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Foreign Ownership of Real Estate: What you Need to Know
The essential laws that govern international property
DHAKA, APRIL 18, 2016: With a quagmire of laws and regulations to navigate, investing in property can seem daunting even on your home turf. This is even more complicated if you are looking to purchase real estate overseas, where everything from the local customs to the legal requirements will be unfamiliar.
As a guide for investors, global property website Lamudi takes a closer look at the laws international buyers are likely to encounter when searching for real estate in some of the leading investment destinations in the emerging markets.
Asia: invest through leasehold, not freehold
At first glance, it may seem that buying property outright is out of the question in many countries. In the Philippines, for example, non-Filipinos are not permitted to own land. However, they can lease private land for a period of 50 years, and this lease can be renewed for a further 25 years. Additionally, the Condominium Act permits non-nationals to buy condominium units as long as total foreign ownership in the development does not exceed 40 percent.
On the 28th of December 2015 a new regulation was enacted In Indonesia to allow expats to buy either a landed house or an apartment. There are a few conditions: the ownership is for an initial period of 30 years, the foreigner can extend the ownership twice, once for 20 years and then for a further 30 years (A total of 80 years).
In Myanmar, a country which has attracted record levels of foreign investment following political and economic reforms, a Condominium Law was passed by Parliament on the 22 January this year. The law will permit foreigners to own up to 40 percent of a condo building. A condo is defined as a building with a minimum of six storeys on 20,000 sq ft of land.
Bangladesh is a complex place to purchase property. A RAJUK owned land cannot be bought by a foreigner. If there is no such restriction imposed, the laws of Bangladesh do not prohibit the acquisition of land property by foreign nationals. Disputes over property ownership are very common. Before buying a property extensive due diligence checks should be carried out.
Middle East: ownership with restrictions
In Saudi Arabia, foreigners can own property outright but should still expect to face some restrictions. Foreign companies must have a legal presence in the Kingdom, while individual investors have to live in the country and must also hold a permit from the Ministry of the Interior. An important exception is the holy cities of Mecca and Madinah, where only Saudi nationals are entitled to buy property.
In Jordan, similar rules apply. Individual foreign investors can buy property for residential purposes, provided that their country of residence has a reciprocal relationship. International buyers will need to seek approval from the Cabinet (Council of Ministers), as well as from the Minister of Finance or the General Director of the Survey Department. Investors from other Arab nations are exempt from this requirement. Foreigners can only sell the property after holding it for five years.
Latin America: ownership restricted by location
In Mexico, whether a foreigner can buy property outright depends on the location. Restrictions are placed on foreign ownership of land in a prohibited zone which includes land that is within 50km of the coastline or 100km from the country’s international borders. The restriction is included in Mexico’s 1917 constitution and reflects fears from that time about the United States’ expansion. However, foreigners can still acquire property within this restricted zone through a bank trust, known as a fideicomiso.
Likewise, few restrictions exist for foreign buyers in Peru, unless the property is located within 50km of the country’s border. Elsewhere in Latin America, international investors face very few limitations. In Colombia, foreigners looking to invest in property have the same ownership rights as citizens of the country. Even tourists can acquire property here without proof of residency.