as insurers seek to delay payout until court proceedings are finalised.
If the property is being constructed without using the VEFA contract, then these guarantees may not be in place, in which case the developer has no right to demand the stage payments available in this contract.
STAGES OF THE AQUISITION PROCESS
THE CONTRAT DE RESERVATION PRELIMINAIRE (CRP)
This first contract between the future buyer and the promoter serves to reserve the property. On signing, a down payment representing a guarantee deposit must be paid into a specific account, generally opened before a notary.
LETTER OF APPROVAL FROM THE BOARD OF INVESTMENT (BOI)
The buyers must submit several documents required by the authorities to the promoters, so that the latter may make an application to the BOI in the name of the client for the acquisition of a PDS property. The BOI examines the application and, if it is approved, submits an approval letter which permits the promoter and the buyer to finalize the sale.
THE DEED OF SALE (DOS)
As soon as the approval letter is received, the buyer and the seller meet before the notary for the final stage, the signing of the sale contract.
At this point the client becomes the official owner of the property.
Foreign buyers are eligible for an unlimited residence permit when they acquire a real estate property, on condition that the buying price is over 500 000 USD and the property is part of a PDS-type development.
The spouse and children aged under 24 of the holder of a residence permit are also eligible for residence permits. An unmarried partner will not obtain a residence permit but will be entitled to a renewable residence permit on a yearly basis.
It is to be noted however that the residence permit does not lead to obtaining citizenship. Although it gives the holder the right to live in Mauritius, it does not automatically allow him to work or to possess other real estate properties in the country. To be able to work in the island, the holder of a residence permit obtained through the acquisition of a PDS type residence must apply for a work permit which is generally granted without much difficulty.
A residence permit granted under the PDS is valid for as long as the buyer remains the owner of his residence and is passed on from one owner to the next.
The following documents should accompany the application form submitted for a residence permit by the main applicant and his/ her dependents.
Certified true copies of passport and birth certificates for each applicant
Two passport size photographs for each applicant
Relevant Professional Qualifications or references
A medical clearance certificate (including an HIV test) issued by a local doctor
A banker’s cheque for the fee of Roupies 50,000 ($1,400 approx.) must be drawn in Mauritian rupees.
Permanent Residence Permits.
While most foreign investors in Mauritius will only have access to a residence permit through property investment, there are a number of scenarios that enable foreigners to secure a PRP ( permanent residence permit ).
One of the advantages of this is the freedom to buy a property outside the previously described luxury schemes, an option usually only available to local Mauritians.
This is of particular interest for foreign nationals interested in retiring in Mauritius. To qualify for a residence permit, you need to be over 50 and to either purchase a property of over USD 500,000 or to transfer the equivalent of USD 40,000 into a Mauritian account for 3 consecutive years. To convert a residence permit into a permanent residence permit, you need to have held a residence permit for 3 years and to have transferred USD 40,000 per year, over these three years.
PRP are valid for 10 years, upon which time, you apply for a renewal. You will need to prove you have brought in USD 40,000 equivalent per year over the period.
A holder of a PRP who can prove a monthly income of over USD 3,000 can purchase one apartment for permanent residence outside of the schemes.
Retired non-citizens are requested to produce a certificate from their bank to show the amount of funds transferred to Mauritius annually.