Buying off-plan property in Mauritius is one of the main options available to foreigners to own a home on the island. The framework is clearly defined by law, which protects buyers from reservation to completion of the project. Foreign ownership also comes with a path to residency. Our guide explains the key points to know.
What is off-plan property in Mauritius? (VEFA explained)
VEFA stands for vente en l’état futur d’achèvement. It is the legal term for buying off-plan in Mauritius. This mechanism allows you to purchase a property which hasn’t been built yet or which is still under construction. As soon as you sign the formal agreement, rights to the land and ownership of existing structures transfer to you, as well as future constructions once they are completed.
Payments are made in installments as construction progresses. The developer is legally responsible for completing the project within the defined timeframe. The property must match the agreed plans and specifications. All matters concerning building permits, insurance and site supervision are taken care of by the developer.
Also, off-plan sales in Mauritius must be covered by a financial guarantee by the developer. The Garantie Financière d’Achèvement (GFA) is the most common. It ensures the property is completed in the event the developer goes bankrupt or abandons the project. You will receive a copy of the guarantee contract before signing the deed.
Can foreigners buy off-plan property in Mauritius?
Foreigners can only purchase a residence which falls under one of the following approved schemes: Property Development Scheme (PDS), Integrated Resort Scheme (IRS), Real Estate Scheme (RES), Smart City Scheme and G+2 apartments. So they can buy off-plan through these schemes. In fact, many overseas buyers choose this mechanism as it provides strict legal and financial protections.
On top of that, if the purchase price of the property (under the approved schemes) is USD 375 000 or more, the buyer and his family get access to a residence permit, which will be valid during the whole period of ownership.
Pros and risks of buying off-plan in Mauritius
It is important to know what are the pros and risks involved in buying off-plan in Mauritius. The most important information is discussed below.
Advantages
- You don’t pay the full price at the start, as payments are spread throughout the construction milestones. This allows you to keep more of your capital available for longer.
- Buying early can make you get the best prices in a development, especially in the case of off-plan property. On top of that, you benefit from a better selection of units.
- The property is built as per the current standards. A one-year guarantee covering defects at handover and a ten-year warranty on structural components are attached to the residence.
- For some projects, you can have your say in finishes and interior choices.
- As every off-plan transaction is handled through a notary, with a bank-backed guarantee, you are protected by law.
- As mentioned before, buying a property under the appropriate schemes can make you eligible for residency.
Risks to weigh
- There can be delays due to various reasons: weather, supply shortages or slow approvals. Check if there is a clause in your contract concerning late-delivery penalties applicable to the developer.
- If the developer fails to complete the property, the completion guarantee comes into effect. Your home will eventually be constructed, but you won’t get any compensation for the wait.
- In the case the market changes as compared to the year you signed the off-plan contract, your property may not hold the same value.
- Property rules in Mauritius are reviewed regularly, so the rules may change during construction.
Important note: None of these risks should stop you from buying off-plan, but they make choosing the right developer all the more important.
The off-plan buying process, step by step
The process is clearly defined in Mauritian law. You can handle most of it from abroad. Every step is detailed below.
Choose your property and reserve it
The first step is to choose a property. Then a reservation contract must be signed with the developer. All the essential conditions are laid down: price, expected timeline and sale conditions. Then, you pay a reservation deposit, which stays in an escrow account. The developer can only access the funds after the sale is signed.
Seek independent legal advice
Engage a lawyer to verify the project’s approval. This is of high importance if you’re buying from abroad. The legal professional will check the building permit and the terms of the contract.
Apply for EDB approval
In Mauritius, the Economic Development Board (EDB) is the body that approves purchase of a property by a non-citizen. In most cases, it’s the developer who handles this part on your behalf. You then have to send your passport, birth certificate, a bank reference and the reservation contract. There is a non-refundable processing fee of Rs 25,000.
Sign the deed of sale before a notary
The draft deed with the plans, the details on materials and fittings and the completion guarantees are all sent at least one month before signing. You get to review everything and finalise the deal before a Mauritian notary. This can be done either in person or through a power of attorney. The notary has eight days to register the sale. On your side, registration duty of 5% of the price must be paid.
Pay in stages as construction progresses
The rest of the balance is split into installments based on construction milestones, up until you get the keys. The notary handles all the transfers, releasing funds to the developer as each stage is completed. The full schedule and figures are explained later on.
Inspect the property and receive the keys
As soon as the property is built, you will accompany the developer for a site inspection. If there are any defects, they are written down in a handover report. It is up to the developer to fix them. You can also report any hidden defects after moving in, provided not more than 30 days have passed.
Payment schedule and deposits: How much you pay and when?
When reserving the property, you have to pay a deposit. The amount is capped by law: up to 5% of the price if the deed of sale is signed within a year, and 2% if it is signed within two years. Beyond that, no deposit can be requested. The deposit stays in an escrow account in your name and is refunded if the sale does not go ahead under the conditions of the reservation contract. On top of that, the developer cannot ask for any other payment before the deed is signed.
