Monaco retains the status of the most expensive luxury real estate market in the world. At the end of 2023, the average price per square meter here was 51,418 euros (-1% compared to the record of 2021).
Capital owners from Russia and other Russian-speaking countries have long been among the buyers of real estate in the Principality, as well as nearby, on the French Riviera.
The immediate question is: can Russians and Belarusians buy houses and apartments in Monaco today?
Yes, if the buyers do not belong to the category of citizens included in the sanctions lists, and for whom the imposed political and/or economic restrictions are directly applicable. However, it should be noted that control over the origin of funds and the final beneficiaries of transactions has recently increased.
The procedure for purchasing real estate in Monaco is fundamentally the same as in France, but it has its own significant features! They consist in the need for both parties to quickly fulfill their obligations under the agreement, as well as in the fact that after a certain point the decisions you make are irreversible (more on this below).
All settlements between the seller and the buyer of real estate in Monaco, as in France, take place through a notary. If the buyer's bank is located outside Monaco, the first thing to check is whether the notary will be able to accept funds from it. To do this, the buyer must declare the bank, after which the principal possibility of accepting the transfer from this bank is checked.
Stages of the transaction
Step 1. Preparing the required amount in such a way that it is in the so-called quick access. This is extremely important, given the speed of execution of the transaction!
It is unacceptable to send an offer to the owner of the property you are interested in, if you do not yet have money in quick access!
Step 2. The selection of the object.
Step 3. Preparing and sending a real estate purchase offer to the seller.
What should be specified in the written offer?
- The buyer's first and last name (plus a copy of the identity card);
- A brief description of the property;
- Cost and payment procedure;
- The date and time until which the purchase offer is valid;
- Terms of sale and transaction costs;
- If necessary, additional conditions, previously agreed with the seller, concerning both the transaction and the object itself: legal registration, source and payment procedure, construction and repair work, and so on.
- Expenses and fees;
- The deadline for signing the purchase and sale agreement.
When the buyer's offer is accepted and signed by the seller, the buyer is bound by obligations without the possibility of refusal, except for some special conditions by prior agreement with the seller!
Step 4. Transfer of an advance payment in the amount of 5-10% of the cost of the object to the notary.
After the seller has accepted the offer, you need to make a deposit to the notary's account within 48 hours. After that, no one can refuse the deal, neither the buyer nor the seller.
Sometimes, before making an advance payment, a preliminary agreement is concluded ("compromise"). It is not required in Monaco, but realtors insist on it when special conditions are provided. A compromise includes a purchase offer and is especially necessary if you apply for financing from a credit institution or if the apartment is subject to the right of pre-emptive purchase by the state. (If the selected property is located in a building built before 1947, the state can exercise its pre-emptive right within 30 days after signing the compromise and replace the seller. Your deposit will be refunded to you, but you will not be able to continue the desired purchase).
Step 5. Payment of the invoice for the remaining amount under the contract. It will be displayed to you a few days before the date of signing the purchase agreement. It is necessary to pay in full in advance, before the decisive day.
Step 6. Signing the purchase and sale agreement in the presence of a notary or through a genuine power of attorney. On the same day, you will receive a certificate of ownership and the keys to your house!
The notary submits the documents for registration to the register of registration of transactions.
On average, the entire process, from accumulating the amount and choosing the object to signing the contract and receiving the keys, takes about three months.
Some features of transactions
- The procedure for purchasing real estate in the primary and secondary markets is identical, as is the set of documents provided by the buyer in both cases.
- The purchase may be with partial attraction of credit funds. Banks today give mortgages to foreigners with guarantees. The main principle is that the confirmed income of the borrower, which will be used to repay the debt, should be three times the amount of the loan payment.
- The transaction can be carried out remotely today, but you will need a notarized power of attorney issued to your agent.
- Let's say the property you want to purchase is for rent. In this case, the lessee does not have the right of pre-emptive purchase, unless this is provided for in his lease agreement. If no amicable agreement is reached, you will have to comply with the deadline set in the lease agreement before resuming use of this property.
Stages of transactions via SCI
You can purchase real estate in Monaco both for an individual and for a specially opened SCI – non-profit civil society, whose mission will be the ownership of the acquired object. The second way involves obtaining a residence permit of the country by the buyer and his family members.
Step 1. Obtaining a long-term visa in France or the right to Article number 5 in Monaco.
Step 2. Obtaining a residence permit in Monaco and opening an account in the country's bank.
Step 3. Opening of a SCI company and an account for it in the Bank of Monaco.
Step 4. Attracting 100% financing from the Bank of Monaco for full coverage with its own funds.
Step 5. Purchase of real estate on SCI, with payment by credit means.
What are the advantages of this method:
- Real estate is purchased on credit – there is no luxury tax;
- The income from the portfolio placed in the bank compensates for the loan rate (even under a conservative portfolio management scenario);
- 6 months after obtaining a residence permit in Monaco, you can apply for a tax residence in the country, which allows you to have zero income tax.
The whole process of organizing SCI and buying real estate for it takes, subject to interaction with an experienced agency, 5-6 months.
Taxes and additional expenses
Notary and registration fees related to the acquisition of immovable property or rights to immovable property:
- Purchase by an individual or a SCI registered in Monaco of new real estate or real estate under construction: 2.5% of the value of the object (1.5% notary fees + 1% registration fee).
- Purchase by an individual or a SCI registered in Monaco of real estate on the secondary market: 6.25% of the value of the property (1.5% notary fees + 4.75% registration fee).
- Purchase through developers (licensed market professionals): 1.5% of the property value (notary fees only). The property must be resold within 4 years, otherwise a fine of 6% will be applied to the value of the property in addition to the transfer tax of 4.75%.
- Purchase of shares of a civil company registered in Monaco and owning real estate: registration fee of 4.75% of the property value plus notary or lawyer fees.
- Acquisition through an offshore or foreign company: 10% of the cost of the object (registration fee + 1.5% notary fees).
- Purchase of real estate as a lifetime annuity: the fee is calculated from the cost of the package (if available) plus the amount of the 10-year lease period (if available). It will amount to 6.25% (1.5% notary fees + 4.75% registration fee).
- In addition to these costs, the buyer pays the agency's commission in the amount established by the Real Estate Chamber of Monaco (3% + current VAT). Currently, this is 3.6% of the sale amount.
- If the purchase is financed by a mortgage loan, a registration fee of 0.92% of the mortgage loan amount will be required. In relation toOther fees may be charged for the type of financing.
If the purchase is made for an individual, you may need to spend money on support and assistance in organizing and legal support of the transaction. If the contract is drawn up for a SCI company, there are costs for its organization and registration.
Summary
The real estate market in Monaco has been established for a long time and is well regulated by law. The main thing for the buyer is to prepare in advance and strictly comply with all his obligations.
Thank you for your help in preparing the material of our expert in Monaco Ekaterina Doronina, RFC Estate.
Sources:Savills
Photos used: depositphotos.com