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| WHY MOROCCO IS THE HOT NEW OVERSEAS INVESTMENT |
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| Record-breaking numbers announced by the Moroccan government on Wednesday (January 30th) indicate that the country's long-term tourism strategy is paying off. Visitor numbers hit 7.4 million in 2007, a 13% increase since 2006 and the highest tourist tally in four decades. Provisional statistics also showed a jump of 12% in tourism revenues to 59 billion dirhams. |
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| Morocco's plan to welcome 10 million tourists in 2010 is on track, Tourism and Crafts Minister, Mohamed Boussaid said at a January 29th press briefing. Since 2001, Morocco has seen an increase in visitor numbers of 3 million, with a further rise of 2.5 million forecast within the next 3 years. |
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| With the King of Morocco's -'Vision 2010' Morocco is the HOT place to invest. With the new agreement allowing freedom of air travel, all the major airlines are permitted to land in Morocco thus opening up a whole spectrum for the overseas investor. Indeed anyone can now buy property in Morocco which previously was restricted. |
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Capital Growth A recent survey by C4's Place in the Sun magazine found capital growth of up to 60% in some coastal areas of Morocco over the last two years. |
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| HERE IS A QUICK GUIDE TO BUYING IN MOROCCO |
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| The Moroccan property buying procedure is relatively simple and very similar to the French and Spanish notary administered system. Foreigners can buy both leasehold and freehold property without restrictions, but government permission is needed to purchase land. |
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| Off-Plan Buying Process |
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| Generally accepted as the most straightforward form of real estate purchase in Morocco, off-plan property poses no awkward or time-consuming problems with title ownership. |
| The process is simple; once the price is agreed, expect to pay a reservation fee of around 3,000 EUR for a typical off-plan unit. Approximately 30 days later, you will sign a Purchase Contract setting out all the conditions of the purchase and pay the deposit of 30 or 40%. The remaining balance will be due on the day of completion, along with your notary's fees, stamp duty and other fees. |
| It is important to get a good English speaking lawyer with conveyancing experience to check all the necessary documentation is in place. The Notary will then draft the final Sales Contract for signature on the day of completion and, last but not least, produce your Title Deeds. |
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| Additional Costs |
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| Buyers normally factor in around 5% of the purchase price to include notary, property registration and all taxes, as follows: |
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| Taxes: |
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Tax on rental income - you can expect exemption for the first 5 years, by way of a government incentive to encourage foreign investors to Morocco. |
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Capital Gains - must be declared in both the UK and Morocco but, under the Double Taxation Treaty with the UK, the tax authorities will deduct any taxes already paid in Morocco. Capital gains will not be charged if you hold onto a property for more than 10 years. For periods of between 5 and 10 years, 10% tax is payable on any gains over a million Dirhams (approx. 60,000 GBP). |
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Inheritance tax - leave your property to a family member and no inheritance tax will be charged. |
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| Other fees: |
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Land Registry fees (Stamp Duty): 1% |
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Notary: Between 1 and 2% of the purchase price and calculated on a sliding scale. |
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Notary tax: 0.5% |
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Registration fee: 5% is the property is sold within 5 years, 3% after 5 years |
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| Mortgages |
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| Non-resident Moroccan Dirham (MAD) mortgages are available at 70% of the purchase price for a period of up to 25 yrs, subject to age and status. To apply for a mortgage you will normally need: |
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Copies of passports |
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Copy of deposit receipt or the Purchase Contract |
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Bank reference letter |
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Proof of income |
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| Proof of income, depending on your status, will be: |
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Retired - pensions and investments paperwork |
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Self-employed - supporting letter from your accountant, copies of bank statements. |
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Employed - P60/Inland Revenue Tax Return, last 3 pay slips with supporting bank statements, work contract. |
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| A mortgage broker can help with the application process, avoiding the need for you to be in Morocco to apply for the mortgage. An application normally takes between 4 and 8 weeks to go through and, unless a power of attorney is appointed, you will only need to be present for the signing of the mortgage documents and Sales Contract on the day of purchase. |
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| Alternative finance through equity release is another popular means of raising funds for those who already own a property elsewhere. |
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| Currency Exchange |
| When actually paying for a property in Morocco, you will need to open a Euro account in a Moroccan bank. Sterling or Euros will are sent to this account and then converted to Dirhams for payment to the vendor on the day of completion. The bank account could then be kept open for possible use when in Morocco or for the payment of any services or maintenance relating to the property. |
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| Repatriation of Funds |
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| The Moroccan government allows 100% repatriation of funds to all EU buyers. This can be done through a Sterling Exchange account which can be opened at any Moroccan bank. |
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| So, in brief, Morocco is set to be the new Mediterranean destination. If you want to know more about Morocco and how you can invest, please contact us. |
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