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Buying Property

Andorra - Buying Property


Many factors affect the actual annual rate of appreciation in property values, but as a general guide an analysis of sales over the last 10 years shows an average appreciation of over 10% in Sterling terms. Be cautious of claims of higher appreciation.

Both residents and non residents are able to borrow money from local banks for the purchase of a property in the Principality. The current terms for non residents available are 60% of the purchase price for up to 15 years at a fixed interest rate of 6%*. Capital and interests repayments are made together. The bank is the first creditor in the case of default. *Loan in Euros - subject to change.

Andorra gives a genuine welcome to foreign visitors and investors. The resident or owner of property will be amazed by the total lack of government intrusion. Inspectors, annual returns, declarations etc. are conspicuous by their absence.

When purchasing a condominium property in Andorra the owner, apart from acquiring the freehold title for the apartment, also becomes co-owner of all the common elements in the building, the plot of land on which the building is erected, the public entrance halls, staircases, lifts and elevators etc. The costs of maintenance of these elements are paid proportionally by the various owners in the building. A typical community charge for a studio might be 600 Euros and a 3 bedroom flat 1200 Euros per annum.

There is no import duty on personal household furniture brought into Andorra providing it is not new and there is no intention to resell.


Property Prices

Due to the complete freedom from any currency control properties may be priced in any currency at the discretion of the vendor. The selling price may be shown in either Euros or Sterling or any other currency. Any conversion rates quoted are for general guidance only and rates should be checked with the local banks.


Property Purchase

As only 8% of the total area of Andorra is available and suitable for development there are restrictions on the amount of property a foreigner can own at one time in his own name, until such time as he/she has completed 20 uninterrupted years as a resident. At present this is one unit of property: one apartment, or one plot of building land for a private house (the size of the plot not to exceed 1,000 m2), or one house already constructed on the plot of up to 1,000 m2. For the purpose of property purchase and registration a husband and wife count as a joint entity: children over the age of 18 years however may have property registered in their name. An Andorran entity, either a company or an Andorran citizen, is not restricted in any way as to the amount of property they can own.


Purchase Procedure

While a property may be reserved verbally, the first commitment is made when the buyer places a 10% deposit with the selling agents: this is non-returnable if the buyer subsequently withdraws from the transaction on unreasonable grounds. At that time a purchase agreement can be signed between buyer and seller. More normally a receipt for the deposit will be given and after a delay of about six weeks a purchase contract will be signed in front of a notary public. The notary is a Government appointed official who acts impartially to safeguard the interests of both parties. At the time of signing, payment of the balance of the purchase price is made and the title deed or escriptura is issued. Prior to this, Government approval to buy will have been sought by the selling agents who will have presented a sol.licitud (request for the approval of purchase) for the buyer. Completion normally takes some four weeks to arrange.


Rates

In Andorra the local parish councils (comuns) levy a two tiered property contribution. The first, known as Foc i Lloc is paid by each household resident on a permanent base. This pays for local services such as refuse collection, street lighting, snow ploughing etc. The second contribution is a property ownership tax and is paid only by the owner of property, irrespective of whether they are fully resident or not. The average annual rates bill will vary from around 160 Euros for an apartment and 250 Euros for a four bedroom chalet.


Owners Associations

Communitat de copropietaris. Owners of condominium property hold annual general meetings at which they elect a Management Company who will oversee the general running of their apartment building or development. At this AGM a budget is agreed to cover improvements, repairs and renewals necessary, and a President, Treasurer and Secretary are elected from amongst the owners in the development. The result of the AGM is that a community charge is fixed which will usually vary depending on the size of the property. Typical charges for apartments where no swimming pools etc. are involved might be: studio 600 Euros, 3 bed flat 1200 Euros.


Planning Regulations

At the end of World War II Andorra was desperately poor. When the property boom arrived, towards the end of Franco's regime, it was fortunate that the country did not go overboard for the concrete block development which spoils so much of Spain's coastline. Andorra has its share of featureless apartment buildings, but stringent regulations are now in force restricting building heights and ensuring that finishes of buildings are in keeping with the natural materials of the region: stone facing for walls, pine wood for balconies and eaves, and the rounded Pyrenean roof slates. Town and country planning and building permissions are granted strictly in step with the infrastructure capacity so that hygienic sewage systems, adequate fresh water, electricity and telephone services are available.


What are the costs involved in the purchase of Andorran property?

The quick answer is: "Remarkably little compared with France and Spain". The government property tax in Spain is 6-8% and in France between 10% and 12% for a house and the first 2,500 m2 of land, depending on the size of the property, and for just building land 13%, while in Andorra 3% should cover the non-recurring items.


Comú Purchase Tax

On 1st March 2001 the Government introduced a new property tax and persuaded the Communes to fix their rates on a percentage basis. These taxes are all collected by the Notary Public on completing the purchase.
The Comù Tax is:

COMUNS Tax % Bldg Permit/m2/Apt
ANDORRA LA VELLA 1.25 44
CANILLO 1.25 48
ENCAMP 1.25 50
LA MASSANA 1.25 45
LES ESCALDES 1.25 46
ORDINO 1.25 60
SANT JULIA DE LORIA 1.25 35

COMUNS FOC I LLOC COMU SERVICES (non-res) LETTING OWNER APT. (non-res) OWNER APT. (resident)
CANILLO 32 (12) 103 --- 65 65
ENCAMP 24 (12) 74 --- --- ---
ORDINO 10 (12) 210 25 (res) 43 90 to 180 90 to 180
LA MASSANA 18 (12) 16 (12) 2,50% --- 112 (4)
ANDORRA LA VELLA 45 (12) 60 (10) 2,88% 147 52
SANT JULIA 82 (9) 68 (10) 3,30% 132 132
ESCALDES ENGORDANY 16(1) 18 (1) 3,00% 125 to 218 ---


Government Property Tax

On 1st March 2001 the Govern introduced a property purchase tax of 1.25% of the declared value of the property. This is paid to the Notary Public on signing the public title deed of purchase. At the same time the Comù Tax is paid.


