Overseas buyers increase interest in Mexican property ahead of rule change
Searches for luxury coastal property in Mexico by overseas buyers have increased by 27% since it was revealed that a 100 year restriction on foreigners buying by the sea is to be revised.
In particular real estate investors from the UK have increased their number of enquiries while Americans are also interested in buying over the border.
Mexico’s lower house of congress voted in April to loosen restrictions on foreigners buying property in the area, and since then international online firm LuxuryEstate has seen a huge increase in sales inquiries.
Currently the law prohibits foreign ownership of land within 50 kilometres of the coast or 100 kilometres of an international border. The limits were written into Mexico's 1917 constitution after the US annexation of Texas in 1845, following American settlement of the region.
‘Foreigners currently have to partner with a local bank in an agreement called a fideicomiso to buy in these restricted zones, but it is complicated and time consuming which puts many people off,’ said Silvio Pagliani, president of LuxuryEstate.
The fideicomiso acts as a trust to protect Mexico’s interest in the land by naming an approved Mexican bank or credit institution as the holder of legal title of the property on behalf of the foreign investor.
In a typical fideicomiso arrangement, the foreign investor has the sole authority to manage and control the property, retains the right to collect rents, and has the obligation to pay taxes and maintain the property.
They are established for an initial 50 year period and can be renewed in perpetuity, however there are fees involved, approximately $550 to set up the trust with an annual charge of about $650, depending on the trustee bank.
Changes are likely to make it much easier for foreign buyers and real estate agents expect the number of inquiries to rise again once the changes have been ratified.
The resort towns of Cancun and Playa del Carmen are set to benefit the most, with 57% of all property searches by UK residents centered on the state of Quintana Roo, in which they are located.
Mexico is emerging as a particularly popular destination for British visitors with nearly 20% growth in the first quarter of 2013 alone and the UK now ranks third in terms of numbers of visitors to the country. International visitors to Mexico grew 6.3% in the same quarter overall.
Overall, English and Spanish speakers prefer Cancun, French speakers prefer Playa del Carmen, and Italians prefer Puerto Vallarta.