Procedures for acquiring real estate
Rights of foreigners to purchase real estate
In the UK there are no legal restrictions on the purchase of real estate for foreigners. Non-residents are even able to take out mortgages with local banks. However, those who have lived in the country for less than two years and are unemployed may face stricter requirements.
Citizens of which countries have the right to purchase real estate in the UK
As mentioned above, there are no restrictions on the purchase of residential properties for foreigners in the United Kingdom. Citizens of any state have the right to purchase real estate in the UK.
What types of real estate are foreigners allowed to buy
Foreigners have the right to purchase all types of British real estate, whether under construction, new or secondary properties. Buildings can have any configuration, architectural style, etc.
What rights a foreigner gets after buying a property in the UK
Foreigners can choose between several types of ownership. The most common are freehold and lishold. Freehold allows you to own the property and the land on which it is located for an unlimited period of time.
Leasehold involves owning only the building (but not the land on which it sits) and only for a certain number of years. When the lease expires, the property will belong to the landowner again. The property can be leased for a term of 1 year to 999 years.
There are also categories of ownership such as sher of freehold and commons. In the first case, the owners of the property are a group of leaseholders. This type of ownership is usually applied to apartment complexes. Under it, a person can own an apartment on a freehold basis and a part of the whole building and land on a freehold basis.
Commonhold involves freehold ownership of an apartment, while the common facilities would be owned by a "homeowners' association".
What responsibilities a foreigner has after buying a property in the UK
The main obligation that arises for people who have bought a property in the UK (regardless of whether they are foreigners or residents) is to pay tax on time. In case of non-compliance with this condition, homeowners will have to face consequences in the form of monetary penalties.
Is it realistic to conduct a real estate transaction remotely?
The procedure of purchasing real estate in the UK in a remote format is a feasible task. To do this, the buyer must execute the appropriate power of attorney for his lawyer. All negotiations will be conducted via email, signed documentation can be sent by courier.
In order for lawyers to identify the buyer, he must provide them with a photo of himself with an open passport. He will also need to confirm his residential address, for example, with utility receipts, and his income with a 2-NDFL certificate or a statement.
The buyer must transfer the money to the bank account of a British lawyer, who in turn will send it to the developer or the private seller's lawyer. The lawyer will also send the necessary documentation to the Land Registry for registration of ownership.
Stages of real estate in the UK. Secondary market.
Typically, a buyer goes through the following steps in the real estate purchase procedure:
- Finding the right property. The first step in buying a property in the UK is to draw up a list of property parameters. The buyer can include such requirements as location, availability of certain amenities, floor etc. Based on the list, it will be much easier for the buyer to search for a suitable property.
- Reservation. Once the buyer has selected a property, he or she needs to make an offer verbally or in writing to the seller. Take into consideration how long the property has been on the market. If it has been on the market for a long time, you can try to lower the price.
- Property verification. After the seller accepts the offer, he will give the buyer a list of documents so that he can check the information about the previous owners and familiarize himself with the records in the land registry. This is most often done by lawyers who prepare a report at the end of the inspection. Also, the buyer should hire specialists who are ready to carry out a technical inspection of the object. This will help him to immediately identify problems that may arise with the property in the future.
- Signing the contract. If no serious problems have been identified during the legal and technical inspection of the property, the buyer and the seller conclude a contract of sale. At this stage, the buyer must pay a deposit of 10% of the price of the property.
- Registration of the transaction. Once the buyer has paid the balance of the price, title will be transferred to him. He must pay stamp duty (within two weeks of signing the contract) before registering the transaction with HMRC.
Property tax in the UK for foreigners
If the foreigner owns no other property in the UK or overseas, the amount of stamp duty they must pay to His Majesty's Revenue and Customs is:
- 0% if the value of the property is below £125,000;
- 2% - £125,001 to £250,000;
- 5% - £250,001 to £925,000;
- 10% - £925,001 to £1,500,000;
- 12% - Above £1,500,001.
British homeowners pay council tax regularly:
- the amount of the monthly fee depends on the decision of the local government and the assessed value of the property at the time of purchase, with a review every five years;
- The amount of maintenance fees depends on the quality and area of the property, as well as the municipality's rates.
