Whatever your reasons for buying a property this is probably the first time that you have bought a property in Cape Verde, or even abroad.
We have put this guide together to help you understand a little more about the process of buying in Cape Verde.
This guide is aimed at providing some basic information about buying in Cape Verde and tries to answer the majority of the common questions that we are asked about. Although we hope that you will find it useful it is important to remember that it doesn’t cover all legal issues involved and certainly isn’t a step by step DIY guide to buying in Cape Verde. It is still recommended that you seek advice from a professional before proceeding – after all we do this every day and have been doing so for many years and therefore know all the tricks and pitfalls that you may come across.
We also know the practical solutions to the problems that exist and also know how Cape Verdean Law interacts with UK law.
Buying property in Cape Verde faq’s
Is the legal system in Cape Verde the same as the UK?
They are very different, but there is an interaction between the two legal systems. That is why the best person to advise you on your purchase in Cape Verde is somebody who understands both Cape Verdean and UK law.
Do I need a lawyer to help me buy in Cape Verde?
Surprisingly this is the most common question that we get asked. No, you don’t – just like you don’t necessarily need a lawyer when buying a property in UK. However, in reality you would always use a lawyer when buying in the UK so what is so different about buying in another country where you probably don’t have experience of buying before? For further reading.
I have been told that I don’t need a lawyer but need a Notary. Is this true?
The Notary is important in Cape Verde but tends only to get involved at the end of the transaction. His role is to carry out some basic checks at the end and attend to the signature of the title deed and in some cases to register the property. He doesn’t normally advise on whether the contract is OK to sign, whether you should pay the deposit, who should own the property, and so on.
I have heard that there are problems with buying property in Cape Verde. What is the situation?
Most of the potential problems that you read about can be avoided by using common sense and by instructing an independent lawyer to advise you on the purchase. We often see people with problems with their property and they invariably tell us that they didn’t use a lawyer or used the lawyer given to them by the seller or estate agent. Cape Verde is an emerging economy and the advise is very important so that you can be aware of the construction situation and companies reliability.
Are the costs more in Cape Verde than in the UK?
Yes, the total costs in addition to the purchase price are higher than you will be used to in the UK. It is therefore important to factor these into your budget from the beginning. The property prices vary according to the island where you want to buy. However, it depends on which property you would like to purchase, and where, this will determine the final price.
The total cost of buying in Cape Verde could be higher than in the UK. For the acquisition of a property it is due the price and taxes related to the transfer of the property as the “Imposto do Selo”, paid before the Tax Authorities, and usually the Notary Public Fees.
You may be asked to sign a reservation contract or a Promissory Purchase and Sale Contract and pay a small deposit, which we call “Sinal”. Signing this contract is the most important sign that you wish to proceed with the property purchase, because a payment is made and the vendor is also obliged not to proceed with the sale to another person in the meantime.
After that you would work towards a full purchase contract and pay typically around 10% deposit. That contract commits you to buy the property.
On a new property you may have to make stage payments throughout the course of construction.
The balance is paid upon signature of the title deeds and registration.
There are two ways of financing your purchase in Cape Verde.
The first is to release equity from your UK assets to buy the property in Cape Verde. The second is to mortgage the property in Cape Verde. Each has advantages and disadvantages but getting it wrong can cost you dearly so take advice on this. We advise special care when the properties are still under construction which is very frequent in Cape Verde, due to the growing number of Touristic Resorts.
If you wish we can put you in contact with mortgage brokers either in the UK or in Cape Verde. We do not receive a commission for doing so and are not tied into a particular broker – we simply recommend them because they have given our clients good service in the past.
If you are buying a property in Cape Verde that already has a mortgage on it then it may be possible to take over that mortgage from the current owner. This is often seen as an easy way of obtaining a mortgage but you should be aware that that mortgage might have been the right one for the seller but may not be the best one for you. For further reading.
If you are buying a property we would always recommend that you obtain a survey. According to our experience, most people ask a bank for a loan in order to proceed with the purchase abroad so that the loan can be granted in their own country.
Any defects in the property which do not affect the value will not normally be shown on the report. A survey will rate the condition of all permanent structures and will highlight any important problems that could affect the property value. Depending on the survey this may also give advice as to future maintenance. The survey should reduce the chance of discovering any nasty surprises with the condition of the property once a purchaser has bought the property. If there are any defects the survey will help the buyer negotiate the price or require certain works to be carried out before the property is purchased. Cape Verdean properties may also include a plan for the construction of the Resort, if that is the case, you will know the date for completion and all the facilities.
Buying any property involves a lot of money.
When you are converting from one currency to another the difference between one exchange rate and another can literally make a difference of thousands of pounds on your purchase. In Cape Verde the currency is the “Escudo Cabo Verdiano”.
Do not underestimate the difference that a good exchange rate can make.
We know people who have sold properties and have made more money on the exchange rate difference than they have on the sale of their property.
