A guide to buying property in Belize
Property values here on Ambergris Caye have been on a steady, and steep, increase during the past 25 years or so. It seems that there is no end in sight to this trend, so any property bought today at a fair price will certainly be a good invesment for short, medium and long term planners.
Can I, as a foreigner, own property free, clear and outright in Belize? Yes, your right to own property is the same as a Belizean. You own it free and clear. You do not need any special permits, licences or the like. You pay a Government Stamp Transfer Tax when you buy.
The very good news is that there is no Capital Gains Tax when you sell!
How do I make sure I am going to get what I think I am buying...in other words, how do I know the property has clear title? This is handled by your legal representative who can be a lawyer or a paralegal. He or she will do a "Title Search" which At Pelican Properties Ltd. we play our part by ensuring that any deposits paid do not pass beyond the Escrow stage until all paperwork is in order. This includes ensuring that the title for the property has been thoroughly researched and declared free and clear of all liens, judgements and encumbrances.
How many ways can I own a property in Belize? Basically, just two. The first way of owning property is you get title free and clear, either in your name or in your company's name. The property can be mortgaged with a lending institution. Titles, free and clear, are issued for land, houses, and true condominiums. Condominiums are surveyed and each condo gets a "Strata" title. The second way of owning property is via. a Corporate Share Certificate or "Co-op." Co-ops are used when buying a condo or house within a planned community where each condo or house represents a share or shares of a company.
What other information might be useful?
1. Property prices in Belize are generally quoted in U.S. dollars.
2. Buying a property is fairly easy. From start to finish the process takes 30 - 90 days with a typical closing on a straightforward fee simple titled property being about 60 days. If you're buying a company to buy a property then the closing can be even less than 30 days.
3. Some sellers offer financing. In most cases they will ask 9 - 12% interest. But, there is a slow trend towards lower interest rates being offered by sellers and recently we have seen rates as low as 7%.
4. As a foreigner you can get some financing in US dollars from Belize offshore banks. But, typically, the maximum you can borrow is 50-60% of the value of the property. Expect to pay about 10% interest, and, of course, the payments have to be in US dollars.
5. If you like a property and want to make an offer you do have to place an Earnest Money deposit with Pelican Properties Ltd. This is held in escrow for your protection. It can be as low as 1% and as high as 10% depending on the value of the purchase. We cannot submit an offer to the property owner without a deposit.
6. The offer form is legally binding to both buyer and seller. There is always a proper due diligence period for the buyer included in the offer form.
7. At Pelican Properties Ltd. we will guide you through the buying process, always keeping you informed of progress.
8. You don't have to involve your US attorney in a typical Belize property purchase. Belize has experienced attorneys and paralegals to protect your interests. And, of course, your money will not be released to the seller until all the paperwork has been properly executed. Your U.S. attorney can preview any documents before you sign them but he'll be underworked. Offers and Agreements to Purchase are written in plain English and are very simple and to the point. Contrast that with the pages and pages of "Legaleeze" in a minature almost-impossible-to-read-without-a-high- powered-microscope documentation that each transaction in the USA or Canada seems to consist of.
9. You do not need to be in Belize to buy or sell your property. If you own property in Belize but live in the USA and want to sell your Belize property you can do so without visiting the country. Having said that, we strongly recommend you NOT buy property "sight unseen" in Belize. There have to be very special circumstances for us to recommend that this rule be broken!
10. Property taxes on Ambergris Caye are very affordable. For example, you might have a house worth $300,000US. Your annual property tax will likely be under $400.00US.
11. Belize has very good property insurance. It is often referred to as "Fire and Allied Perils" insurance. One of the "allied perils" we have in Belize are hurricanes. Direct hits from hurricanes on Ambergris Caye are very rare. They can happen, though, but with proper insurance they should only be considered a "royal pain in the butt" rather than a financial catastrophe. Here at Pelican Properties Ltd. we request and require that all structures on a property are properly insured during the buy/sell period. Expect to pay as little as 1% of the insured value for concrete going up to as much as 2.5 - 5% of the insured value for an all-wood structure for 1 year of insurance.
