Mauritius Property - A Beginner's Guide

The Mauritius property market is exploding. Many people book a holiday to Mauritius lured by attractive advertising that says how easy it is to buy a home of your own.

Sorry, but this is dead wrong.

In the World Bank ranking of ease of registration of property, Mauritius ranks 153rd, slightly ahead of France that ranks 159th. Here lies the clue. Mauritius property law is based on the archaic and convoluted Code Napoleon, France's legal system, and this system is run by Notaries. In Mauritius notarial licenses are passed down from father to son and while the majority are fine professionals, many have very poor service levels.

Therefore, if you are going to dabble in property in Mauritius, be forewarned. Time can be lost with the wrong notary. But more than this, investing in property in Mauritius it is filled with lots of unpleasant surprises.

Unpleasant Surprise Number One:

The Non Citizens Property Ownership Act states quite clearly that a non Citizen can only purchase property (or enter into a lease exceeding 5 years) with approval from the Prime Minister's Office (PMO). What this means in plain English is that if you are not a citizen, you can't own property. Sorry.

The Good News:

This is tempered by a general dispensation from the PMO to allow non Citizens to purchase property within the IRS (Integrated Resort Schemes) and RES (Real Estate Schemes) - subject to IRS and RES regulations.

More Good News:

Permanent Residents (foreigners who have acquired permits and met certain criteria over three years) may apply to the PMO to purchase residential property. While the details of permanent residence are still being thrashed out, we are led to believe that this includes bare land, freehold property or leasehold property. One per permanent resident, it is understood.

Unpleasant Surprise Number Two:

Beach-front property is nearly all leasehold. If is commonly referred to as 'Crown Land' - it is leased by the government to individuals for a period of up to 60 years. Most of the old leases with 15 or so years left on them are currently being renewed for 60 years. The price of renewal can be up to Rs5 million per acre ($166 000) and annual government rentals as much as Rs500 000 per acre ($17 000).

Unpleasant Surprise Number Three

The costs of transfer of property can range from 20% for Freehold property to as much as 35% for Crown Land beach-front property. This includes both the seller and the buyers commitments, as well as agent's commission and notarial fees. It is common practice in Mauritius for sellers to peg their property on a nett selling price, thereby passing on all costs to the buyer. Beware!

Good News: On IRS the government fees are set at $120 000 per IRS unit (seller plus buyer) but there are still agents fees and similar to settle on top of this. This applies up to a property price of $1.4 million. After this, it is $50 000 for the seller and 5% for the buyer. This 5% rather than $70 000 change was introduced in the 2008 budget.

More Good News: No capital gains tax

Unpleasant Surprise Number Four

It is very common for prospective buyers who have settled on a price with the seller to arrive at the seller's door, contract in hand, and find the seller has changed their mind. Many sellers, particularly of beach-front property are heavily influenced by their children, most of whom are greedy.

Unpleasant Surprise Number Five

Beach-front property is probably some of the most desirable property in the world, but from a yield point of view or capital return, it can be terrible. If it is life-style that the buyer is looking for, then beach-front it must be, but if you are looking for a good return, either from a rental or a capital gain, tread carefully. The costs of transfer are big. The holding costs are high.

Unpleasant Surprise Number Six

Mauritius is not big on town planning, nor is there an even handed administration of building permits. It is possible to purchase a lovely piece of land, build a beautiful house and then have a neighbour with absolutely no taste or consideration build a monstrosity next to you.

The Good News: There are a number of gated communities springing up around the island, particularly in the north and west. These apply building standards that the residents stick to, to a large extent. They also have higher resale rates and rental rates than equivalent houses elsewhere.

I will probably add more points to this blog as I think of them. Or please feel free to add yours.

Monkey Business

One of the great things about living in Mauritius is that we get the chance to meet the most amazing diversity of people, different backgrounds, different lives, different ways of making a living.

Last night, I met a man who runs a breeding business. He breeds Java Macaque monkeys for sale to foreign (US and European) medical experimenters. I share a shudder with most of you.

They have 22 000 monkeys (parents, breeding males, babies and juveniles) in a number of breeding stations in Mauritius. They have 350 staff and seven full time vets. They monkeys command a top price (around $2 000 per animal) as they are pristine. Other animal breeding countries, such as China, have huge operations, but their product is inferior due to the conditions they are reared in as well as the genetic impurity of the animals - the monkeys should be as similar to each other as possible, to allow for repeatability of results of experiments.