Notary Fee (Conveyance)

To convey a Public Title Deed or Escriptura Publica the Notary Public in Andorra charges a once only fee of approximately half a percent of the purchase price of the property.


Government Documentation

To purchase a property on an Escriptura Publica you must apply to the government for permission by means of a Sol.licitud. This is purely a formality designed primarily to ensure that foreigners only own one property. The charge for the preparation and presentation of this document is 190 Euros.


Community Charge

If you are buying an apartment under the regim horitzontal (condominium) you will have to contribute a once only payment into the reserve fund of the co-proprietors plus the advance payment due on the annual service charge (a recurring item). Although this is not strictly a cost attributable to the purchase it is nevertheless important for you to be aware of it. For this you should allow approximately 1% of the purchase price.


Connection Charges

Normally charges for connection to the services of water and drainage are included in the purchase price, the exception is when buying a new chalet or town house. These charges are fixed by the developer and therefore cannot be quoted accurately, however, they are unlikely to exceed a total of 300 Euros.

Charges for connection to the services of electricity, gas and telephone, if applicable, are:

Electricity (Encamp, Canillo, Les Escaldes & Andorra for 8.8 Kw.): 185.-Euros
Electricity (La Massana and Ordino): 117.-
Electricity (Sant Julia): 90.-
Gas: 150.-
Telephone (not including installation): 36.-

Typical Costs on Purchasing an Apartment of 100m2 in La Massana

Assumed Purchase Price 300,000 Euros:

Govern Purchase Tax: 3750.-
Comú Purchase Tax: 3750.-
Notary Fee: 1500.-
Government Suplica: 190.-
Electricity Connection: 117.-
Telephone connection: 36.-
Community Fund*: 600.-
TOTAL 9943 Euros


Property Title Deeds

It is quite possible if you are new to Andorra, or contemplating the purchase of a property, that you might have difficulty in understanding the different methods of conveying property titles.

Below we will explain in detail the various forms of contract which can be used. It should be noted that ALL FORMS OF CONTRACT described hereunder are FULLY LEGAL, FULLY PROTECTED UNDER LAW, and it is impossible to purchase in Andorra any property with a PUBLIC DEED that has either a lien or mortgage attached, unlike in Spain for example.

At this point we must understand the essential difference between the PRIVATE CONTRACT and the TITLE DEED. The former is a document which is legally binding on all participants, however, even if it has had the signatures witnessed by the Notary Public it is still just a private contract. As far as the Notary is concerned, a TITLE DEED must have been drawn up in its entirety by him and its clauses verified by him. Most important of all the purchaser, if a foreigner, must have acquired a certificate from the Andorran government giving permission to buy.

All transfer of property titles take place in front of the Notary Public of which there are four in Andorra. The Notaries, who are qualified lawyers, are public officials acting impartially in dealing with the many types of documents which are signed before them and which in most cases they draw up themselves. Thus lawyers are not necessarily required, as they are in other countries, and are extremely costly; the decision is yours.

You may appoint a person to have a restricted Power of Attorney for the purpose of purchasing a named property on your behalf in front of the notary Public should it be inconvenient for you to be in Andorra for the eventual transfer. We can arrange this for you. For your peace of mind it should be noted that well over 75% of all transfers handled by us over the past twenty years have been effected in this manner.

The Title Deeds available are as follows:


Escriptura Publica De Compra-Venda

All property in Andorra starts out having an ESCRIPTURA PUBLICA (Title Deed) since all property originally started out with an Andorran owner (or a foreigner who has lived in Andorra for a minimum of 20 years).

The simplest form of property transfer is therefore the NOTARISED transfer of the Title Deed from one Andorran to another. Simple that is, because an Andorran is not subject to any restrictions on property ownership and an Andorran company has the same status. However, there may come a time when the Andorran wishes to sell his property to a foreigner. The foreigner, that is YOU, must petition the government by means of a Sol.licitud. This document, in Catalan, requests permission for you to buy (or sell) the property in question. A sol.licitud is not required from the Andorran vendor (but would be required from a foreign vendor). The government registers the sol.licitud and checks that the foreigner

a. does not own more than one property and
b. that the property in question conforms with the legislation in force at that time.

Once approved, the sol.licitud opens the way for the Notary Public to draw up the Escriptura Publica (Title Deed).

A sol.licitud will automatically be granted to persons fulfilling the following conditions:

1. He/she is of full legal age - over 18.

2. He/she is the holder of a current passport or legal identity document.

3. The applicant (and his/her legal spouse) does NOT currently own another property by public title.

4. The building in question, if an OLD one, must have

a. been authorised by the government for construction and sale, and
b. have been passed by the government Public Services Inspectorate as conforming with the building regulations in force at that time.

If it is a NEW building point a. must apply and in addition the building must comply with all the CURRENT building regulations. It follows that point b. must apply as soon as possible after completion.

5. If a plot of land or ONE chalet, the plot area must not be more than 1,000 m2. If an apartment there shall be ONE only.

6. The old system of owning a property by means of a PROMESA IRREVOCABLE DE COMPRA-VENDA or irrevocable private contract of purchase or sale has been stopped and such documents are no longer legal.

7. It is possible that the Andorran government might shortly give foreigners the right to own more than one property in their own name but in the meantime the only way of owning more than one property is to register it in the name of another adult member of the family (not a spouse) or in the name of an Andorran company.


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