The following information is intended as a guideline for persons wishing to purchase property in Gibraltar, and is not meant to replace professional advice. We strongly advise prospective purchasers to seek independent legal advice prior to signing any documentation.
What are the first steps?
By the time you have found a property you wish to buy you should ideally already have decided on the building society or bank you will be using, and the amount and type of mortgage you will be having.
If you wish we can gladly arrange a meeting with a Financial Consultant to discuss with you the fiscal aspects involved in purchasing your new home in Gibraltar or introduce you to the leading lending institutions.
Should I pay a deposit?
It is standard procedure on the Rock for a purchaser to pay a 2% deposit either to the estate agent or developer.
On what tenure is property held in Gibraltar?
The land upon which all modern developments in Gibraltar are built is owned by the Government of Gibraltar, which grants a lease to the Development Company for 150 years (the Headlease), which in turn grants an Underlease to the purchaser.
There are also a number of older style properties within the town area held on a freehold basis, although historically these are more difficult to raise finance for.
What is a management company?
The majority of modern developments in Gibraltar have a management company, which manages the upkeep of the development as a whole. The persons who own units within the development own the Management Company and contribute to the running costs of the development by way of service charges.
Do I need a Survey?
When you buy a property, the legal principle of "caveat emptor" (let the buyer beware) applies. To protect yourself, you need professional advice from a surveyor.
Before your bank or building society agrees to lend any money, they will insist on a survey of the property. In reality it will consist of little more than a valuation for mortgage purposes, unless you ask and pay for a more extensive survey.
Which solicitor should I appoint?
Choosing a solicitor for your Gibraltar property is not necessarily an easy matter. Although cost is an important factor on the properties for sale in Gibraltar, above all else you will want someone who will do a good job for you. Speed is vital because a delay at any stage could result in you losing the Gibraltar property you want. Hence the importance of your chosen solicitor keeping in contact with you on a regular basis concerning the properties for sale in Gibraltar.
House sales can fall through for many reasons, and it s advisable to ask your solicitor in advance what he would do regarding charging you in the event that the sale of the Gibraltar property fell through for no fault of your own. If for example, you find alternative properties for sale in Gibraltar, many solicitors will not charge other than a nominal amount, but the point is well worth checking.
What are the approximate purchase costs?
Legal Fees: Range from a minimum of £900.00 to 0.5% of the full purchase price.
Registration & Disbursements: An approximate figure of £300 should be allowed, but this varies from one conveyance to the next.
No stamp duty is payable by first and second time buyers on the first £260,000 of the purchase cost.
There are a number of duties and disbursements as follows:
1) Stamp Duty: The Gibraltar Stamp Duties Act 2005 (as amended by the Stamp Duties (Amendment) Act 2010) relates only to transactions involving real estate property situate in Gibraltar. The rates of duty applicable are as follows:
(i) Nil % where:
a. The property value does not exceed £200,000, or
b. The property value does not exceed £260,000 in those instances where the purchaser is a first-time buyer or second-time buyer, or
c. Where the property is being transferred between spouses or, following the dissolution of a marriage, between former spouses.
(ii) 2% on the first £250,000 and 5.5% on the balance, where the property value exceeds
£200,000 but does not exceed £350,000, and
(iii) 3% on the first £350,000 and 3.5% on the balance where the property value exceeds
Additionally, if the property is purchased with the assistance of a mortgage, stamp duty is charged at the rate of 0.13% where the amount borrowed does not exceed £200,000 and 0.20% for amounts in excess of £200,000.
2) Land Titles Register: a fee of £125 per deed is charged for recording the transaction in the Land Titles Register.
The registration procedure referred to above should not be confused with the Land Registration procedure in the United Kingdom. In Gibraltar there is only a requirement under the Land Titles Act to register the deed in order to keep a public record of property transactions. As a result, the protection afforded by the priority of periods granted under the Land Registry rules in the UK is not available in Gibraltar.
On a mortgage 0.2% of the loan amount.
What are the standard running costs involved in owning a property in Gibraltar?
As a general rule of thumb, the majority of leasehold Gibraltar property pay Service Charges (normally to the Management Company), General Purpose Rates and Ground Rent.
What tax benefits are there for home-owners?
There are 3 main forms of tax relief available to home-owners, and we strongly advise you to seek professional advice from a Financial Consultant.
Tax Relief on mortgage interest
Tax Relief on qualifying life assurance premiums
Tax Relief for the "First Time Buyer"
Is there Capital Gains Tax?
There are no capital gains taxes in Gibraltar, and any profit from the sale of a local property is free from all taxation on the proviso that it is not done as a business activity.
Thinking of Buying to Let Gibraltar property?
This is an expanding sector in the housing market and we can arrange buy-to-let mortgages through leading lending institutions and manage the property on your behalf. Please contact us for further information.