Whatever your reasons for buying a property this is probably the first time that you have bought a property in Morocco, or even abroad.
We have put this guide together to help you understand a little more about the process of buying in Morocco.
This guide is aimed at providing some basic information about buying in Morocco 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 Morocco.
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 Moroccan Law interacts with UK law.
Buying property in Morocco faq’s
Is the legal system in Morocco the same as the UK?
No, they are very different, but there is an interaction between them when you buy a property in Morocco. That is why the best person to advise you on your purchase in Morocco is somebody who understands both Moroccan and UK law.
Do I need a lawyer to help me buy in Morocco?
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 in the 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 Morocco and his involvement is required by the law. His role is to carry out some basic checks before the transaction, attend to the signature of the title deed and register the property on the name of the purchaser. His role is crucial for the success of the real estate investment in Morocco.
I have heard that there are problems with buying property in Morocco. What is the situation?
Certainly there are potential problems when buying in Morocco, just like there can be in any country including the UK. 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.
Are the costs more in Morocco than in the UK?
No. the total costs in addition to the purchase price is not higher than you will be used to in the UK.
The total cost of buying in Morocco is a lot higher than in the UK. As a rough rule of thumb you should budget for something in the region of 6% and 7% of the value of the property. This should cover all legal fees, Notary fees, taxes and so on. If you are taking out a mortgage the cost will be slightly higher as there are normally bank costs in addition (between 1% and 1,5%).
You may be asked to sign a reservation contract and pay a deposit (which the amount depends on the developer commercial policy) to take the property off the market for a couple of weeks. This doesn’t commit you to buy but it is still worth having your solicitor to check that the contract is OK before signing. Just because a contract says “Reservation Contract” on it doesn’t mean that it is one.
After that you would work towards a full purchase contract and pay typically around 10% deposit (the amount depends on the developer commercial policy). 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 Morocco through a mortgage.
The first is to release equity from your UK assets to buy the property in Morocco. The second is to mortgage the property in Morocco.
Each has advantages and disadvantages but getting it wrong can cost you dearly so take advice on this.
If you wish we can put you in contact with mortgage brokers either in the UK or in Morocco.
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. For further reading.
If you are buying a property we would always recommend that you obtain a survey. If you obtain a mortgage the valuation carried out for the mortgage company will only look at whether the property is worth the amount you have negotiated
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.
The survey may also reveal that certain works have been carried out or highlight rights that are necessary for the property which we can investigate before the property is purchased.
Buying any property involves a lot of money. In Morocco, the payment must be paid in Moroccan Dirhams (MAD). The real estate investment must be, once the transaction is made, declared to the Moroccan exchange office in order to ensure the retransfer payment if the investor decides to sell the real estate.
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.
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.
Currency dealers have increasingly sophisticated products. You can agree rates for the future. You can get them advising you when to buy or agreeing to buy for you 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 Smart Currency 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.
Powers of attorney
A Power of Attorney is a document which allows somebody to do something on your behalf.
Because the Power of Attorney allows somebody to do important things on your behalf it should only be given to somebody that you can fully trust. Therefore, unless you happen to know somebody in Morocco we strongly recommend that you handle the transaction in person and you do not mandate a third party to sign any transaction documentation on your behalf.
If you wish we can act as your Power of Attorney and carry out actions such as signing the Title Deed on your behalf using that Power. For further reading.
Fractional Ownership is not a new concept and has been around for many years – although back then we called it 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.
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 Morocco so don’t assume that you can adopt what you have done here to your purchase in Morocco.
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
When deciding on the best form of ownership we would need to take into consideration both Moroccan and UK tax and also a range of other circumstances such as your plans for the property in the future. For further reading.
Residents Association (Syndic des Corpropriétaires)
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 (Conservation foncière)
Almost all land and properties in Morocco are now registered.
We would obtain a search at the local Land Registry for office copy entries (certificat de propriété) of the previous owner’s deed which will show who the registered owner is and whether there are any charges on the title.