Entities owning a luxury property with a value in excess of £500,000 must pay an annual high-value property tax. This is calculated at a progressive rate. Persons paying tax on rental income do not pay annual high-value property tax.
Capital gains tax for non-residents was introduced on direct sales of residential property in the UK from April 6, 2015. From April 6, 2019, the tax was extended to include all direct and indirect sales of property and land. Gains on the sale of residential properties are taxed at a rate of 28%.
1. Checking the object
Once you have decided which property you will buy, you need to do a comprehensive background check on it. Request the following documents from the seller through the realtor:
- land certificate (original);
- building permit (original);
- proof of payment of construction and land tax for the last five reporting periods;
- proof of full payment for electricity, water, telephone;
If the owner of the object is a legal entity, the list of documents also includes notarized minutes of the meeting of participants, at which the decision to conclude a sale and purchase agreement was made, as well as copies of the ID of the company's representative and its director. A letter from the bank is required for a mortgaged property.
The buyer will be required to have an ID or passport, and in case the property is being purchased by a company, all statutory documents and copies of directors/representatives IDs.
2. Conclusion of a preliminary agreement on sale and purchase
A CSPA, or contingent contract, is executed by the buyer and seller prior to the transfer of the plot/property. It is considered a pre-contractual agreement for a long-term lease of real estate and in some cases may require an advance payment or the seller to fulfill certain conditions.
3. Signing of the main contract
In Indonesia, this document is called Akta Jual Beli, and it is signed in the presence of a representative of the local government, whose duties include registering all the necessary documents for the property.
A real estate purchase agreement includes:
- full identification details of the buyer and seller;
- a statement from the seller on the transfer of the object to the buyer;
- long-term lease certificate;
- re-measurement of the site;
- seller's warranty;
- dispute resolution procedure;
A declaration of non-infringement of the ownership provision by the long-term lease agreement.
4. payment
Once all the documents provided and the property itself have been verified, the seller and buyer must pay all taxes and fees due on the purchase of real estate in Indonesia and submit the appropriate confirmation to the Land Deed Official, who is in charge of re-issuing real estate documents.
The buyer transfers the amount specified in the contract (or the balance of the amount if an advance payment was made at the stage of signing the conditional contract) to the seller at this stage. The method of transfer of funds as well as the terms of payment of additional costs shall be agreed upon separately.
5. Registration of ownership right
Once all the necessary documents have been signed, the PPAT (Pejabat Pembuat Akta Tanah) office will produce and deliver a certificate to the purchaser within 7 days indicating the transfer of the long term lease rights and all accompanying documents.
It should end up in the buyer's hands:
- copies of the seller's and buyer's identification documents (ID);
- confirmation that all required taxes have been paid;
- land certificate (original);
- a proposal to register a certificate of transfer of long-term lease rights;
- act of translation (original);
all recent receipts confirming payment of building and land taxes (originals).
As a rule, a real estate transaction in Indonesia takes about a month. If desired, the buyer can conclude the transaction remotely. In this case, you will need to hire a lawyer who will perform all the required actions and issue a power of attorney for him.
Additional costs and taxes for real estate transactions in Indonesia
When going to invest in Indonesian real estate, you need to be aware of the additional taxes that will need to be paid. At the same time, some of the costs are also borne by the seller.
The buyer must pay an additional fee (as a percentage of the value of the property purchased):
- long-term lease transfer tax of 5%;
- sales tax - 1%;
- legal services in the amount of 0.5-1.5%;
notary services - 1%
The seller will be required to:
- long-term lease transfer tax of 5%;
- payment for real estate agency services - 5%;
a registration fee of 0.2%.
Thus, the additional cost to the buyer is 7.5-8.5% of the total property value, to the seller 10.2%.
Further maintenance costs consist of utility bills, annual real estate tax (0.5% of assessed value), as well as construction and land taxes. The amount of the latter depends on the region in which your property is located and varies between 0.1-0.2 percent of its value.
Buy real estate in the UAE have the right to citizens of any country, but with restrictions on the territorial basis. In any place in Dubai can acquire objects only citizens of the UAE and the Gulf countries, as well as companies registered in these states.
