Understanding the legal framework of offshore property investment is crucial for successful ventures. Mauritius, a prime destination for such investments, has an intricate yet well-structured set of laws and regulations that govern real estate transactions.
The Mauritian government has put forth several initiatives to attract foreign investments in the real estate sector. Over the years, different property schemes tailored for international buyers have been introduced to facilitate and regulate the acquisition of property by non-citizens.
Understanding Real Estate Investment in Mauritius
Mauritius is a hot spot for offshore property investment, thanks to its robust legal framework and tax system. Mauritius is a popular pick for investors, entrepreneurs and business people from South Africa, Britain, France as well as continental Europe.
Why Mauritius is a Great Investment Destination?
Mauritius offers more than just beautiful landscapes and a relaxed lifestyle. The government has implemented measures to encourage foreign investment in its property market, including favorable taxation policies overseen by the Mauritius Revenue Authority (MRA).
1. Constitutional Basis
The Constitution of Mauritius provides the foundational law in the country, guaranteeing the right to property for all. This right is safeguarded unless expropriation is needed for public utility, and in such cases, fair compensation is mandated.
2. Non-Citizen Property Restriction Act
Traditionally, foreigners were restricted from buying property in Mauritius without the approval of the Prime Minister’s Office (PMO). However, with the introduction of specific property development schemes, these restrictions have been relaxed to promote foreign investments.
3. Property Development Schemes
- Integrated Resort Scheme (IRS): Introduced to attract high-net-worth individuals. Allows foreigners to own luxury villas and residences in integrated developments with high-end amenities.
- Real Estate Scheme (RES): A flexible property scheme where there’s no minimum investment amount. Allows for a diversified set of properties to be sold to both locals and foreigners.
- Property Development Scheme (PDS): A unified scheme combining features of IRS and RES. Allows foreigners to buy property without a minimum investment requirement.
- Smart City Scheme (SCS): A recent addition focusing on mixed-use developments, emphasizing innovation, sustainability, and holistic living.
4. Land Transfer Tax
The transfer of immovable property in Mauritius is subject to land transfer tax. The rates may vary depending on the nature of the transaction and the parties involved.
5. Land Lease
Foreigners can also lease land in Mauritius for up to 20 years without PMO approval. However, leases extending beyond this period require authorization.
6. Notary System
Mauritius operates under the notary system inherited from its French colonial past. The involvement of a notary is compulsory in all property transactions, ensuring that all legal requirements are met and that the rights of all parties are safeguarded.
7. Residence Permits and Permanent Residency
Foreigners investing more than USD 375,000 in property can qualify for a residence permit. This allows them to live, work, and set up businesses in Mauritius. After a set period and subject to certain conditions, investors can also apply for permanent residency.
8. Environmental and Building Regulations
All new property developments must adhere to strict environmental guidelines, ensuring minimal impact on the island’s ecosystems. Additionally, building codes derived from British standards ensure that all structures are safe and resilient. The norms include built for withstanding tropical cyclone conditions. All buildings go through multiple boards to be thoroughly inspected, including environmental impact assessments and urban planning.
9. Corporate Social Responsibility (CSR)
Developers under specific schemes have an obligation to contribute to the nation’s CSR framework. This ensures that property investments also benefit local communities and contribute to the overall development of the country.
10. Dispute Resolution
Mauritius offers a transparent legal system for resolving property disputes. The Judicial Committee of the Privy Council in London serves as the highest appellate court, ensuring an additional layer of impartiality and expertise in legal matters.