Will Mexico open the real estate market for foreigners.
The country is washed by the California Gulf, the Gulf of Mexico, the Caribbean Sea, the Pacific Ocean; has a warm north-tropical climate. Mexico has a variety of resort areas – such as, for example, Costa Alegre, Puerto Vallarta, Manzanillo. To the territory of Mexico are also islands and groups of islands: Guadalupe, Revilla Hichedo.
In addition to remoteness for lack of a great demand among Russians for Mexican real estate there are other reasons – complicated Mexican legislation that does not allow investors to buy land in coastal zones, as well as communal ownership of most of the land. Buying land in Mexico is a costly and troublesome business, for which only a foreigner can go, with a very great desire to live in this country. Nevertheless, it seems that the country is expected to make serious changes in the legislation that directly affect the real estate market.
27 article of the Constitution of Mexico.
Today, in order to buy real estate in Mexico in the coastal zone, a foreigner needs to use a special trust of the Mexican bank, which is called “Fideicomiso”. Direct purchase of real estate by foreigners in the so-called “ban zone” (50 km from the ocean and 100 km from the state border) does not allow 27 article of the Constitution of Mexico.
The constitution was adopted in 1917 after the Mexican Revolution. Article 27 of the Constitution is a reminder of the colonial past of the country, when until 1821 it was dependent on Spain. Hence the suspicious attitude of Mexicans towards any permanent settlement of foreigners on the coastal zone and close to the borders of the territory. Moreover, an example of the separation of part of Mexico as a result of the settlement of territory by foreigners in the history of the country already existed – this is Texas, which was once a Mexican province.
However, in April of last year there was an encouraging development: Congressman Manlio Fabio Beltrone of the ruling Institutional Revolutionary Party of Mexico proposed a bill to introduce an amendment to Article 27, which would allow foreigners to freely purchase non-commercial real estate in the coastal zone. After this news, many foreign investors, especially from the United States, prepared for profitable investments in the new market.
In Costa Alegre, there are already many elite villas belonging to both Mexicans and foreigners. The resort area expects to invest more than $ 1 billion in new projects. According to Beltrones, the abolition of the ban on the purchase of property by foreigners in the coastal zone will attract a significant amount of investment necessary for the country.
The lower house of parliament has already approved the bill. The law requires the approval of the upper house and the majority of legislatures in 32 states of Mexico. However, the bill has already caused protests among Mexicans. About 88,000 people signed an Internet petition against the lifting of the ban. In their opinion, the unhindered admission of foreigners to the land of the coast will lead to the fact that most of the coastal zone will be bought up by foreigners and will be inaccessible to local residents.
Bank trust Fideicomiso.
At the moment, a foreigner can buy non-commercial real estate in the “ban zone”, having issued a trust agreement at the Mexican Bank. This became possible due to the law adopted in 1973, when the country needed foreign investors. Formally, the owner of the land in the “ban zone” is the bank, but the buyer is formalized as a beneficiary. The buyer’s right is renewed every fifty years. Outside this territory, a foreign buyer does not need a trust agreement. To register a bank trust from a buyer, an initial contribution of $ 1,000 to $ 2,000 and a percentage are required, depending on the value of the property. In addition, an annual fee is expected for the services of the bank as a principal.
The main drawback of trust ownership, in addition to the additional fees, is that if a will has not been made after the death of the beneficiary, the special prescription of the Mexican court sent to the bank may be required to re-register the ownership of the property by the alleged heir. In this case, it may take several years and thousands of dollars to settle all legal issues. It is important that the property being bought is not commercial, that is, it is purchased only for housing.
Reforms in Mexico.
Mexico is one of the world’s top ten oil exporters. After the official inauguration in 2012, Mexican President Enrique Pena launched comprehensive reforms in the field of economy. During his election campaign, Pena promised to reform the oil and gas sector, stop the monopoly of Pemex state corporation and allow foreign companies to participate in the oil sector. To this end, in late December 2013, the President signed an amendment to the already mentioned Article 27 of the Constitution. Thus, a precedent for changing the constitution was set up to attract foreign investment.
It is obvious that the Mexican government has headed for reforms and one can also expect the next step – the abolition of the ban on the purchase of real estate by foreigners on the coast of Mexico. It is also understandable why the president is not in a hurry with another important reform that could provoke protests from the conservative part of the population, and so not too happy about the energy reform – the oil sector completely nationalized in 1938 was a special national pride for the Mexicans.
In any case, news about possible changes in legislation that should significantly simplify and reduce the cost of buying a property in Mexico, caused a great deal of excitement among investors around the world last spring. Despite the fact that the plans for reforming the land legislation have temporarily left the official agenda, the possibility of opening a new promising market forces potential investors to follow the news from Mexico closely. A new promising market can not but attract buyers’ attention even from a country as far from Mexico as Russia.
Daniil Burygin, HomesOverseas.ru.
You can leave your question and get professional advice on the country you are interested in.
Will Mexico open the real estate market for foreigners.