What kind of real estate is a foreigner entitled to buy?
Freehold zones
Non-Arab foreigners can purchase residential and commercial properties in certain freehold areas of the UAE. The properties located in free zones are fully privately owned and can be sold, rented, donated or inherited.
In 2006-2008, a number of decrees were issued, which approved the list of freehold zones in Dubai, Umm Al Quwain, Ras Al Khaimah and Ajman, and in 2019, freehold for foreigners became available in Abu Dhabi. In 2022, Sharjah introduced freehold zones for the first time, where properties can be fully privately owned.
In Dubai, for example, much of the area is already recognized as freehold zones.
List of Freehold Zones in Dubai
|
Arjan |
Dubai Creek Harbour |
Jumeirah Beach Residence (JBR) |
Remraam |
Al Warsan |
Dubai Waterfront |
MBR City |
|
Barsha Heights |
Dubai International Financial Centre (DIFC) |
Jumeirah Heights |
The Greens |
DAMAC Hills |
International City |
Motor City |
|
Bluewaters Island |
Dubai Investment Park (DIP) |
Jumeirah Lake Towers (JLT) |
The Views |
Dubai Festival City |
Jumeirah |
Mudon |
|
Business Bay |
Dubai Production City |
Liwan |
Dubai Marina |
Dubai Hills Estate |
Jumeirah Golf Estates |
Palm Jumeirah |
|
Culture Village |
Dubai Residence Complex |
Mirdif Hills |
Al Barari |
Dubai Silicon Oasis |
Jumeirah Village Circle |
Town Square |
|
Discovery Gardens |
Dubai Science Park |
Old Town Dubai |
Al Furjan |
Dubai South |
Jumeirah Village Triangle |
Arabian Ranches |
|
Downtown Dubai |
Dubai Studio City |
Park Gate Residences |
Al Warsan |
Dubai Sports City |
Meydan City |
Emirates Hills |
|
Jumeirah Islands |
Jumeirah Park |
Reem |
Meadows |
The Villa |
Tilal Al Ghaf |
*** |
Lickhold Zones
In addition, in the UAE there are lishold-regions, where real estate transactions are formalized on the rights of long-term lease. The maximum term of ownership is 99 years. At the end of the contract, the tenant theoretically must return the object to the owner, which is usually the developer. But it is possible to renegotiate the contract on relatives or yourself for a similar period. Or sell the property early, transferring the remaining years of the lease to the buyer.
What rights does a foreign owner of real estate get?
Since 2006, foreign buyers of real estate in the UAE have received the same rights to dispose of their property as citizens of the country. That is, to resell, lease, gift, transfer by inheritance. Before the introduction of this law, foreigners were only allowed to rent real estate in the country for 99 years.
In February 2019, an innovation came into force that allowed foreign real estate investors to get a "golden visa" in the UAE. The rules have been changed several times, but since 2022 the state has set a threshold of value: a residence permit for ten years can be obtained by buyers of residential real estate worth from 2 million AED ($544 thousand).
Also, foreign owners of real estate in Dubai can apply for a resident visa for a period of two years. The purchased object must cost from 750 thousand dirhams ($204 thousand).
Are there any restrictions for Russian citizens?
Russian citizens can purchase real estate in the UAE on the same terms as foreigners from any other countries. In 2022-2024, the Emirates became one of the most popular destinations for Russians.
Russians also have access to bank accounts in the UAE. Residents with Emirates ID can use the services in full.
Property owners in the UAE do not pay an annual tax, but there is an annual fee to maintain the building, common and surrounding area. The exact rate depends on the developer and the area, but varies between $15-60 per square meter.
There are four key stages to buying a home in the UAE.
Signing a preliminary contract
Once you have found a suitable property, you need to sign a preliminary contract in English or Arabic. It is not necessary to have it notarized. In an annex to the contract, additional conditions are prescribed - in this case it is better to consult an experienced lawyer who will tell you what nuances should be specified, taking into account the peculiarities of a particular offer.
The contract should state:
- the address of the object to be acquired,
- the amount of the transaction,
- liability of the parties,
- allocation of mandatory co-payments, as well as the deadlines for their payment.
