Morocco Buyers Guide
The Moroccan property buying procedure is relatively straightforward, modern and reassuringly akin 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.
Off-Plan Buying Process
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.
Additional Costs
Buyers normally factor in around 5% of the purchase price to include notary, property registration and all taxes, as follows:
Taxes:
- 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.
- 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).
- Inheritance tax – leave your property to a family member and no inheritance tax will be charged.
Other fees:
- Land Registry fees (Stamp Duty): 1%
- Notary: Between 1 and 2% of the purchase price and calculated on a sliding scale.
- Notary tax: 0.5%
- Registration fee: 5% is the property is sold within 5 years, 3% after 5 years
Mortgages
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:
- Copies of passports
- Copy of deposit receipt or the Purchase Contract
- Bank reference letter
- Proof of income
Proof of income, depending on your status, will be:
Retired – pensions and investments paperwork
Self-employed – supporting letter from your accountant, copies of bank statements.
Employed – P60/Inland Revenue Tax Return, last 3 pay slips with supporting bank statements, work contract.
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.
Alternative finance through equity release is another popular means of raising funds for those who already own a property elsewhere.
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.
Repatriation of Funds
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.
Buying Tips
The buying procedure in Morocco is up-to-date and on par with any sophisticated European country. However, as is often the case with property purchase, some simple precautions will help you avoid making potentially costly mistakes:
Your lawyer must be fully knowledgeable in the conveyancing process and not specialise in some other aspect of law. Additionally he or she will need to be bilingual and independent - not necessarily the one recommended by the developers of your project who may have a vested interest in using one particular lawyer.
The notary, as in other countries like France and Spain, is solely responsible for drawing up contracts and obtaining the Title Deeds; he/she is merely a government official and not a lawyer. Do not confuse notaries with lawyers as they won’t give you independent advice and are employed merely to move paperwork. They probably won’t speak English either, so if this is the case do make sure you have a translator with you on the day of signing.
You will save time and disappointment if you arrange a mortgage in principle for the amount you intend to borrow, allowing you to move forward on your chosen property without delay.
When exchanging currency from sterling, ensure you book a good rate with your currency dealer in advance of the purchase date, allowing sufficient time for funds transfer and exchange to Dirhams at the Moroccan bank. Daily exchange rate fluctuations can vary as much as 10% so remember that booking a good rate can save you thousands when transferring the large sums needed for a property purchase.
When buying off-plan, you’ll be selecting your property from a plan, a model and at best, a show home. Make sure the room sizes you get are the same as those in the show home and if they are not, find out the exact difference. Make sure you fully understand what you’ll be getting and ensure it is well documented in the contract you sign.
Just who are the developers? Do they have a proven track record and can your lawyer confirm they are providing you with a bona fide bank guarantee and insurance should the project fold?
Some developers will offer pre-arranged mortgages as part of the off-plan deal. You are not obliged to take these mortgages, although you’ll probably save some arrangement costs if you do so. It is always wise to be cautious and get competitive quotes from other mortgage suppliers before simply taking the developer´s option.
Do your sums carefully. If the price of your unit doesn’t compare favourably with that of comparable finished or soon to be finished developments in a similar area, then you are gaining nothing by buying off-plan.