Buying Property in Mexico

The rise of burrito bars and Mexican street food restaurants springing up around the UK shows that Mexican culture away from the traditional images of tequila and huge hats is beginning to win the hearts and minds of the British public.

And while we may still lagging behind our North American counterparts in snapping up Mexican property, a small and adventurous band of Brits are beginning to discover the diverse delights that Mexico has to offer. Moving to Mexico means a great quality of life. The country’s economy, currently ranked 14th in the world, is booming with 700,000 new jobs created in 2010 alone. And the good news is that this economic surge has not been met with increased costs of living for residents and visitors. It is possible to live an extremely comfortable lifestyle for just £200 a month.

For those thinking of moving full time, Mexico is also famed for its excellent medical facilities. Becoming a resident (which you can do after purchasing land) enables entry into the National Health Care Plan which offers 100% cover for around £160 a year and access to the country’s first rate hospitals. And then there’s the warm weather. The Mexican Caribbean (Costa Maya) is 28 degrees year round and the rest of the country stays warm across the seasons.

Property hotspots in MexicoLos Cabos – One of Mexico’s most popular areas for investment, tourism, and relocation, Los Cabos is starting to see huge swathes of development and is already home to some of Mexico’s most prime luxury properties. The area’s popularity means that buyers will never be short of things to do, with a wealth of leisure and entertainment options available. While prices are rising in the area, you can still get a luxury townhouse, with access to golf courses and 24 hour security, starting from around £350,000. However, big spenders have the potential to spend £2 million on something really stunning.

Lake Chapala – An area that is growing in popularity with expat Brits, Lake Chapala offers one of the finest climates in the world and stunning scenery courtesy of the impressive 55 mile body of water. A nearby international airport at Guadalajara is only twenty minutes away, making access easy for holidaying Brits or visiting relatives.  Here, it is possible to buy a three bedroom villa within a semi gated community with access to a shared pool for £200,000.

Cancun – One of Mexico’s most international destinations, Cancun is popular with visitors from across the world in part due to its well connected airport Cancun International, which is Mexico’s biggest for international travellers and operates direct flights to and from London Gatwick, Glasgow International, Belfast International and East Midlands among others. Property in Cancun is, as a result, relatively high in price and more generous in rental yields. A 275sqm condo can be yours for  around £700,000 while a smaller but still not unsubstantial property of around 275sqm would set you round about £460,000.  The future is also looking bright for the area- modern beachfront hotels are beginning to attract increasing numbers of visitors to the area, which means even greater development.

Campeche – This area that is fast becoming the next Rivera Maya is of the Gulf side of the Yucatan. The area now has several large developments along the perfect white sandy beaches. A nearby international airport at Campeche is only forty minutes away from Sabancuy a small fishing village set to be the next big explosion in property market.  Along the coast you will see a few finished properties and the first main coastal attraction AKK Bal. Lots are available in this area from 95,000 for a 20 meter beachfront plot.

Buying process

The Mexican system of buying a property follows the Spanish notarial system with a notary acting for both the buyer and the seller. After the offer on a property has been accepted it is the notario’s job to organise the surveys, transfer of deeds, and to register the property with the relevant local authorities. Prior to this happening though, the buyer and seller will sign a promissory contract and a deposit of around 5-10% will be taken from the buyer.

One slight complication is the fact that the Mexican constitution prohibits direct ownership by foreigners of property within a “restricted zone”, which includes any land within 100km of Mexico’s borders (with the USA, Belize and Guatemala) and within 50km of its coastlines.

However, there are ways to get around this law.  Having realised the implications on overseas buyers investing in the country, the Mexican government introduced a form of trust scheme in 1994 which enables a bank (ie the mortgage lender) to own the title to the property, nominating the buyer as a beneficiary (meaning they have full ownership rights). Known as a fideicomiso, this is easily renewable and available in 50-year intervals.

There is no legal requirement to appoint a lawyer in Mexico, although this is highly recommended.

Buying costs

In total the cost of buying a home in Mexico will come to around eight per cent of the purchase price which includes forming the trust which your property is held in, estate agents fees and costs including notary fees and expenses and transfer taxes.

The cost of setting up the fideicomiso involves a one-off fee of £1,600, plus an annual fee for the trust based on the value of the property. In addition to this yearly charge, you will also need to pay 0.25 property tax per annum.

There is no VAT payable on residential property, but you will be charged 33 per cent capital gains tax on the rise in value of your property when you come to sell. The good news is that Mexico operates a double taxation treaty with the UK meaning that you will not be taxed twice on any profit you make.

Buyer beware

A consideration that potential buyers in Mexico must be aware of is the high cost of securing a mortgage in Mexico compared with the UK. Interest rates are currently around 14 per cent, and banks will require a deposit of between 30 and 40 per cent. It is also hard to secure funding through US lenders as many will only lend according to equity you have built up in the States. The best way to finance your property if you’re not buying with cash is to remortgage in the UK, which will enable you to avoid the high interest fees.

Another thing to note is the fact that estate agents in Mexico are not licensed or regulated in any way. Make sure you shop around to ensure you are dealing with someone reputable and that they are offering you value for money.

info supplied by 

www.multilistingserviceunitedkingdom.com

http://www.aplaceinthesun.com/