12. When you purchase a property in Belize you do have to pay just under 5% Stamp Transfer Tax. This percentage is based on the value of your property purchase. If you bought a condo for $250,000US then the Stamp Transfer Tax will be around $12,500.00US. Note that when you sell the property you don't have to pay the Transfer Tax but the new buyer does. There is no Capital Gains Tax so your profits stay with you 100%.
13: How to avoid common problems when buying property in Belize or "Property Purchasing Pitfalls and How to Avoid Them!"
(a): If you're buying a condo it is fair to say that the best run condo associations are those that are wholly owned by the condo owners themselves. If you see a condo you like but the management is separately owned (either by the developers or a separate management company) please, please BEWARE! You could be buying into a hornets nest of disputes, legal proceedings and zero net rental incomes. In my 18 years here on Ambergris Caye I have consistently seen that the most successful condo projects from each condo owner's viewpoint (ie. YOURS if you buy a condo) are those where the management is owned by the condo owners. When management is separately owned one generally finds that such management levies fees heavy enough to ensure very little net income to individual owners. You find trouble. If you're buying a condo please FIND OUT if you're going to be co-owning the management with the other owners. If the answer is "no" then TREAD CAREFULLY. Ask existing owners if they're happy with the management of their condo. The better real estate offices in San Pedro will tell you which condo associations are 100% owner-owned.
One more cautionary note when buying a condo: If the developer shows you ESTIMATED annual net rental income figures of more than 6% of the purchase price a year treat that information with a degree of caution. It's likely not going to happen. Even the best net rental income on the best condo projects is no more than 3%-6% of the purchase price. When you see net rental income figures of tens of thousands of dollars from a developer he's simply not being truthful. When management is owned by the individual owners of the condos you will never see exaggerated net rental income figures.
(b): If you're buying any property make sure the person you're buying it from is the legal owner and can transfer title to you without delay. We have seen bad things happen when people omit the simplest due dilligence drills. Two wonderful ladies bought a small property close to the Ferry a couple of years ago. They were promised title by the seller who said he was subdividing a bigger property into smaller titled lots (theirs was one of the smaller "soon to be titled" lots). They built their dream home on the property. Circumstances changed and they were forced to sell. They did not, at any time, receive title from the seller because he was still paying for the larger property himself. Because they could not pass title on to the next owner they were forced to sell at a loss to the original "owner."
They have lost most of their life savings. They did the deal directly with the owner and they signed paperwork that did not offer them any protection. They also made the mistake of building their dream home on a property that didn't belong to them (at least in legal terms) and they made the mistake of paying the "owner" of the property for a title they never got. The money should have stayed in a safe Escrow. This would have put the "owner" of the property under pressure to produce the legal title to the property as promised. Their money would have been refunded in full as soon as it became apparent that the "owner" of the property had no intentions of producing title.
(c) Make sure that the property you THINK you're buying is the property you're ACTUALLY buying!You go with the purported owners of a property and you look at it and it's remote and beautiful and glorious and you say "I'll take it!" You do everything after that correctly, (or so you think)...you hire a Belize lawyer who does his or her job correctly. They effect a smooth and efficient transfer of title for you. Everything about the title is 100% correct, no liens, cautions, it's free and clear. The lawyer has no way of knowing that the property you were shown is not the one you bought! After all, lawyers are not in the real estate business, they're in the paperwork business. You thought you were buying 5 acres of beautiful lagoon front white sandy beaches. That's what you were shown. You acutally bought 5 acres of swamp and mud. This could have been avoided with a little due dilligence. If you want to buy property, especially land that is remote and difficult and expensive to get to, MAKE SURE the land you're looking at and like is the land you're buying. Ask for proof.
Having said all of that....being a property owner on Ambergris Caye needen't be anything but a great experience and a wonderful investment. Just exercise a little care and attention during the viewing, deciding-to-buy and actual buying process. At Pelican Properties Ltd. we will go the extra yard to ensure that any transaction you make through us is done with care and proper due dilligence and that none of the pitfalls you see in our little "Property Purchasing Pitfalls and How to Avoid Them!" primer will happen to you.
I mean, why should I own property on Ambergris Caye?
1. It is almost certainly going to be a great investment.
2. You came to our island and loved it.
3. Paradise does not have to be "lost." You can own a piece of it!
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