Real estate in Cairo and other developed Egyptian cities continues to be an attractive destination for foreign investors, ex-pats and people who want to have a holiday home in a sunny place surrounded by picturesque natural scenery. The local market offers a wide range of high-quality housing options, both in the elite segment and in the more affordable sector. These offers are in great demand among buyers and tenants. Therefore, property owners can count, not only on comfortable living but also on rental income and capital gains. We will analyse the process of buying a house in Egypt in 2023, and the stages of buying a property, below.
Contents:
- Foreigners' rights to purchase real estate
- Citizens of which countries have the right to purchase real estate in Egypt
- What types of real estate are foreigners allowed to buy?
- What rights does a foreigner get after buying a property in Egypt?
- What responsibilities do a foreigner have after buying a property in Egypt?
- Is it possible to make a real estate transaction remotely?
- Stages of buying a property in Egypt
- Booking a property and signing a preliminary contract
- Concluding the main contract and purchasing a property
- Registering the property
- Property tax in Egypt for foreigners
- We will help you become a real estate owner in Egypt
Foreigners' rights to purchase real estate
Foreigners are allowed to purchase real estate and enter into full ownership in most cities of Egypt. The only exceptions are Sharm El Sheikh and other resorts located on the Sinai Peninsula, where local residential and commercial units are available only on a leasehold basis.
Citizens of which countries have the right to purchase real estate in Egypt
According to Egyptian law, there are no restrictions on the purchase or long-term rental of real estate by citizens of other countries. The local government is interested in attracting foreign investment and is doing everything to support such initiatives.
What types of real estate are foreigners allowed to buy?
Foreign buyers interested in Egyptian real estate have a rich choice of residential and commercial units. Local legislation provides virtually no restrictions when it comes to the type of property. The main rule is that citizens of other countries do not have the right to own real estate with an area of over 4,000 m2. Moreover, they cannot own more than 2 residential units.
What rights does a foreigner get after buying a property in Egypt?
Buyers who have received freehold ownership can dispose of real estate at their discretion. They can sell it, give it away, bequeath it, rent it out, etc. The freehold area is located in the African part of Egypt.
Let's discuss the leasehold. The maximum rental period of Egyptian property by citizens of other countries is 99 years. They can also dispose of such real estate at their discretion, by selling, donating, giving it as an inheritance, subletting it, etc.
According to Egyptian law, when the long-term lease comes to an end, foreign nationals can extend the contract. To do this, they will have to pay a fee. Its amount may vary between 3-9% of the original value of the property.
The acquisition of any real estate gives the buyer the right to obtain a resident visa, which is valid for 6 months. Foreigners can renew this document many times. Leaving Egypt cancels the resident visa. Upon return, foreign nationals can apply for its re-registration.
What responsibilities do a foreigner have after buying a property in Egypt?
The main obligation for property buyers from all countries, including Egypt, is to pay taxes and utility bills on time. Homeowners who do not comply with these conditions may face unpleasant consequences, such as monetary fines or confiscation of property.
Is it possible to make a real estate transaction remotely?
Buying Egyptian real estate remotely is a task. Some realtors, according to their work experience, claim that most transactions are made in this way. According to local legislation, the ownership right is supported by two documents – a sales contract and a taukil. The buyer does not need to be present when they are issued.
To conclude a remote transaction, the buyer must sign a contract with an agency or other intermediary who will represent his interests. This document will be the basis to transfer money through the bank to the details of a legal entity.
Buyers who want to register a contract in court, take out utilities or receive a green contract must issue a power of attorney or a lawyer who will perform all necessary actions on their behalf. Only experts in the legal field can perform this function.
Stages of buying a property in Egypt
The procedure for acquiring real estate in Egypt consists of 3 stages: booking a property and concluding a preliminary contract, concluding the main contract and purchasing a property and registering it. Let's take a closer look at each stage in more detail:
Booking a property and signing a preliminary contract
When a buyer chooses a house in Cairo or another locality in Egypt and confirms its value, he will have to deposit to book it. As a rule, the amount can vary from $1,000 to 10% of the value of the property. This is the first stage for foreigners buying a home in Egypt and at this stage, it is necessary to conclude a preliminary contract.
If the buyer cooperates with a real estate agency, its representatives will most likely control all obligations under the contract. In addition, it is the intermediary company that will keep the deposit until the official registration of the transaction.
The preliminary contract should include the following details:
- all information about the parties to the transaction, including contact and passport details, addresses, banking details, etc.;
- the property price, the deposit, the payment plan and the amount to be covered by the buyer;
- additional conditions, such as the deadline for entering the property into operation and quality assurance.
The lawyer's task at this stage is to check whether the transaction is legal and analyse the seller's documents. If the object of the transaction is primary real estate, the buyer must have a land title, a building construction permit and an approved project.
When concluding a transaction on the secondary market, the seller must provide the buyer with title deeds that were valid in the past, and a taukil. A foreigner wishing to purchase Egyptian real estate must provide only a passport.
Concluding the main contract and purchasing a property
After the buyer has made a deposit, he enters into a contract of sale with the seller. When the transaction involves a citizen of another country, the document is printed in 2 copies – in Arabic and the official language of the foreigner’s country. All pages of the contract must be signed.
The main contract should include the following details:
- all information about the parties to the transaction, including contact and passport details, addresses, banking details, etc.;
- all information about real estate, including address, area, number of rooms, etc.;
- the cost of real estate;
- the consequences that the parties will face if they violate the terms of the contract, such as a monetary fine;
- restrictions on the operation of real estate, for example, a ban on painting the exterior of the balcony or using the roof for personal purposes;
- all information about persons who owned the real estate in the past.
The property can be paid for by bank transfer to the agency's or seller's bank account, as well as in cash. When the transaction involves new buildings, the parties agree on an installment payment. The buyer pays as the construction stages of the building are completed. The last installment is made when construction is completed and the property is put into operation.
Registering the property
When the buyer fully covers the cost of the property, and the developer puts it into operation (transactions on the primary market), a taukil is issued. This document allows buyers to own their homes and use them as they wish. It must be written in Arabic and notarised.
If the transaction is made on the secondary market, originals and copies of old taukils belonging to the previous owners must be attached to the taukil. Registering this document will take only a few hours in the presence of the buyer. If the contract is concluded remotely, and the buyer is in another country, this process will take longer.
Property tax in Egypt for foreigners
The cost of a transaction in Egypt goes beyond the cost of real estate and includes the costs of lawyers, notaries and agents, registration fees and, of course, taxes. Before concluding the transaction, the buyer must prepare his budget for the following expenses:
- Registration fees. To complete the transfer of ownership, the transaction must be registered with the local real estate department. Not so long ago, the Egyptian government revised the registration fee, and its amount now depends on the area of the property you purchase. The maximum registration fee is 2,000 EGP (about $100).
- Transfer tax. The sale of real estate is subject to a transfer tax of 2.5% of the value of the property.
- Capital gains tax. Since capital gains tax is levied on gross profit, it is classified as transaction costs. Its size is 2.5% of the seller’s gross profit.
We will help you become a real estate owner in Egypt
To find a property that will suit your tastes and financial capabilities, please visit the official website of "Cairo". Its catalog contains the best villas, duplexes, studios and apartments in Cairo. Highly qualified specialists of "Cairo" can provide an individual approach to the situation of each client. Therefore, whatever goal a potential emigrant pursues, he can achieve it.
