Like many countries it is advisable to seek expert guidance or purchase direct from a reputable developer who has the ability to guide a buyer successfully through the purchase. While the associated costs of buying in Egypt are not high there is with Egypt ways of gaining the best possible advantages as a private buyer or as an investor
Under Law No 230 of 1996 non nationals can purchase property in Egypt but it is not without some issues which are outlined as follows:
Non nationals may not purchase more than two pieces of real-estate of which must not exceed 4,000 square meters (sq. m.) and a property is to be used for a family member as well as the purchase being approved which takes about two months.
Registering property in Egypt
If purchased and registered the property cannot be sold or rented for five years.
The fees associated with the purchase should pass through an Egyptian Commercial Bank
Any property must be rented furnished after the 5 years period
For Egyptian Nationals or dual nations - example USA and Egyptian Citizenship the buying process is the same as if the buyer were just an Egyptian National. This also applies to marriages where one party is an Egyptian National - Registration is straight forward if registering under the Egyptian Nationals name.
How to enable a property to be bought and then used as an investment?
There are two methods of registering a property
1. Registration
Advantages of registration - full and maximum protection. It is the recognized method in the Egyptian law for transferring real estate ownership.
Disadvantages - owners are not entitled to resell a property unless 5 years have passed since the date of purchase, and even then you would need to obtain a written approval from the Prime Minister.
2. Signature validity court verdict
Advantages of the ‘signature validity court verdict’ method - this is the practical way for real estate transactions either in Sharm el Sheikh, Hurghada, or Marsa Alam or elsewhere. This method allows you to resell your property whenever you need, and without need for any approvals.
Disadvantages - It is a weaker form of protection than registration. A real estate lawyer’s services are much needed when buying property anywhere in Egypt. One reason is that people have in the past been reluctant to register properties, because it was costly to be the first owner of a building to register. Even in a modern area like Maadi, sometimes sellers have not registered because they still have an outstanding debt secured by the building, and fear that upon registration the creditor would be able to claim the building.
Legal Fees - Because of the highly complex property registration process it is advised that buyers hire their own Arabic-speaking lawyers. Legal documents written in Arabic are the only ones recognized in courts. Legal fees are around 3% of property value.
Real Estate Agent's Fees - Real estate agent fee is around 2.5% to 3% (plus 10% sales tax), paid by the seller.
Transfer Tax - Sale or transfer of immovable property is subject to transfer tax, 2.5%.
Capital Gains Tax - Since the Capital Gains Tax is charged on gross gains, it is classified as a transaction cost. Capital Gains Tax is imposed on the sale of land and buildings within the boundaries of an Egyptian city at the rate of 2.5% of gross gains of the seller. |
