Buying Real Estate in Vanuatu
Buying Real Estate In Vanuatu
Here are 36 frequently Asked Questions about buying real estate in Vanuatu:
1. Can foreigners buy property in Vanuatu?
Yes. There are no restrictions on foreigners buying property. A non - citizen may be required to provide a "financial reference" and a "professional reference" from a local firm, for urban purchases but that is the only distinction made between citizen and non-citizen buyers. You do not need a Vanuatu Investment Promotion Authority (VIPA) Investor’s Certificate or a business licence to buy property in Vanuatu. If your purchase also requires a business licence (for example, when you buy an existing business) then you would need a VIPA approval and a business licence in your name, or in a local company's name.
2. Is there any freehold land in Vanuatu?
No. If a property is registered it is registered as a as leasehold title. The urban areas of Port Vila and Luganville on Santo island were declared "public" land in 1980 under the Land Reform Act (Cap 123). The Minister of Lands is the Lessor in the urban areas, and in many rural leases where the customary ownership is not yet established.
3. Do I have to live here to own property?
No. There is no requirement for property owners or holders of Vanuatu residency permits to reside in Vanuatu.
4. What are the normal steps in buying property in Vanuatu?
- Inspect properties in the usual way and choose one.
- Make an offer and negotiate any conditions. If the offer and any conditions are accepted, draft sale agreement issued (usually by Vendor's side).
- Agent confirms acceptance in writing.
- Sign sale agreement & pay deposit (usually 10%) into agent's or solicitor's trust account.
- Purchaser proceeds to meet any conditions in contract; for example:
- Obtain (VIPA) Vanuatu Investment Promotion Authority approval
- Apply for F4 business licence (only if rental property)
- Confirm financing
- Obtain planning permission if required
- Register for VAT (Commercial only)
- Vendor applies for Lessor's Consent to Transfer or arranges for share transfer.
Both parties are informed when Consent to Transfer is approved.
If all other conditions are informed settlement date is arranged.
- Pre-settlement inspection of property or last minute search of title is carried out by purchaser's side, if desired.
- Settlement takes place. Documents usually handed over to purchaser include:
- 3 original Transfer deeds already executed by Vendors
- Copy of registered title
- Settlement Statement
- Last property tax receipt
- Last lease rent receipt
- Tenancy agreement (if applicable)
- Company documentation (if applicable)
- Purchaser stamps Transfer Deeds and pays 2% Stamp Duty to the Vanuatu Financial
- Services Commission (4% on share transfer).
- Purchaser registers Transfer and pays 5% to the Vanuatu Government.
YOU ARE NOW THE REGISTERED OWNER (LESSEE) OF YOUR VANUATU PROPERTY.
5. What is the maximum term of a leasehold title?
The Constitution states that the maximum term of a lease is 75 years. Many leases are 50 years from their creation or from Independence on 30 July 1980, but nearly all new leases nowadays are registered for 75 years, including strata title leaseholds.
6. When you buy a lease, is it renewed at the time of purchase or do you buy the term remaining?
When you buy an existing lease, you purchase the remaining term of that lease, not a new 50 or 75 year period.
7. What happens at the end of the lease?
In 2003 Parliament passed a law (the Land Lease (Amendment) Act No. 24 of 2003) enabling any urban lessee to surrender their existing lease title, and either extend a lease that is currently less than 75 years up to 75 years or, where a lease is already for a period of 75 years, to renew the lease for a full period of 75 years from the date of renewal, upon payment of the requisite premium and administrative fees.
8. Is there any way to extend a lease when you buy, or at any other time in either the urban or rural area?
Yes. Lessees may surrender their leases either to subdivide land, re -zone (ie: residential to commercial; agricultural to tourism, etc) or to extend the term. (see Question 7 above) "Premium" payments and revised annual lease rents are likely to apply, which are negotiated between Lessor and Lessee.
9. Is it possible to buy apartments or shops on their own Strata title?
The Vanuatu Parliament passed the Strata Title Act in 2000 and also recently approved the Strata Title regulations. This means it is now possible to strata title existing buildings and to create strata titles for new apartment and commercial buildings.