Tax Department (obtaining the tax clearance certificate/Quitus fiscal)
Checks should be made at the tax department to make sure that the real estate taxation has been paid up to date.
Moroccan inheritance laws are probably very different to those that you are used to in your home country.
However, inheritance laws applying in your home country will apply to your case, even if the real estate is located in Morocco.
The inheritance rules will be different.
The tax rates will be different.The way in which an inheritance is carried out will be different.
It therefore makes sense to make a new Will dealing with your assets in Morocco to make sure that not only do things work as smoothly as possible but also that the inheritance is carried out in the most tax effective way. For further reading.
After you buy a property in Morocco there are ongoing obligations that you need to meet;
It makes sense to insure your property and contents.
Real estate Tax (Taxe d’habitation/taxe des services communaux)
This is normally paid annually in one lump sum. The amount will depend on the location, size and age of the property.
You will be responsible for the utility charges – electricity, gas, water sewerage, rubbish collection etc. from the time that you buy the property
You should pay these otherwise the property can be confiscated and auctioned in order to settle the debt.
If you are resident in Morocco, you must declare any income you have earned in Morocco. This applies even if you receive this income by renting out to people from your home country and the money never touches Morocco.
Depending on your citizenship and on the fact that the Moroccan authorities are bound by an international tax agreement, you will also normally have to declare this income in the country where you are tax resident but can normally offset the tax paid in Morocco through Double Taxation Treaties.
The taxes that you pay when you buy a property in Morocco will normally depend on whether you are 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.
Do not be tempted to have selective amnesia when it comes to declaring taxes the authorities in both Morocco and the UK are clamping down on people who do not do not do things properly.
Sometimes you should declare something for tax purposes in one country and also in another. Morocco and the UK have a Double Taxation Treaty which means that you don’t normally pay tax twice and can offset the tax paid in the other country against the tax that you would otherwise pay in your home country
VAT is payable by the purchaser where the vendor is considered a developer who pays VAT and / or this is the first time that the property has been sold / transferred.
The VAT rate is fixed at 20%.
Taxe sur les profits fanciers (real estate taxation) is a tax based on the increase in the value of the real estate since the last transfer. The rate varies according to where the property is.
Its rate is fixed at 20% on the basis of the transaction added-value with a minimum of taxation fixed at 3% of the real estate transaction amount.
Our charges. We charge 1% of the purchase price subject to a minimum of £1,500. 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
- Obtaining certificate from the Community of Owners (if appropriate)
- Checking the legal status of the property and the seller’s right to sell
- 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
|Lumière||Light (but often refers to electricity)|
|Certificat de propriété||Land Registry Search|
|Pouvoir||Power of Attorney|
|Police d’assurance||Insurance policy|
|Conservation foncière||Land Registry|
|Chambre de ramassage||Storage room|
|Valeur foncière||Official value of the property|
Buying in Morocco checklist
|1||Decide what you are buying, where and why. If necessary take advice on this.|
|2||Instruct us as your independent lawyer.|
|3||Look at the cost of buying. Fix a budget. Stick to it.|
|4||Investigate finance and think about how to finance deposit.|
|5||Learn about the process of buying|
|6||Look at who should own the property.|
|7||View properties / choose a property. Be honest with the estate agent about what you are looking for – that will save a lot of time for you and them.|
|8||Survey and valuation|
|9||Send any contract to us to check prior to signature|
|10||Speak to currency dealer about getting the best rate for your purchase|
|11||If it is a reservation contract pay a small reservation fee|
|12||Lawyer carries out checks on the property and advises you on whether it is safe to proceed with the full purchase contract|
|13||Payment of Full purchase deposit|
|14||Lawyer deals with purchase|
|15||If you are moving to Morocco arrange removal company|
|16||Arrange Power of Attorney if needed|
|17||Arrange insurance – contents / buildings / health|
|18||Signature of title deeds and registration at the Land registry|
|19||Enjoy a well deserved holiday in your new property|
Why use judicare
A highly experienced Moroccan 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 Moroccan team has many years of experience dealing with a whole range of legal issues with Morocco
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