How to buy a property off-plan in Mauritius
Purchasing a property off-plan (known as VEFA – vente en l’état futur d’achèvement) is an excellent and secured way to invest in real estate in Mauritius. In recent years, this type of contract has proven more and more popular with buyers in the island. It allows individuals and institutional investors to acquire a new property safely and in compliance with the law. The property is not yet built or is still under construction but the promoter commits to deliver to the buyer a property in accordance to the plans and technical specifications.
The current trend
VEFA, also known as off-plan buying or sales before completion, is the latest trend in real estate transactions in Mauritius. It is subject to strict and specific regulations under the Mauritian Civil Code. It allows individuals to acquire a turnkey property while taking advantage of milestone payments. The real estate promoter takes charge of the construction of the house: he handles every step, including applications for building permits, insurance, as well as construction, quality control, and works monitoring. But above all, in the context of an off-plan purchase, the promoter has financial completion guarantee. It is a bank guarantee by which a financial institution agrees to finance the completion of the works should the promoter go bankrupt.
Buying off-plan allows buyers to benefit from numerous advantages. For example, with this type of contract, the buyer does not have to pay the entire price of the property at once as the staggering of payments is governed by Article 1601-3 of the Mauritian Civil Code. The latter established the timing of payments based on the progress of the project.
The steps to follow
When you buy off-plan, there are three essential milestones:
- the reservation contract and the security deposit;
- the deed of sale at the notary and the milestone payments;
- reception of work and delivery of the property.
The reservation contract is the first agreement signed between the promoter and the buyer. It includes the mandatory clauses and allows the property to be reserved. Upon signing the reservation contract, the purchaser must make a downpayment which represents the security deposit in an escrow account opened with a notary or a financial institution. The total amount of the purchased property is payable in increments, while a payment of 25% is due at the signing of the deed of sale.
First of all, it should be noted that Mauritius is a former French colony. In the real estate sector as in other fields, the country has retained many legal concepts, like VEFA, which are similar to French regulations. According to the Civil Code, with the VEFA, the seller immediately transfers to the purchaser his rights to the land and, when necessary, ownership of existing buildings. The buyer must pay for the works as they progress. The future owner has nothing to fear because the financial guarantee of completion provides insurance and protection in the event of a failure on the promoter’s side.
Mauritius is a popular destination for real estate investment thanks to its beautiful beaches, numerous tourist sites, political stability, tax advantages and favourable business climate.
Compagnie de Beau Vallon Ltée has been a major actor in the real estate sector for more than 15 years. This real estate developer gives Mauritian and foreign buyers the opportunity to buy a property off-plan in the south-east of the island, an authentic and preserved region. And, a team of professionals ensures that real estate projects are fully carried out in accordance with the law.