We are not a bank or a currency dealers, but would recommend that you investigate the cheapest way of sending your money abroad. If you would like we can put you in contact with currency dealers that we know will give you a good exchange rate and a good service.
Currency dealers have increasingly sophisticated products. You can agree rates for the future. You can get them advising you when to buy when the rate hits a certain level. You can even agree a fixed rate for longer periods of time if you make regular payments abroad (for example for a mortgage or moving your pension money).
We work with various currency dealers who can give you a good exchange rate for your purchase and whom we have known for years. We will normally receive a commission for introducing them to you. This does not cost you anything more as they are simply paying us part of what they make. This commission is costed into our overall charges for providing our services.
Fractional Ownership is not a new concept and has been around for many years, previously it was called Co-ownership.
Put simply Fractional Ownership is where several people buy a property together. This can be members of a family, friends, work colleagues or even complete strangers.
You buy a share in the property and also share the running costs.
The best Fractional Ownership schemes are those where the cost of buying is closest to the value of the actual share in the property – i.e. the ones where there are not huge margins built into the sale.
Timeshare is a type of Fractional Ownership but Fractional Ownership is not necessarily Timeshare as there are strict definitions as to what Timeshare is. Cape Verde is widely influenced by the Portuguese system, this kind of ownership is now available in Cape Verde properties, mostly in Resorts.
The NIF (Número de Identificação Fiscal, which translated literally is your Foreigner’s Identity Number) is your Tax Identity Number in Cape Verde.
There are several times when you are likely to be required to produce your NIF number;
- When you buy a property
- Opening a bank account
- Dealing with the utility companies
- Taking out insurance
- Dealing with the tax authorities
- Buying or selling shares, bonds and stocks
- Buying a car
At the moment you can apply for your NIF personally, through your representative. We will therefore advise you how this works at the time that you contact us.
Who should own the property?
This is probably the most important decision that you can make. Getting this right can save you thousands in costs and taxes. Getting it wrong can be an expensive mistake.
The way that you would buy a property in your home country is not necessarily the best way to buy in Cape Verde or any other country, so don’t assume that you can adopt what you have done here to your purchase in Cape Verde. Acquiring a property in a foreign country is always different and the rules for that acquisition may vary.
There are many options – ranging from personal ownership to company ownership but there is no “one size fits all” solution that works for everybody.
Your circumstances and priorities are different from the next person. We are able to look at your circumstances and your priorities and advise you who should own the property based on that information. The solution may not necessarily be immediately obvious. For further reading.
Residents Association (Associacáo de Propietários)
If you are buying in a complex then there will be a Community of Owners. We would need to make sure that all Community charges have been paid up to date before you buy.
Water and Electricity
It is important to check that there is a connection and that the charges are paid up to date.
If you are buying a new property we will need to check that the property has the appropriate Habitation Certificate which allows the services to be connected.
Land Registry (Registo Predial)
Almost all land and properties in Cape Verde are now registered, but our experience tell us that the registration should be duly confirmed.
We would obtain a search at the local Land Registry for office copy entries of the previous owner’s deed which will show who the registered owner is and whether there are any charges on the title. The Land Registry has the history of all the events concerning certain property. Once you become the owner, you will appear as the current owner and you can transfer from the previous owners, and issues such as mortgages registration or others (usufruct and liens).
Tax over the Property (IUP—Imposto Único Sob o Património)
It is a tax paid to the Town Hall of the city where your property is located and is paid annually.
Moving in and Wills
Just like back home you will need to arrange to have the utilities and services in your name and often have to set up a direct debit at your Portuguese bank to pay the bills. You also need to inform the local Council and the Residents Association that you own the property.
Owning a property means that it will become part of your estate once you die. The rules for inheriting a property located in Cape Verde are different then from those in the UK.
In general, we can advise you on the various different options regarding your Cape Verdean Will. It is possible to have two wills – one in the Cape Verde covering your assets and one in the UK covering your other assets. Both Wills need to be drafted carefully to make sure that they do not revoke each other.
You can leave your assets in Cape Verde to somebody with a UK will but this doesn’t make sense – the cost of the subsequent inheritance will be more and it is possible that you will inadvertently cause inheritance tax problems.
The cost and extra complications of leaving no Will at all is great and should be avoided.
Whilst as a foreigner you do not have to follow the same rules that Cape Verdean people do in terms of who you have to leave your property to, it often makes sense to do so as this can save your beneficiaries huge amounts in tax.
A Cape Verdean Will can be prepared and signed in your local area or in our offices – there is no need to go to Cape Verde. We can arrange for the registration of your Will at the competent entities.
Cape Verde Inheritance Law states that when you die your properties will be shared among your heirs according to the law of your country of origin.
It is a common misconception that as a foreigner you have to leave your assets in accordance with Cape Verdean law, which imposes certain “forced heirs”.