If you are buying a new building, make sure that the document specifies the completion date of the project in which your home is located. Also, the compensation that the developer will pay if the complex is not completed on time must be specified.
Signing of sales agreement
The next step is to sign a memorandum of understanding (agreement to buy and sell), which in Dubai is called an "F contract". Download the form of the document on the website of the Dubai Land Department.
According to the contract, the buyer gives the seller an advance payment. Most often it is 10% of the purchase amount, sometimes more. A certificate of the money transfer is kept by the realtor. If the deal goes through as originally intended, the buyer gets the deposit back. If the investor changes his mind - the money stays with the seller, if the seller changes his mind - he has to return the money in double the amount.
The validity period for a completed and signed agreement is 30 days if it is a secondary property.
Application for NOC certificate
Next, the seller and buyer meet at the developer's office and apply for a No Objection Certificate (NOC). With this document, the developer confirms that the seller has no debts to him. It can take up to five working days to process. The issuance of the certificate means that the seller can transfer ownership.
Transfer of property
After issuing the NOC, the seller and the buyer go to the Dubai Land Department to transfer the property. Payment of the entire amount of the transaction is made on this day, when the department will issue a check for payment. Then the buyer receives the title deed and officially becomes the owner of the property.
By the way, in Dubai, the digital version of a document from the real estate registry can be checked on the website of the Dubai Land Department. Each title is available to everyone online and has a unique QR code.
In the case of buying a property under construction, the procedure is simplified: there is no NOC and contract F, and the buyer signs an initial contract of sale, which must be reissued when the construction is completed. The transaction in this case is registered in the temporary registry.
The average duration of the entire real estate purchase procedure in Dubai is one month.
Required documents
In order to close the deal, the buyer needs to have:
- original passport
- the visa on the basis of which he or she is in the UAE
- proof of residential address in Dubai
- Power of attorney, if the transaction is conducted by the buyer's representative
- memorandum of understanding
- Agreement of sale or initial contract (in the case of a building under construction)
- NOC certificate (for secondary products)
Remote transaction
You can buy real estate in the UAE remotely. To do this, you will need to make a power of attorney for your representative, which can be, for example, a realtor of a local agency.
The document must be notarized in the country where it was signed and then legalized at the UAE embassy, certified by the Ministry of Foreign Affairs and translated into Arabic. If you reside in the UAE and the power of attorney is executed in the Emirates, the signing of the document must be notarized by a notary - this is required by the Dubai Land Department.
Mortgage and installments
Foreigners planning to buy property in the UAE can count on a loan from the bank and/or installments from the developer.
Typical conditions
- The loan rate is about 5% per annum.
- The collateral is the property being purchased or the down payment.
- The bank pays 60-80% of the transaction amount depending on the availability of IOU.
- The application processing time is several months.
- Among the mandatory documents is a certificate of regular income (the specific amount is set by the bank).
Installments for two to five years after completion of construction are not offered by all developers, but in the current environment, such offers are becoming more and more numerous.
Additional costs
- Realtor's fee. The standard fee is 2% of the purchase price, but other terms are possible - discuss this with your broker. In some cases (usually in the primary market) the agent is paid by the seller/developer, in others by the buyer, the fee may be shared equally between the parties.
- One-time tax (Property Transfer Fee). The fee is payable to the Dubai Land Department (DLD): 4% + a fixed administrative fee of UAE AED 580 (approximately $160). Generally, the seller and buyer split the amount equally. When buying from a developer, this tax may be included in the price.
- Mortgage Fee. If a loan is raised, a mortgage registration fee of 0.25% of the loan amount must be paid to DLD.
- Administrative fee for registration of transfer of ownership (Property Registration Fee). From 2 thousand to 4 thousand AED ($545 to $1 100) depending on the price of the property.
Fee for issuance of certificate of ownership. After the transaction is finalized, you will need to go to the district court and request a title deed. The cost is about $70 and the processing time is three days.
Additional for secondary real estate
NOC fee: $140-1,360 depending on the specific facility.
After you buy a property, you need to
- Visit the nearest Dubai Electricity and Water Authority office and register the agreement in your name by submitting your title deed and a copy of your passport. Please note that a deposit of $545-1090 will be required.
