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The IRS, RES, PDS and SCS legal frameworks

In order to promote foreign direct investment in the real estate sector, the Mauritian government implemented in 2002 a legal framework governing property acquisition, the Integrated Resort Scheme (IRS), followed a few years later by the Real Estate Scheme (RES).

After the IRS and RES, the government introduced in 2016 new real estate investment options like the Property Development Scheme (PDS) and the Smart City Scheme (SCS). Both also allow foreigners to acquire property in the country.

The IRS legal framework allows foreigners to buy freehold property within an integrated development scheme. The minimum amount invested to buy an IRS-type residence is USD 500,000 (excluding taxes), which enables the new owners to apply for a residence permit. A residence permit issued under the IRS or PDS is valid only as long as the holder retains ownership of the property and is passed from one owner to the next.

In order to carry out a professional activity on the island, the holder of a residence permit obtained must apply for a work permit, usually granted without much difficulty.

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Smart City Scheme

Work, live and play is an Economic Development Board's concept which aims at creating better working conditions in the country by encouraging its economic development.

Built around the work, live and play concept, Smart Cities incorporate mixed-use developments in cosmopolitan conurbations with smart technology and pioneering innovation at their core. The focus is to deliver a happier lifestyle through the development of self-sufficient cities offering integrated sustainable solutions and ensuring minimum wastage and maximum comfort for the long-term benefit of all citizens and future generations irrespective of social and economic class.

Moka Smart City, developed by the ENL Group, is among the first Smart Cities on the island.

As with the other legal frameworks (IRS, RES and PDS), foreign investors can apply for the Mauritian residence permit upon acquisition of a residence worth at least USD 500,000.

In addition to residing in an attractive destination with a high standard of living, the acquisition of a property within an SCS development gives foreigners access to the country’s favourable tax environment. The property owner is entitled to become tax domiciled in Mauritius under certain conditions, such as a minimum stay of 183 days in the territory in the relevant financial year.

PDS Guidelines

SCS Guidelines
 

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Key statistics

There are 11 IRS, 85 RES and 52 PDS developments on the island.

52% of buyers come from France, South Africa and Great Britain. Other foreign buyers are mostly from Belgium, Madagascar, Germany, China, Italy and Switzerland.

Analysis shows that the luxury residential properties in the north of the country are more popular with French citizens while South Africans tend to buy properties on the west coast.

The real estate market, unlike others, is influenced by intrinsically local factors. As well as the structural and architectural features of a building, easy access to essential amenities and equipment, the availability of transport and other public services play an important part in the attractiveness of a particular place. They actually determine the price of real estate products.

IRS property prices range from USD 17m to USD 70m. The highest price registered for an IRS project is Rs 250m and Rs 120m for an RES project.

About 76% of buyers bought their properties in their own name and 24% used the mediation of a company. Approximately 23% of those who registered their property through the mediation of a company were French citizens while 10% of those who bought their property through trusts were South Africans.

IRS, RES and PDS projects attract substantial foreign currency inflows into various sectors of the national economy while producing significant spin-offs. They have a very positive and immediate impact on the construction sector as well as the banking and financial sectors, including asset management, private equity funds and the legal sector.

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Vente en l’Etat Futur d’Achèvement (VEFA)

Residential developments such as Heritage Villas Valriche and La Balise Marina are sold off-plan by way of a VEFA. This type of real estate sale governed by the French Civil Code provides for payment in instalments and must be validated by a contract.

According to Article 1601-3 of the French Civil Code, which is applicable in Mauritius, the VEFA is the contract by which the seller transfers immediately to the buyer his rights to the land as well as ownership of existing structures. Future constructions become the property of the buyer as they are built. The buyer is legally bound to pay the amounts that become due as work progresses. The seller retains the powers of project manager until the work is completed.

Learn more about buying-off plan in Mauritius

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Garantie Financière d’Achèvement (GFA)

In accordance with the requirements of the VEFA, the developers must provide a Garantie Financière d’Achèvement (GFA) from a reputable local bank. The GFA is a financial guarantee providing assurance to the buyer that the property will be delivered according to the terms of the contract. In case the developer fails to fulfil his obligations, the bank will ensure delivery of the property.

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Stages of the acquisition process

The Contrat de Réservation Préliminaire (CRP)

This first contract between the future buyer and the developer serves to reserve the property. On signing, a down payment representing a guarantee deposit must be paid into an escrow account, generally opened before a notary.

Letter of approval from the Economic Development Board

The buyers must submit several documents required by the authorities to the promoters, so that the latter may make an application to the Economic Development Board in the name of the client for the acquisition of a property in an IRS or PDS property. The Economic Development Board examines the application and, if it is approved, submits an approval letter which permits the promoter and the buyer to finalize the sale.

The Deed of Sale (DOS)

As soon as the approval letter is received, the buyer and the seller meet before the notary for the final stage, the signing of the sale contract.

At this point the client becomes the official owner of the property.

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Residence permit

Foreign buyers are eligible for a residence permit on acquisition of a real estate property with a minimum buying price of USD 500,000. The property must also be part of an IRS, RES or PDS-type development.

The spouse and children of the holder of a residence permit aged under 24 are also eligible for residence permits. An unmarried partner will not obtain a residence permit but will be entitled to a residence permit renewable on a yearly basis.

However, the residence permit does not give access to citizenship. Although it gives the holder the right to live in Mauritius, it does not automatically allow him to work or own other real estate properties in the country. To be able to work in Mauritius, the holder of a residence permit obtained through the acquisition of an IRS-type residence must apply for a work permit, which is generally granted without much difficulty.

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A residence permit granted under the IRS programme is valid as long as the buyer retains ownership of the property and is passed on from one owner to the next.

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