Process of buying real estate in Marrakech
Thankfully the process of buying real estate in Marrakech is nice and straightforward.
From experience, the challenging part of house hunting here is actually finding the perfect Marrakech property that you fall in love with.
Almost every renovated riad or luxury villa is foreign owned and it will have a modern deed or titre fonciere – as it would in Europe, which is recorded in the land registry.
This deed is indisputable and has undergone a long and thorough verification process.
Once terms have been agreed on a riad or villa then the house papers are checked by a notary.
These papers will be the title, the construction permit, the authorised plans and the habitation permit.
In respect of medina maison d’hotes there will be the business papers too to check.
Then all being well sale contracts are drafted by the notary for the purchase.
It is worth noting that the legal system here is French and that standard contracts are similar to typical French sale contracts.
It is all nice and simple.
The costs of buying Marrakech property / Estate agency fees
In Marrakech the respective costs for the buyer and the seller are very clear.
The buyer is responsible for the legal costs and administrative costs of the real estate purchase and for the registration of the sale contract and the land registry – (the Conservation Foncière).
The total cost for the notary, the registration fees and the title change in the conservation Fonciere is 6.7% including TVA – (i.e. 20% VAT).
It is worth mentioning when acquiring a riad hotel – there will be a small part of the price that will be declared in the sales contract for the fonds du commerce – ( i.e. the website, goodwill, registered name etcetera ) and the administrative processing of the fonds du commerce will be with an additional administrative charge of 1.3% including TVA.
In turn the seller is responsible for all of the tax.
Then there are real estate brokerage fees on both sides – for both the buyer and the seller – of 2.5% plus TVA – (i.e. 20% VAT).
The role of the notary in a property transaction
In Morocco the sale of a property is executed by a notary and is undertaken with a sales contract written specifically by him.
The notary is a professional with the rank of a ministerial public officer – bound by judicial rules – and he is responsible for drafting sales contracts as stipulated in the civil code – Dahir 4th May 1925.
By law the notary is obliged to protect the rights of both a buyer and a seller.
He is an impartial arbitrator and is required to ensure moral and legal authenticity of any sale and its respective sales contract.
Before drafting any sales contract – he is required to verify all the ownership documents and house papers.
The role of the notary is to also register a transaction after a signing and deal with the formalities at the land registry.
For buyers it is imperative that he declares any purchase with the Offices Des Changes – the government office for foreign investment – in order to guarantee that on resale funds can be repatriated with ease.
In turn the notary should help a seller obtain a Quitus fiscal – or tax clearance – so that the proceeds of a sale can repatriated.
As a point of reference here are two reputable notaries that have worked for some time with us as Marrakech estate agents and we are happy to recommend :-
- Maitre Laila Benfdil – email@example.com / 00212 524435397 – Boulevard Mohammed V, Angle Rue Med ElBeqal, imm. ElBatoul, Guéliz, Marrakech.
- Maitre Abderrahim Cherkaoui – 05 24 42 35 03 / Cherkaoui.firstname.lastname@example.org – Hivernage, imm Adrar2, Appt N°4 -1er Etage- Marrakech
The attractions of property investment in Marrakech
For some time the administration has been trying to make Morocco an attractive tourist destination as well as an attractive place to invest in property.
In respect of this – it has adopted financial and fiscal legislation to encourage private investment.
For example, anyone purchasing a maison d’hotes or licensed Marrakech hotel is granted a tax exoneration for a period of five years on tax on foreign payments / revenue – then a subsequent period of five years at half tax. This is in addition to a five year exemption on tax professionelle – or tax on rent.
New property owners also benefit from regulations such as lower council tax bandings for five years.
In furtherance of this – if one wishes to become a resident here – there will be lots of extra interesting additional investment incentives – some of which are worth noting.
There is an absence of wealth tax – ( TFR ) for the French and they are exempt from CSG, CRDS (social contribution) on income from French sources.
CGT is set at just 20% – and there is an exemption from CGT on ones’ principal home if it has been occupied for eight years or more.
There is no inheritance tax charged on property.
Personal effects and household furniture brought over to furnish a new property are exempt from import duty if they were acquired more than six months prior to admission to Morocco.
Residents are exempt from paying income tax on rental income for a period of three years after the completion of any construction. Then thereafter there is a 40% abatement.
The taxation on retired residents is seriously low. With the French for instance they benefit from a tax reduction of 80% calculated on the amount of a pension one transfers over to Morocco in a convertible account.
Mortgages and bank loans for acquiring Marrakech real estate
It is not always easy for foreigners to obtain lending here to buy property in Marrakech, but there are some Moroccan banks that offer mortgages to foreigners.
In the case that credit be obtained it is normally up to a ceiling of 70% of the value of the property – with a cash deposit for the other 30%.
Lending is more stringent than in Europe and certainly less competitive – with current interest rates on Moroccan mortgages around 7%.
Lending can be arranged on both a variable and fixed-term basis and is often up to a maximum of ten years.
It is worth noting that no financing will ever be offered on a property with commercial activity such as licensed medina maison d’hotes for sale.
For British nationals it worth noting that there are no British banks present here in Morocco, but there are several Moroccan banks such BMCE with convenient branches in London and these offer a few investment packages.
However there are some big international French banks on the continent – which have a strong presence here and French clients and other foreign nationals might like to approach them for more favourable lending.
Buying an unrenovated riad with Melkia papers
Buying an unrenovated riad in the medina is fundamentally straightforward too – though it needs a little explaining.
Most unrenovated riads are Moroccan owned and their ownership has been recorded in the traditional way under Muslim law – on hand written scrolls known as Melkia.
In order for a foreigner to buy an unrenovated riad, which has its ownership detailed on Melkia, it is necessary for the papers to be modernized into French law – i.e. non Muslim law, and to trigger the titling process that will eventually provide a modern title deed.
This will require several things to happen.
First a promise of sale contract would be signed. Then a demise plan is made by a land surveyor and the documented ownership is verified by a Muslim lawyer, or adoul as he is known.
This lawyer will then pay an Istimrar tax and have the demise registered in the National Land Book at the land registry for the first time.
Thereafter, the notaire initiates the titling process and applies for a requisition number from the administration. This process will take about a month and it is then that a purchase can occur.
All of this process would be taken care of on your behalf – so is all nice and easy.
For more information please feel to read my thorough blog on titling, or kindly write to Chic Marrakech with any questions that you may have at email@example.com.