10. Do the commercial banks accept leasehold titles as security for loans?
Yes. Mortgages and "Cautions" are registered on the leasehold titles as they would be on freehold and leasehold titles in other countries.
11. How long does it take to complete a transaction?
Generally, about 1 - 2 months. This varies depending on conditions that may be part of a particular transaction. Any transfer of a property title requires the Lessor’s “Consent to Transfer”.
12. What are the normal buyer's costs?
2% Stamp Duty
5% Title Transfer Registration
If the buyer is purchasing an existing company, the Stamp Duty is 4% on the share transfer value, and because the shares in the lessee company are transferred, not the title itself, there is no 2% Registration fee.
Legals Usually 0.5% - 1.%.
13. Has there been capital gain? If so, how much and where?
Residential property and vacant land capital gain has been best in prime areas such as the harbourfront. Lagoonfront areas with good water and sunset views, and for commercial property, along the main street CBD of Port Vila have also seen steady increases in market value. In some places, 5 – 10 percent per year has occurred while in other prime areas, less than 5% per year.
14. Where are the best places to buy?
Residential - In Port Vila Tassiriki, Elluk, Harbourfront, First Lagoon, Second Lagoon, Bellevue, Malapoa and the newer oceanfront sub-divisions near town.
Commercial - CBD and main street and central harbourfront
Agricultural - Efate & Santo islands.
15. Is it easy to rent out property?
Good property typically rents well. There are many aid organisations and private foreign companies who prefer to rent for 1 - 3 year contracts rather than buy.
16. Is it possible to find good property management?
Yes. Our company has been doing property management of houses and commercial buildings for 15 years. This usually costs a maximum of 7% of gross income plus VAT.
17. What sort of tenants are there, and how long are the tenancy agreements?
Many tenants are employees of aid donor agencies, high commissions and other private and public organisations. Most contracts are for one year, but 2 and 3 years tenancies are also common.
Typically, a good standard family home would rent for AUD 1,200 to AUD 2,000 per month, and sometimes higher.
18. Are there qualified builders in Vanuatu?
There are several companies in Port Vila with qualified builders. As in any other country it is important to select a builder carefully and to see other jobs they have done.
19. How do I know the house I am buying is well built?
Engineering and survey reports may be requested from qualified people or companies operating in Port Vila. For many years it has been impossible to obtain bank financing, full insurance (including against cyclone) on property without engineers and architects reports.
20. If I want to build my own house, do I need any permissions or approvals, or do I need a business licence?
No. Not to do the building for yourself on your own land title. You will still need to obtain your planning permission and building permit, and you will need to register as an employer with the VNPF (the Vanuatu National Provident Fund) if you hire any workers.
21. What does it cost to build a good house in Vanuatu?
Naturally, this varies from builder to builder, but a reasonably good guide is about AUD 1,200 - 1,500 (approximately VT 100,000 – 130,000) per square meter. Obviously where more luxurious fixtures and fittings are used, this price will be higher.
22. What amount of equity contribution toward the purchase do banks want from buyers?
Banks typically require 20% for residential loans and up to 50% for commercial loans of the loan amount from the borrower. This varies depending on the nature of the loan and the bank's assessment of the borrower.
23. What is the usual deposit when exchanging contracts?
Ten per cent is the standard contract deposit when a sale agreement is exchanged between a buyer and seller. Deposits are held in trust, till settlement, usually by the vendor’s agent or solicitor.
24. Do I need to use a lawyer for conveyancing?
The law does not oblige purchasers to use a solicitor but for those contemplating buying property or a business it is very wise to seek legal advice and representation, especially if you are entering the Vanuatu market for the first time. Our laws and practices are likely to be different from your own country. Unless you specifically ask us to represent you as purchaser, our agency is engaged by the vendors and our commission will be paid by the vendor.
