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The legal frameworks of the IRS, RES,PDS and SCS

In order to promote foreign direct investment in the local real estate sector (at the moment it represents 63%), in 2002 the Mauritian government implemented a legal framework governing the acquisition process – the Integrated Resort Scheme (IRS), followed a few years later by the Real Estate Scheme (RES).

After the IRS and RES, in 2016 the government introduced new plans for real estate investment known as the Property Development Scheme (PDS) and the Smart City Scheme (SCS), both of which 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 amount invested to buy a residence of the IRS type must exceed 500 000 USD (excluding taxes), which permits the new owners to apply for residency. There is no minimum selling price for the PDS or the SCS. However, for the buyer to benefit from the Mauritian residence permit and potential status of fiscal resident, the value of the property bought must exceed 500 000 USD.

All IRS and PDS properties are sold by the provision of a VEFA (Vente de l’Etat Futur d’Achèvement).

In order to undertake a professional activity on the island, the holder of a residence permit obtained under the IRS or PDS must apply for a work permit, usually granted without much difficulty. A residence permit obtained under the IRS or PDS is valid only as long as the holder remains the owner of his property and is passed from one owner to the next.

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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 as well as international trade and financial centres.

The Smart City Scheme provides a favourable, ecological and sustainable framework as well as numerous attractive fiscal and non-fiscal advantages to investors for the development of “intelligent” towns across the island. Moka Smart City, developed by the ENL Group. is among the first Smart Cities.

As with the other legal frameworks (IRS,RES,PDS), foreign investors in the SCS have access to the Mauritian residence permit upon acquisition of a residence of at least USD 500,000.

In additional to residing in an attractive destination with a high standard of living, the acquisition of a property in an SCS development enables foreigners to benefit from the favorable fiscal climate of the country. Provided that the duration of the stay on the territory exceeds 183 days per financial year, the property owner is entitled to become tax domiciled in Mauritius.

IRS Guidelines  

PDS Guidelines

SCS Guidelines
 

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Key statistics

At the end of the third trimester of 2016, 13 IRS projects, 82 RES projects and 16 PDS projects had been approved, with a total of 1,966 buyers.

Overall sales of IRS and RES units up to the end of 2015 brought in a total revenueof Rs 49,551 million.

72% of buyers were from France, South Africa and Great Britain. The other foreign buyers were for the most part Belgian, Swiss, Indian, Russian, American, Dutch and Italian.

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 relevant amenities and equipment, the availability of transport and other public services play an important part in making a particular place attractive.In fact, they determine the price of real estate products.

The price range for IRS properties is much wider and can reach over 3,000,000 USD. The highest prices for IRS projects have been registered in the eastern and southern parts of the island.In the north IRS and RES prices are in a lower range, between 500,000 USD and 1,000,000 USD.

About 72% of buyers bought their properties in their own name and about 19% used the mediation of a company. About 7% used other investment instruments such as trust fund bodies. Approximately 80% of those who registered their property through the mediation of a company were French citizens while 70% of those who bought their property through trust funds were South Africans.

The IRS, RES and PDS projects attract important inputs of foreign currency into various sectors of the national economy as well as 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)

Whether in the case of Heritage Villas Valriche or La Balise Marina, real estate property is sold by the provision of a VEFA. The VEFA, governed by the French Civil Code, permits a method of payment in installments and must be validated by a contract: the VEFA 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 the ownership of existing structures. Future constructions become the property of the buyer as they are built. The buyer is legally bound to pay what is due as the work progresses. The seller retains the powers of project manager until the work is completed.

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Garantie Financière d’Achèvement (GFA)

In accordance with the requirements of the VEFA, ENL promoters of the developments have had recourse to a Garantie Financière d’Achèvement (GFA) with trusted banking institutions. The GFA provides assurance to the buyer that his property will be delivered to him according to the conditions in the contract, for if the promoter fails to fulfill his obligations, the banks 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 promoter serves to reserve the property. On signing, a down payment representing a guarantee deposit must be paid into a specific 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 an IRS or PDS property. The Economic Developmetn 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 when they acquire a real estate property, on condition that the buying price is over 500 000 USD and the property is part of an IRS, RES or PDS-type development.

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

It is to be noted however that the residence permit does not lead to obtaining citizenship. Although it gives the holder the right to live in Mauritius, it does not automatically allow him to work or to possess other real estate properties in the country. To be able to work in the island, 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.

A residence permit granted under the IRS is valid for as long as the buyer remains the owner of his residence and is passed on from one owner to the next.

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