What Are 4 Difficult Places for Foreigners to Buy Real Estate?
Buying property is a complex process that involves numerous steps—and requires specialized knowledge—to ensure the correct, legal transfer of property, and the protection of both the buyer's and seller's legal and financial interests.
When you take an already complex process, translate it into a foreign language, and add unfamiliar customs and laws, the process of buying property abroad can seem like a minefield. The ownership rules, borrowing and payment restrictions, and local customs in some countries make it very difficult for foreigners to buy real estate.
Securing professional guidance and assistance is essential when buying property in your own country, and it's even more important when buying property abroad. By working with an experienced real estate agent, under a reputable company experienced in helping foreigners purchase property, you can be confident you're following the correct procedure to acquire and retain ownership with a clear property title. However, you might want to look at nearby countries with similar amenities, but where buying property may be less complicated.
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Understanding 4 Difficult Places for Foreigners to Buy Real Estate
In Vietnam, all land is owned collectively, so technically neither foreigners nor locals may own land. Foreigners can buy a residence and lease the land from the government, and resident foreigners can purchase homes, but cannot sublease them.
- In many markets around the world, real estate is more difficult—or impossible in some cases—for foreigners to purchase.
- Hiring an experienced, qualified real estate agent familiar with the local market is important in any real estate transaction, but is especially crucial when buying foreign real estate.
- Four countries in which there are extra layers of difficulty for non-citizens who attempt to purchase real estate are Vietnam, Mexico, Greece, and Thailand.
One Vietnamese real estate company, however, enables foreigners to acquire 50-year renewable leases with significant rights, including sublease rights. Also, real estate transactions are priced in Vietnamese Dong but carried out in gold, so changes in gold prices and currency values make it difficult to anticipate how much the transaction will actually cost. (For related reading, see Key Reasons To Invest In Real Estate.)
All land in Mexico falls into one of four categories. There's the federal zone, which belongs exclusively to the government, and includes the first 60 feet of all coastal land in the country (as measured from the average high tide line). No one can buy or sell property here. From the federal zone up to 31 miles inland of any coastline and 62 miles of its natural borders is the "restricted" zone.
Foreigners can buy property here, but it must be held through a bank trust called a "fideicomiso." A third category of "ejido" lands are communally owned agricultural land and can be converted to private ownership, but foreigners may want to avoid this complex process. All other land falls in the "unrestricted" zone, where the ownership process is the simplest and most familiar for Americans.
For non-European Union members, buying property in Greece can be especially tricky. In addition to hiring a real estate agent who speaks both Greek and your language, you will need to hire a lawyer to complete many steps in the process. The lawyer helps foreigners to obtain a Greek tax number called an AFM and a Greek bank account, both required to purchase real estate.
The Greek government requires proof of the source of funds for the bank account on what is known as a pink slip. Without this proof, the Greek government considers funds wired into the country to be taxable income. There are also some militarily and archaeologically sensitive areas, where foreigners cannot buy property or where they can only buy with special permission.
There are also areas outside of town planning zones, where it is not possible to get electricity, water, or phone service. It is difficult to get a mortgage from a Greek bank and real estate transaction fees are high.
In Thailand, foreigners cannot own land. The only way for a foreigner to own land is by forming a corporation that is 51% owned by Thai nationals. Otherwise, foreigners are generally restricted to leasing land, which has very weak property rights, or to buying condos or apartments, so long as foreign ownership does not exceed 40% of the building's units. Many types of title deeds in Thailand do not convey clear ownership.
Foreigners cannot get mortgages from Thai banks, and a specific process must be followed when moving money into the country to purchase real estate. (Exotic mortgages allow you to decide how much to pay. For more, see Choose Your Monthly Mortgage Payments.)