This Will must contain a declaration that their personal law is governed by the principle of free disposition of property by testament.
Generally speaking a valid Cape Verdean Will is sufficient to dispose of the estate as you wish.
If a foreign resident dies in Cape Verde the estate will be distributed according to the personal law which is the law of nationality.
As it concerns taxes, we remind that there is no Double Taxation Agreement between Cape Verde and UK.
Although Cape Verde is not a European country, its legislation is mostly influenced by the Portuguese legislation.
If you inherit real estate in Cape Verde or other assets you may have to pay what they call “Imposto de Selo” (i.e. Stamp duty) which is due in many financial and patrimonial operations in Cape Verde.
On the act of writing your will, you may have to pay this tax.
Before you write your will we advise you to speak to a lawyer or a notary in both countries, so that you can be aware of all the procedures in which relates to taxes to pay and other formalities.
After you have a property in Cape Verde there are ongoing obligations that you need to meet (assuming that you wish to keep the property):
It makes sense to insure your property and its contents.
Council Tax (Imposto Único sobre o Património—IUP)
This is normally paid before the Town Hall.
Non payment of IUP can lead to legal proceedings being taken against you by the tax authorities and an embargo on the property.
You will be responsible for the utility charges – electricity, gas, water sewerage, rubbish collection etc. from the time that you own the property.
Community Charges (Quota de Condomínio)
You should pay these otherwise the property can be confiscated and auctioned in order to settle the debt.
Income Tax—Imposto Único sobre Rendimento
If you are non-resident you must declare any income you have earned in Cape Verde. This applies even if you receive this income by renting out to people from your home country.
Even if you do not receive any rent from the property it is assumed that you have received some sort of benefit and you are taxed on this.
The ongoing taxes that you pay when you buy a property in Cape Verde will normally depend on whether you are a tax resident there or not.
Tax residence is a determined by a number of factors:
- How long you spend in that country?
Is it 183 days or more a year (not necessarily continuously). If so you are likely to be tax resident there
- Is your main home there?
If it is then you are likely to be tax resident there.
- Is your immediate family (spouse and dependent children) based there?
If so you are likely to be tax resident there.
- Is your main economic interest there?
If so you are likely to be tax resident there.
If you do become tax resident in a country then you will normally stop paying taxes in your home country and start to pay taxes in the new country.
Sometimes you should declare something for tax purposes in one country and also in another. UK and Cape Verde have no Double Taxation Agreement which means that you must be duly informed about the way to be taxed.
Fees and taxes
IVA (VAT) is payable by the purchaser where the vendor is considered a developer who pays IVA and / or this is the first time that the property has been sold / transferred.
The VAT rate is flat in 15%.
Transfer TAX (also named Imposto Único sobre o Património) is payable if the property is a resale (second transfer). This is paid by the buyer to the Cape Verde Tax Authority within 30 days of the date of signing the title deed and is needed in order to register the property.
Gains (Mais-Valias) is a tax based on the increase in the value of the land since the last transfer.. Technically the vendor pays this although often it is agreed that the buyer will pay this. This is not normally a huge amount.
IUP (Imposto Único sobre o Património) - This tax is annually due by the owner of the Cape Verdean property and is paid once per year, depending on the total amount of the tax. It is paid before the Cape VerdeTax Authority.
Our charges. We charge 1% of the purchase price subject to a minimum of £2,000 + VAT. If the property title is defective or unexpected additional work is required then there may be additional charges. We would inform you before incurring this cost.
Our charges include;
- Legal advice on the terms of your offer to purchase
- Searches at the Town Hall
- Searches at the Land Registry
- Obtaining certificate from the Community of Owners (if appropriate)
- Checking the legal status of the property and the seller’s right to sel
- If appropriate checking the guarantee provided by the vendor
- Preparing a report on our searches and advising you on the purchase
- Arranging the signature of the title deed
- Arranging payment of the relevant taxes
- Arranging registration of the property at the Land Registry
- General hand holding and advice throughout the transaction
Why use Judicare
Cape Verde lawyers
A highly experienced Cape Verdean legal team.
We are Solicitors
We are a UK based firm of Solicitors regulated by the Solicitors Regulation Authority and who specialise in international legal issues.
We understand both sets of laws
Because we understand both sets of laws we understand the difficulties that come when two sets of laws meet.. This is particularly important when it comes to issues involving ownership, taxation and inheritance.
We are members of AIPP
The Association of International Property Professionals was set up to improve standards of professionalism in a largely unregulated overseas property market.
Our Cape Verdean team has many years of experience dealing with a whole range of legal issues with Cape Verde.
We speak your language
You need a lawyer who can speak your own language. More importantly you need somebody who can explain and discuss often complicated issues in terms that you understand.
We are independent. We are not allowed to act for the buyer and the seller at the same time. We are not linked with any Development Companies, Builders or Estate Agents.