There are various ways for foreigners to acquire property in Mauritius, and various reasons for them to want to do so. The market offers an abundance of properties to those who can afford it, and for those wishing to acquire the right to live in Mauritius through their ownership of a property, the threshold of USD375,000 is relatively low in comparison to similar programs elsewhere.
The acquisition of property by foreigners is governed by the Non-Citizens (Property Restriction) Act of 1975 (as amended)(NCPR Act). The NCPR allows that in principle virtually any property anywhere can be bought, with the condition that any such acquisition has to be approved by the Minister under whose responsibility this may fall from time to time. Upon approval, the Minister shall issue a certificate of authorisation in terms of section 3(2) of the Act. However, getting such an approval is a lengthy process and the approval is entirely at the discretion of the minister. Section 3(3) of the Act therefore creates categories of purchases that carry implied consent for foreign purchase. The developments included in this list shall be referred to as the “Schemes” and include IHS (Invest Hotel Scheme), PDS (Property Development Scheme), Smart City Scheme, G+2 (Ground floor plus two) apartment block scheme as well as properties in the now discontinued IRS and RES Schemes. Properties within these schemes are typically tailored and priced for the international market.
In 2023 the NCPR Act was amended to make provision for a further category: the acquisition of properties by resident foreigners outside the schemes. The conditions attached to these acquisitions are contained in clause (3)(3)(d) and 3(3A) of the Act. In December 2023, the Economic Development Board (EDB) issued guidelines as to how this will be implemented[1]
Important considerations
It is important to note that this new category is only available to foreigners who already have the right to live in Mauritius. The terms “resident” is not restricted to permanent residents and includes holders of other residence or occupation permits. It is not available to foreign investors or to foreigners who wish to acquire residence by the acquisition of property in Mauritius. It follows that the purchase of such a property, regardless of the fact that the minimum threshold is USD500,000, will never entitle the owner or their descendants to residency.
On this minimum threshold, an additional duty of 10% on the value of the property is levied, apart from the normal land transfer tax and registration duty (another 10%). But in contrast with the purchase of property in a Scheme which is relatively free of encumbrances, in this case there are several restrictions: For one, the use of the property is restricted to the “personal residence” of the owner. This terminology seems to refer to a right of “habitation” – from the Latin habitatio, which is the right to inhabit a property, as opposed to the term “use”– from the Latin usufruct, which has a wider meaning and may include using the property for profit. It follows that using a property for “personal residence” restricts the owner to living in the property himself and does not allow for it to be rented out or use as a business, for instance a guesthouse or Airbnb.
Secondly, property speculation is specifically prohibited. Thirdly, the owner of the property can only be a private person – the main permit holder. Apart from these major restrictions there are other limitations too, for instance regarding the maximum size of the property, the nature of the land that can be so bought, and the ministerial approval for the onward sale of the property.
This begs the question: Is buying outside of Scheme under these new provisions better for the foreign resident than buying in a Scheme?
Pros and cons of buying in an approved Scheme
Firstly, let us look at the main benefits of buying property inside an approved Scheme. As a starting point, for a mere USD375,000 one can acquire permanent residence by buying a property in one of the schemes. Property can be used relatively freely and traded with relative ease, and there is no bar on ownership for legal entities. Furthermore, the quality of these developments aim to be of a high standard and usually include amenities to complement the residential buildings. Smart city developments for instance aim to cater for all the needs of its residents and usually include hospitals, schools and shopping malls. These developments are also typically situated in locations where foreigners prefer to stay.
On the downside, one would be hard pressed to find anything for USD375,000 in one of the Schemes, with the possible exception of a modest apartment. In most of the Schemes, nothing more than a townhouse/duplex will be available even at the USD500,000 price point. With the rapid expansion of this market comes complains about build quality and delivery deadlines. Lastly, buyers are still limited as to where and what they can buy.
Pros and cons of buying under the new provisions
One of the benefits of buying a property outside of a Scheme under the new provisions is that there is a much wider selection of properties to choose from (theoretically, at least – properties under the USD500,000 threshold are not available), and buyers should be able to find a much larger property for their money. On top of this, there are no limitations as to where such a property should be located, bar a few minor exceptions. From this point of view, there are probably many hidden and previously unattainable gems ripe for the picking.
On the downside: The entry price of USD500,000 is quite high for the local market, and many properties won’t meet this minimum threshold. Access is thus restricted to properties at the high end of the local market. The idea of buying a neglected older home in a nice neighbourhood and fixing it up is mostly unrealistic, as these properties are likely to be priced below the threshold.
From an investment perspective, the 10% premium on the purchase price means that the property, on resale, will have to have gained a 10% growth in value for the owner just to recuperate their initial investment. This high price point also means that the owner will on resale be squeezed between the upper end of the local market and those other foreign residents who wish to buy a property outside a Scheme. The majority of potential buyers in that price bracket, namely foreign investors, will not be allowed to buy the property.
Another obstacle is the fact that the property may only be used as the personal residence of the owner. In the absence of renting it out on short- or long-term basis or using it as an Airbnb or guesthouse, it does not appear that any income can be derived from it. For as long as the owner lives in the property, this should not be an issue. However, the question arises when the owner has to vacate the house or leave the country for whatever reason: How will the restricted use of the property allow the owner to benefit from, or even maintain the property if no income can be derived from it?
Lastly: Such a property can only be bought in the name of a private person (the main permit holder), not a legal entity (including a trust). Trusts are handy tools in estate planning, and this limitation might have a severe impact on the succession planning of the owner. The property will be vulnerable to the death or bankruptcy of the owner, as it cannot be entrenched through any of the usual mechanisms such as a trust.
Conclusion
The established property Schemes do not have many restrictions as to resale, use and ownership. Buying in such a development is akin to buying any other property in the world. In a Scheme, a property worth USD375,000 will grant the owner residency for as long as he holds it, and will transfer that residency to the new owner when the time comes to sell it. By contrast, buying a property outside a Scheme, even though it is now permitted, carries a lot of limitations.
Any new development in law takes time to filter down into practical, workable components. But as matters stand regarding these amendments to the NCPR Act, caution is advised. At the core, these new rights are intended only for the personal use of those who are already resident in the country and do not intend to leave soon. Barring potential long-term growth, this might be all that it is good for.
[1] Guidelines: Acquisition of Residential Property for a Minimum of USD500,000 by a Non-citizen Holding a Residence/Occupation Permit
[This article is republished from the Temple Journal Second Edition.]
About the authors:
WILLEM JANSEN VAN RENSBURG
FOREIGN LAWYER – TEMPLE LAW
DIRECTOR OF OPERATIONS
Willem has over 20 years of legal experience, mostly leading his own firm
in South Africa. After moving to Mauritius in 2018, he completed a Master’s
in International Business Law and became Director of Operations at
Temple Law. Practising in Mauritius for five years, Willem remains on
the roll of attorneys in South Africa. Initially a property conveyancer, he
is now a versatile lawyer specialising in international commercial law
and the African market. In 2024, he was appointed Chair of the African
Leadership Group of Meritas, the premier global alliance of independent
law firms.