- Chiller the air conditioning company to sign up if your complex does not have a central system.
Restrictions for foreigners in Cyprus
Residential real estate in Cyprus can be purchased by foreign individuals and legal entities. EU citizens are allowed to buy real estate without restrictions and without the need to obtain any permits from the state authorities.
Non-EU nationals require authorization from the Council of Ministers. In reality, this procedure is a mere formality, as permits are issued without any restrictions. Only two things are checked: if the buyer has no legal problems and if there is no already registered housing in Cyprus.
A foreign citizen may purchase no more than two properties with an area of up to 4,014 square meters in his or her name. To circumvent this restriction, foreigners can open a company and register properties in their name or register them in the name of family members.
Foreigners may purchase any type of residential real estate: a house, apartment or plot of land - up to 4,014 square meters, but no more than two units per family (i.e. spouses; children are not counted here).
Foreign individuals may also buy commercial real estate within the two units per family allowed by the state with a total area not exceeding 4,014 square meters. An entire commercial building or a floor in a building with several office spaces, for which a common title has been issued, is considered one unit.
If more than two units are purchased, no title will be issued. In this case, the properties can be operated as normal (live in, rented out, sold, etc.), but you cannot get a loan on them.
Permanent residence for real estate in Cyprus
Owning real estate in Cyprus entitles you to a multiple entry national visa. On it you can stay in the country for up to 90 days per half a year. However, there is no possibility to travel without a visa to European countries. Cyprus is part of the EU, but not Schengen.
The purchase of real estate for an amount of €300 thousand or more entitles you to a permanent residence permit, which does not require renewal. However, a plastic card confirming this status is issued for ten years.
To obtain the status it is allowed to purchase housing on the primary market or commercial real estate on the primary or secondary market.
Requirements for applicants for permanent residence for real estate
- In order to submit an application, €300k + VAT must be deposited into the developer's account.
- The funds for the purchase of the property must come from abroad. The Cypriot bank must send the appropriate notification to the Civil Registry.
- The required minimum annual income has increased from €30k to €50k for the applicant, for the spouse from €5k to €15k and for children from €5k to €10k per year.
- As of May 2023, parents cannot be included in the application.
- The number of bedrooms in the property to be purchased must match the number of applicants.
Having lived in Cyprus for a cumulative period of five years within eight years, one can acquire citizenship of the country by naturalization.
It is worth noting that for certain categories of applicants an accelerated naturalization regime in three or four years is possible.
Duties of foreigners in Cyprus
Any owner must pay for utilities (electricity, water, garbage disposal). Property tax has been abolished in the country since 2017.
Tax residents of the Russian Federation (these are people who actually reside in the Russian Federation for more than 183 days a year) still have obligations to their home country. They must notify the Russian tax inspectorate of the creation of accounts in foreign banks or the establishment of legal entities. Both may be required when concluding a transaction.
The Cypriot side does not request notifications from the Russian tax authorities, but this remains the responsibility of Russian citizens.
1. opening a bank account and reserving an object
Account opening
It is not necessary to open a bank account after selecting an object. Funds can be transferred from your account directly to the seller's account. This scheme is relevant for citizens of Russia and Belarus, for whom bank accounts from 2022 on the island if and open, then after the registration of real estate.
Citizens of other countries can still open an account in a Cypriot bank for upcoming payments, as all payments for real estate in Cyprus are cashless.
It is important to remember that if you are buying real estate for the purpose of obtaining a residence permit, the funds must come to the seller's account from foreign banks.
Deposit payment
Immediately after the buyer has finally decided on the choice, the property must be reserved. For this purpose, a preliminary contract is drawn up and a deposit is paid. Usually it is 1-5% of the value of the object and is a non-refundable payment.
If the buyer later withdraws from the transaction, the amount will not be refunded. If the transaction fails due to the fault of the seller, the amount is refunded in full.
The signing of the preliminary contract must take place in the presence of a lawyer (in the secondary market). If the buyer does not intend to be present at all stages of the transaction, he/she shall execute a general power of attorney for his/her lawyer, which shall be certified by an invited independent notary in the presence of the buyer.
Based on this power of attorney, the lawyer will be able to handle the entire process on behalf of the buyer, including signing the contract and registering the property, and the buyer can go home in peace.