25. Is VAT payable on housing sales?
VAT (currently 12.5%) is not payable by the purchaser on residential property. VAT is payable by a builder if he sells a house he has built or if a property developer creates a land subdivision for sale.
26. Is VAT payable on all commercial transactions?
As a rule VAT is payable by the purchaser on the sale of commercial property. He can then claim back the VAT if he is a registered VAT entity. A "one - off" sale of a commercial property where the seller is not registered for VAT and has not claimed back VAT for expenses on the property may not be subject to VAT. Also a sale where the vendor has already de-registered from VAT is not subject to VAT. Specific enquires should be made to the VAT Office, or to a solicitor or accountant accustomed to dealing with VAT issues.
27. What are the usual outgoings on property in Vanuatu?
1. Municipal Property Tax (in the Urban Zones) paid every six months.
2. Annual Lease ("ground") rent
4. Rent Tax on Residential property (or VAT on commercial) is 12.5% of gross income.
28. How is property sold in Vanuatu? (ie: Auction; Private Treaty; Tender)
Most property is sold by Private Treaty or Tender. No auctions occur. Occasionally the "Expressions of Interest" method is used, especially for a project or subdivision not yet done, but approved, where the developers wish to determine the level of interest in their project.
29. What do I need to do to reclaim land or build a jetty.
To reclaim land on the waterfront boundary of any property, you require:-
1. Foreshore Development Act approval (Minister of Internal Affairs).
2. Negotiator Certificate from the Minister of Lands.
3. Lessor's approval if land is rural, or the Minister of Lands is not the Lessor.
4. Municipal Planning Permission in the urban areas.
5. Provincial Government Planning permission in the rural areas.
6. An environmental impact study may be required for a commercial or tourism project.
7. A jetty will require Department of Ports & Marine approval.
30. Can I put a yacht mooring anywhere?
Yacht moorings are marked on a grid pattern within Port Vila Harbour. Department of Ports & Marine should be consulted about any rules and fees for mooring anywhere else in the country.
31. Can sale agreements be done in any currency, or only in vatu?
Private parties can agree to a sale in any currency acceptable to both sides. There are no restrictions in sending foreign currency into or out of Vanuatu.
32. What happens if someone tries to sell me land in the rural area that has no registered title over it?
Any land area with no registered title cannot be sold, because there is actually nothing legally existing to sell. The majority of land in Vanuatu is unregistered or indigenous land, and the legal “customary” owner(s) has not been established in many areas. A leasehold title must be registered before a transfer (sale) can take place. An undisputed Lessor is absolutely necessary in order to create and register a lease. We strongly advise all potential investors not to enter into any agreement, or pay any money to anyone in such circumstances without first seeking legal or professional advice.
33. What do I need to insure my property?
Insurance will cost about 0.5% to 0.7% of insured value. You will need an engineer’s certificate to obtain cyclone insurance. Other perils such as fire, earthquake, theft, burglary, etc are also covered in standard policies. Public liability, workers compensation, loss of rental income, and so on are also available. Contact the local brokers and insurance companies for further details.
34. Are there any restrictions if I am a foreigner and I want to sell my property in Vanuatu?
There are no restrictions. If a vendor is up to date with his outgoings to the local authorities, and lease rent to the Lessor, he will be able to obtain the Lessor’s Consent to Transfer the title.
Encumbrances such as Mortgages are discharged at settlement as typically happens in other countries.
35. What are the vendors costs in a sale transaction?
The vendor has no costs except agents commission and legal fees if a solicitor is used. There are no fees or taxes on the sale, unless VAT is applicable.
36. I want to come and check things out for myself, who can I book with to stay in Vanuatu?
There are innumerable online agents espousing all sorts of claims, the only one we found that is 100% experienced and knowledgeable about the country you are buying in is Vanuatu Hotels. They operate from Port Vila and have a great local network to assist you with in your research.
NB: Laws, Government regulations and fees may be subject to change from time to time. It is advisable to seek advice as to the current situation from the Government departments concerned or from qualified private companies.
Information supplied by Island Property Vanuatu’s leading real estate agent