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Gibraltar - Buying Property

Buying a property in Gibraltar can be fairly expensive, as many new developments are being aimed at wealthy buyers in general. On the other side, there are several projects which are being built in cooperation with the government in order to offer more affordable housing for those with fewer funds. There are some older properties once owned by the British Armed Forces that are being renovated for sale as well. Many apartments that are available to buyers are found in blocks or small developments, sharing some facilities such as swimming pools and sometimes laundry rooms.

When buying a property in Gibraltar the process is very similar to the one in the United Kingdom. There are no particular restrictions on foreign nationals buying a property in this territory, although those without residency permits or work permits must go through an application process with the Gibraltar government. Those who intend to buy a property in the name of a Gibraltar Offshore Company must know that there may be some tax breaks, so it is highly advisable to get some independent advice from a financial advisor prior to purchasing.

All deeds to properties have to be registered with the Supreme Court and most of new properties are leasehold rather than freehold. As in the UK, buyers must see the property first, and find out more about the price. It is necessary to pay a reservation fee, an amount of 2%, which is held while the sale is conducted.

There are numerous additional fees which any buyer should take into consideration. The first of these is a stamp duty fee of 1.26% of the purchase price, and there is an additional 0.13% if a mortgage is involved. There is a small fee for registering the deeds with the Supreme Court and the office of the Land Titles Registry. All buyers must also consider their legal costs, and these charges can vary. Finding a lawyer should not be a problem as Gibraltar has a huge number of them. When the agreement is in place, a further 8% of the purchase price is added to the 2% already in escrow, and when this stage is completed, both sides are obliged to go through with the sale.

How to buy property in Gibraltar

Buying a property can be both an exciting and daunting process. However, some experienced lawyers in Gibraltar can help expats to avoid potential problems and protect their interests throughout. The whole procedure for purchasing a property and the services that can be expected are explained in the four steps below.

1. Identifying a property & paying a holding deposit

Once a purchaser decides to buy a property, a holding deposit should be normally paid to the vendor. In most cases, estate agents represent vendors and they usually request a 2% deposit, payable by the buyer. This way the property is being taken off the market. The 2% deposit is later deducted from the purchase price.

2. Investigating title & exchanging contracts

The next step is to instruct lawyers who initially carry out a search at the Land Registry and investigate the title to the desired property. This is important in order to ensure that title to the property is properly constituted and that there are no mortgages secured against it on completion. In addition, Preliminary Enquiries Before Contract are sent to the vendor’s solicitor. These enquiries cover a variety of matters relating to the property, such as whether alterations requiring consent or planning permission have been made to the property, whether Energy Performance Certificates have been obtained, and whether the vendor has experienced any problems with neighbours or the management company.

After that, a purchase agreement is drawn up by the vendor’s lawyers and delivered to the buyer's lawyers for approval. This agreement sets out the purchase price and the terms and conditions under which the property is being sold. Until a purchase agreement is signed, negotiations take place on a "without prejudice" and on a "subject to contract" basis. This means that until both sides have signed the agreement, no binding contract is made for the sale of the property. The signing of the purchase agreement by both sides is also known as "exchange of contracts".

After the exchange of contracts, both sides must go through with the transaction. If one party does not complete after the exchange of contracts, the other side can sue the defaulting party and force them to proceed with the process. In this case, the defaulting party is liable for all costs and consequences resulting from non-completion.

If a purchaser or vendor pulls out before exchanging contracts, he/she is not generally liable to the other side. However, if a holding deposit has been paid to an estate agent, they may be entitled to retain a proportion of this. This largely depends upon the terms under which the deposit was paid to the estate agent. Most estate agents ask buyers to sign a memorandum of sale or a reservation agreement. Buyers should read the terms of these carefully and ask their lawyers to review them before signing.

3. Completion

The next stage is for the lawyers to draw up a Deed of Assignment, in case of the property being leasehold, or a Deed of Conveyance if the property is freehold. This deed is approved by the vendor’s lawyers and by all parties to the transaction as well. These often include the management company of an estate and the original developer. This deed is the document by which the buyer becomes the owner of the property.

Once the deed is approved, a completion statement is drawn up by the buyer's lawyers. This includes details of the purchase price to be paid, the amount of money being advanced by a bank or building society and stamp duty and registration charges payable to the government. At this stage lawyers ask buyers to provide the balance of all required funds needed to complete the purchase of the property. These funds are paid into the lawyers’ client account and payment is made by them to the vendor’s lawyers.

If obtaining a mortgage, the funds will be requested from the bank or building society by the buyer's lawyers. Buyers only need to provide the balance of the required monies over and above the amount of the mortgage advance. Once the deed is executed by all parties and the purchase price paid, the original historic title documentation and the keys to the property are handed over to the buyer's lawyers.

4. Registering the deeds & paying stamp duty

It is important to know that all properties purchased for £200,000 or less are exempt from stamp duty. If the buyer is a first or a second time buyer, the threshold is £260,000 and the property purchase is also exempt from stamp duty. In all other cases, stamp duty needs to be paid to the Gibraltar Government. The deeds to the property also need to be registered at the Land Registry and extra costs are payable to effect this.

Where to look for a property

The best place to start looking for new properties is on the internet. There are numerous websites that offer precise information about properties available for buying in Gibraltar.

Bray Properties
Gibraltar's Property Portal

Read more about this country

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