Once the deed is signed, the price is paid in five stages. Each payment is only due when the corresponding stage of construction is completed. Here is an example for a property priced at USD 500 000:
| Construction stage | Payment | Example (USD 500 000) |
|---|---|---|
| Signing of the deed | 25% | USD 125 000 |
| Foundations completed | 10% | USD 50 000 |
| Roof completed | 35% | USD 175 000 |
| Construction completed | 25% | USD 125 000 |
| Handover of the keys | 5% | USD 25 000 |
Payments are sent from abroad in a major currency (USD, EUR or GBP) to the notary, who then releases the funds to the developer. Under the main schemes, 85% of the price must be paid to the developer in Mauritian rupees. The notary takes care of the conversion. Also, registration duty and notary fees are paid separately.
Costs and taxes for off-plan buyers
The purchase price is not the only cost to plan for. Below are the main costs and taxes you should budget for when buying an off-plan property in Mauritius.
One-off purchase costs
The main cost is registration duty, which is 5% of the purchase price. It is paid when the deed of sale is signed and the notary transfers it to the authorities. You also have to pay notary fees. For properties under the approved schemes, they are usually around 1% of the price, plus 15% VAT. On top of that, the EDB charges a non-refundable processing fee for your application. In most cases there are no agency fees when you buy off-plan directly from the developer.
Currency rules
As a foreign buyer, your funds must come from abroad in a major currency. Under the main schemes, 85% of the price must be paid to the developer in Mauritian rupees, while the remaining 15% can be settled in foreign currency or rupees. Also, it is important to note that bank fees and exchange rates can slightly increase the cost.
Ongoing costs
Once the property is delivered, you will have regular costs to cover. These include service charges for the maintenance of shared areas and facilities, home insurance and utilities. If you decide to rent out property, it must be managed by the developer or a service provider approved by the developer, so management fees should also be taken into account.
Tax advantages
Mauritius is known for its favourable tax framework. There is no capital gains tax, no wealth tax and no annual property tax on residential property. If you sell the property later, the seller pays a land transfer tax of 5%. Also, rental income earned in Mauritius is subject to local income tax.
Financing an off-plan purchase as a non-resident
The financing rules for foreign buyers are strict in Mauritius. They apply to all first sales under the approved schemes. This includes off-plan purchases from a developer. If the property costs less than USD 750 000, you must pay the full price with your own funds. These must be transferred from abroad. You cannot take a home loan from a Mauritius bank.
If the property costs more than USD 750 000, the first USD 750 000 must be financed from your own funds, transferred from abroad. The remaining amount can be settled with a loan from a bank in Mauritius. The loan is granted in local currency, but you repay it in a major foreign currency. For example, for a property priced at USD 1 000 000, you must transfer at least USD 750 000 from your home country. A local bank can then finance the remaining USD 250 000, if it approves your application.
Buying off-plan from abroad: What overseas buyers need to know
Buying off-plan in Mauritius from abroad is straightforward, provided you get your paperwork timing right. If you can’t be here in person, you can sign the deed via power of attorney. Just ensure it is certified by a local notary in your country and apostilled. It is recommended to start this process early, along with any background checks, which can take a few weeks.
For residence permits, keep an eye on expiration dates: medical and police certificates only last six months, so time your requests near your registration date. Also, you are free to choose your own notary, you don’t have to use the developer’s choice. In regards to tax obligations, don’t forget to check tax rules in your home country. Owning a property abroad may need to be declared, and rental income may be taxed both in Mauritius and at home, depending on tax agreements between the two countries.
How to choose an off-plan developer in Mauritius
Choosing the right developer is the best way to protect your investment. Start with its track record. Check which projects it has delivered and if they were completed on time. If you can, visit a finished development and speak to the owners. Then, check the project. Ask for proof for EDB approval and of the building permit. Your notary should confirm that the developer owns the land and that it is free of any disputes.
Also, enquire which bank issues the completion guarantee. Finally, think about life after delivery. Ask who will manage the shared areas, how much the service charges will be and if the developer offers rental management.
Residency, rental income and resale
If your property costs more than USD 375 000, your residence permit stays valid for as long as you own it. Your spouse and your children under 24 are also covered. With this permit, you can also invest and work in Mauritius, without needing a separate work or occupation permit. If you sell the property, the permit ends.
You can rent out your property when you are not using it. However, under the approved schemes, it must be managed by the developer or by a service provider the developer has appointed. For short-term holiday rentals, a licence from the Tourism Authority may also be required. Verify this before you plan any rental income.
You are free to sell your property at any time. You must first give the EDB 30 days’ written notice, with a copy to the developer. The buyer must also be eligible to buy under the schemes and must submit a new application to the EDB.
Conclusion
Buying off-plan in Mauritius is straightforward and heavily protected by law, whether you’re on the island or overseas. Your funds are held securely, payments are tied directly to construction progress and your purchase opens the door to Mauritian residency.
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