Usually the object is reserved for one to one and a half months. During this time, the lawyer checks the property documents, makes sure that the seller's lawyer has cleared the property of liens and encumbrances, if any (a tax clearance certificate is issued), prepares the sale and purchase agreement, coordinates it with the seller and the buyer, and goes out to conclude the transaction.
2. Conclusion of the contract
The seller and the owner accompanied by lawyers are present at the signing of the contract, but their authorized representatives with powers of attorney may conduct the procedure.
The sale and purchase agreement can be signed either in Cyprus or abroad, in a representative office of a Cypriot company. The presence of a notary is not mandatory.
The contract shall be signed in duplicate, shall be binding on both buyer and seller, and shall be enforced in all respects.
Please note: The legal system in Cyprus is based on the British system. According to the officially accepted standard when buying real estate the contract is drawn up in English. But if the buyer wishes, in addition to the English-language one, a copy in another language can be prepared and notarized. It is also possible to draw up a bilingual contract: the text on the left will be in English, and on the right - in Russian.
The contract should have a clear description of the property, as well as the payment procedure for the transaction.
When signing a contract, you usually pay 30% of the value of the object. It is also necessary to pay the state duty - stamp duty for legalization of the transaction.
3. Registration of the new owner
Remote transaction
If the buyer is unable or unwilling to attend the transaction in person, the buyer can be represented by a lawyer or a proxy. A power of attorney shall be executed for this person, which must be certified by an independent notary in the presence of the buyer.
With a power of attorney, a lawyer or trusted person will be able to handle the entire process on behalf of the buyer, including signing the contract and registering the property.
Stamp duty
The amount of stamp duty is directly related to the value of the property.
The first €5k of the value of the property is exempt from this tax. Thereafter, 0.15% is charged on the first €170k and 0.2% on the amount exceeding €170k.
Stamp duty must be paid within 30 days after signing the sale and purchase agreement, after which the agreement can be submitted to the Land Committee. Registration must take place no later than two months after the conclusion of the contract.
Title fee (property transfer fee)
VAT
New properties are subject to this tax. The standard rate is 19%, but first-time homebuyers can apply for a VAT refund and pay it at a reduced rate of 5%.
Land plots are not subject to VAT.
How to obtain VAT exemption in Cyprus
VAT is levied on new property purchases, with those buying their first home for themselves able to pay the tax at a reduced rate.
According to the amendments to the Value Added Tax Law (VAT law) of June 8, 2012, both citizens of the Republic of Cyprus and the EU, as well as foreigners from third countries are entitled to a reduced rate of VAT on the purchase of real estate in the country. They can pay a tax of 5% instead of the standard rate of 19%.
In the summer of 2023, the Value Added Tax Act (No. 42(I)/2023) made important changes.
Here's a list of updated requirements for the tax rate relief.
- The applicant must be a natural person, not a legal entity.
- The buyer of the property must be at least 18 years of age.
- The real estate must be his main place of residence in the Republic of Cyprus. It may be an apartment, a house or a residential property under construction.
- The applicant must not have any other property in Cyprus acquired during the ten years of VAT exemption. After ten years, the purchaser can again receive the tax exemption by designating the new apartment as the main residence.
- The property must be used exclusively as a first and main residence in Cyprus.
- Preferential VAT can be applied only to properties smaller than 190 square meters and only to the first 130 square meters of the dwelling (previously to the first 200 square meters). The standard rate of 19% applies to the area exceeding this value.
- The reduced rate is applicable only for the purchase of an object worth up to €475 thousand and only for the first €350 thousand.
- The preferential rate does not apply to luxury properties.
Important! Any projects for which an application for a building permit has been submitted before October 31, 2023 are subject to the previous rules for charging preferential VAT.
VAT refund procedure
The applicant first pays VAT at the standard rate in force at the time of the contract and specified in the contract for the purchase of real estate (19%). He then applies for a refund.
Once the VAT department confirms that the claimant is entitled to the relief, VAT is recalculated at the 5% concessionary rate.
Usually it is the developer or a solicitor who is in charge of obtaining the preferential VAT rate under a power of attorney.