Why is Mauritius so good for breeding monkeys? Because it is an island, and the monkeys have been genetically insulated for over 300 years. They have tested the mitochondrial DNA (mtDNA) of the monkeys and traced them back to two original mothers introduced to the island from Sumatra by the Dutch in the 1600 or 1700's. Scientists use mtDNA to trace human origins to better understand our evolution.

Animal experimenters, I was told, not only like genetically similar monkeys, they also like to have 'clean' monkeys. That means they should be free of defects in the form of bites or other physical anomalies, disease and interestingly, stress. In fact, they have found that a stressed monkey does not survive well, nor produce the same results as an unstressed monkey.

Monkeys are social animals, and the breeders have found that if the monkeys are kept together through the rearing process, and then transported together and even undergo experiments together, this greatly helps reduce their stress.

I realised then that perhaps we humans underestimate the damage we do to ourselves with stress. But I think I would rather be a stressed human than an unstressed test monkey.

Moving to Mauritius?

We moved to Mauritius in 1993, our little family of four. Two young girls needed schooling. My wife was not allowed to work. Residence and Work permits were issued for one year. I won't bore you with the mind numbing bureaucracy of those early days.

Now you can get your residence or occupation permit in seven days. It is valid for three years. Your spouse can work. After three years you can apply to get permanent residency and with that comes the possibility to own a home - anywhere, not just in some high priced golf resort.

Then there are the tax benefits. Individuals are taxed up to a maximum of 15%, not on their world wide income, but just on their domestic remittances. Companies are taxed at 15% - unless you use a global business company, in which case, the rate drops to an effective 3% or even 0%. No death duties, no capital gains tax. Paradise has just got better!

Ok. Now that we have you all excited, it's time for a reality check.

Reality number one: If you are hoping to educate your children in Mauritius, the bad news is that the private English medium schools are pretty full. So fix that one before you pass go.

Reality number two: The application process is not hassle free. You have to bring the right documents with you, and plan your time carefully. My company helps with this. Visit our site: http://frontfin.com for more information.

Reality number three: Rental homes are expensive, and quality homes are hard to find. A trick here might be to get your residence or occupation permit for three years, but then stay in your home country until you qualify to buy.

Reality number four: Property prices are shooting up at more than 20% per annum. This might give you problems with the trick proposed above in number three.

Reality number five: If you are going to move here, make sure you plan a sustainable income. Living off your savings will not last long unless the interest is enough - lucky you if this is the case. The good news is that Mauritius is the 8th easiest country in the world to start a business.

Reality number six: South Africans will find that trying to live off money left behind inside the exchange control net will be very difficult. Emigration is the only way. This is a tough decision and requires a lot of running around. Guess what? We can help you here. Send me an email.

Reality number seven: Despite the fact that Mauritius is getting better every day, it is still a developing country. This means that your order for a cafe latte could cause confusion. Buying stuff on the internet works, but wait a month, not a day. People drive a little differently on our narrow and crowded roads. Mauritius has one of the highest deaths per motor vehicle statistics in the world. Most of those that die are outside the vehicle, on a bike or on foot. Then there are lots of sad looking strays and a fair number of road kills to turn your stomach on the way to work. If you are a sensitive animal lover, you will either be filled with the desire to help fix the problem, in which case we all thank you, or you will wail and gnash your teeth, in which case, join the club!

Reality number eight: Planning on bringing or buying a boat to cruise around our crystal blue waters? Good idea. Just get ready to a) Insure and register your boat with the ministry of tourism. This involves an inspection of your vessel, making sure it has the requisite life jackets, bucket and first aid kit. I hear that it is really hard to get the boat licensed these days as the authorities believe there are enough pleasure craft on the water and b) Attend classes and pass a skippers exam so you can drive the boat. No, your overseas yacht masters certificate does not qualify you, but you will find the exam easy.

That's enough for now. I still think that I am one of the luckiest people in the world to own a home and live on this stunning island, free of the risks, stress and horrible lifestyles of most civilized countries.

If you want more information, please contact us. Our contact details are on the banner of our home page: http://frontfin.com. If you are looking for a high level of detail, please understand that we are a commercial operation and may not be able to help you due to time constraints, or we will charge for the time. Click home and then go to the Link to Frontfin Mauritius on the main blog page.