Investors Guide to Egypt

The Purchasing Process

The purchasing process in Egypt has been developed from structures similar to those in Europe, making buying property very straight forward to understand. It is not uncommon in Egypt for developers to offer a selection of payment options to appeal to a greater number of potential investors. Incentives can also be found when selecting the developer’s preferred payment option, such as increased time frames for guaranteed rental returns.

Once the property for purchasing has been selected, a holding deposit is placed while a private purchase contract (PPC) is created. The buyer’s solicitor will also use the time to check through the legal documents relating to the development, to ensure a safe purchase.

If the buyer’s solicitor advises that the property is safe to go ahead with, the PPC will be signed by both parties as a contractual agreement for the purchase. The payment structure will be clearly set out in the agreement, along with the legal obligations of both the buyer and the seller. Upon signing the PPC, the reservation deposit will be paid and in most instances the holding deposit will be subtracted from the first instalment.

The final payment will be made when the keys to the property are ready to be handed over. The only associated costs of the property purchase will be required at this stage, being the registration and legal fees. The registration fee is set at a fixed cost of 2,000 Egyptian Pounds, or approximately GB£220. The registration fee and lawyer’s fees amount in total to approximately 3% of the purchase price.

Fees & Taxes

The absence of taxes when purchasing property in Egypt assists greatly with presenting an attractive market for real estate investment. Associated purchasing costs are at a minimum with only the property registration fee and legal fees to be paid by the buyer.

Real Estate tax is charged by the government on an annual basis whether the property is used for rental purposes or not. The fee for non-residents is charged at 10% of the gross rental value, with an exemption of the initial approximate £4,000. Deductions can be arranged on the income tax of up to a maximum of 50% of the gross rental income. An annual supplementary tax is also charged at 20% of the real estate tax.

Buyers purchasing property within a residential development will also be liable to pay an annual maintenance fee. The fee is paid to the community and is often charged at between £5 and £15 per m2 per year.

• Registration and Legal Fees - 3%
• No Stamp Duty, VAT, Capital Gains or Inheritance Tax

Financing the Property

Mortgages can be arranged for the purpose of buying property through Egyptian banks. Mortgages can also be arranged in a company name, along with the purchase of the property.

Several developers in Egypt offer developers mortgages designed specifically for purchasing their properties. The terms and conditions of the mortgages for personal and company loans will vary between the bank or finance company used. As an example, the following restrictions can be used as a guideline of what is available:

• Financing up to 85% Loan-to-Value
• Repayments up to 30 years
• Some providers offer no minimum loan amount
• Financing can be arranged up to the age of 65 to 70 years of age
• Interest rates are around 14%

More about overseas property finance

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