- What do I need to buy a property on Margarita Island?
In order to buy a property in Margarita, you would need a Passport and an RIF tax identification form which can be obtained with power of attorney.
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- Are there any restrictions to buy a property in Margarita?
All you need to buy a property in Margarita is the tourist visa (the green form given on the plane).
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- I would like to buy a property in Margarita Island. Do I need legal assistance?
It is strongly recommend that clients instruct a lawyer to represent them from the outset, when buying a property in Margarita. The process can be daunting and stressful and a lawyer can carry out all the legal work, allowing the purchaser to complete a property purchase with peace of mind.
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- Should I instruct a lawyer when buying a property in Margarita?
When buying a property in Margarita it is always recommended to instruct a lawyer who is familiar with the legislation. Venezuela is a Spanish speaking country; therefore, few lawyers speak English.
We can recommend a UK based Law firm with its Venezuelan English speaking Lawyers, who will be able to provide you with legal advice. This representation is formalised through a power of attorney notarized here in London (at the Venezuelan Consulate). Once this Power of Attorney is duly legalised, the Lawyer on the Island, can represent you there and sign the title deeds on your behalf.
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- How do I know if the land has planning permission, building licences, etc and if everything is in order when I buy a property in Margarita?
Your solicitor (lawyer) will perform all necessary due diligence and the client will be informed of all legal matters and issues regarding their new property in Margarita Island. The Due Diligence work involves research of the land title deeds, charges and easements over the land, building licence and company search, if the developer is a company. UK based solicitors can take care of the whole legal process of buying in Margarita, using its Associate office in Isla Margarita. This also helps to speed up the purchasing process (so that clients can meet their deadlines on time), as well as offering an extra guarantee to clients who know their interests are safeguarded, with both a UK and Margarita based lawyer.
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- Do I need a surveyor to check if all is fine with off-plan property in Margarita?
Not if you are buying off-plan property in Margarita. If you are buying "off plan", as it is impossible to carry out a survey if the property you are buying has not been built. However, we can arrange an inspection of the land where the development is to be constructed. There will be an extra charge for this.
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- What taxes do I have to pay when I buy my property in Margarita Island?
Normally when buying a property in Margarita, based on Venezuelan legislation (Art.1491 Civil code) and customary practice the Seller bears the cost of the transfer tax rate (0.5% of the purchase price). This can be modified by agreement between the parties. This tax has to be paid prior to signature of the purchase title deed. The equivalent of 0.5% of the total purchase price is to be paid into the SENIAT bank account (The SENIAT is the equivalent of our Inland Revenue). This payment corresponds to the transfer tax and it is a necessary requirement to comply with the law.
The buyer will always have to bear the municipal taxes, notaries and registration fees on completion - the Escritura - (approx. 1% purchase price), RIF (Tax Identification), Venezuelan and/or UK Lawyer's fees and other Administrative Expenses (there are disbursements that arise during the purchase process, ordinary expenses such as post mail deliveries, valuations and assessment studies from experts, normal copies or certified copies of documents and plans.)
The reason why the Island expenses are not that high, is because is it is favoured by a low VAT regime due to its "Duty Free status".
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- What taxable are payable on the rental income from property in Margarita?
Based on the Venezuelan - United Kingdom double taxation Treaty, all income that originates from a property located in Venezuela "can" be paid in Venezuela. This means that the owner is allowed to decide where to pay the tax, whether in Venezuela or in the UK. Therefore the owner of the property can pay the income from a Venezuelan property in the UK but only if the owner qualifies as a British Tax Resident (living more than 183 calendar days in the UK). In practice, the SENIAT (The Venezuelan's Inland Revenue) will charge you for this tax. Therefore once you pay the taxes in Venezuela you are OBLIGATED TO PAY THE DIFFERENCE IN THE UK. The income tax in Venezuela is 15% for income up to USD $35.000,00. In conclusion, if you qualify within the minimum rate in Venezuela which is 15% and you are a 40% tax payer in the UK, you will have to pay the 25% (the difference) in the UK.
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- How secure are the payments for property in Margarita I make to the developer?
It is common practice in Venezuela for developers to set up a "Fideicomiso" (Venezuelan Escrow account). However, there are other legal forms of protection (not commonly used) that can be offered by the Developer. These are: "Daci?n en Pago" or "Fianza de Fiel Cumplimiento" through an Insurance Company. The latter all guarantee that the purchasers monies are protected and that the property will be completed. Guarantees vary according to the development, for this reason clients need to ask, so as to know which guarantees are applicable. Please find a description of each guarantee below:
UK Escrow: Clients have the option of placing the first major instalment (made at Purchase Contract) into an escrow account with The International Property Law Centre, until the purchase contracts are exchanged. This Escrow Account will be based on the terms and conditions of the reservation and promissory contract.
Fideicomiso (Margarita Escrow): The amounts paid by the buyer and assigned to the construction of the building and are deposited in a bank account. The builder can only use that money for the construction of that specific project. Some "fideicomisos" are subject to the completion of particular stages in the construction in order to be able to receive the monies. The architect, at each stage of construction, will issue a certificate declaring that the builder has completed a given construction stage. The certificate also has to be signed off by bank officials and the directors of the Promoter Company. Without this certificate no money can be transferred to the builder.
First Grade Mortgage: This is a guarantee, registered against the plot of land where the property is built. In case the developer does not complete the property, the client has the security of the plot of land and whatever is built on such plot.
Land Registry: If clients purchase properties not in qualifying as a condominium, the developer could offer you the possibility of registering the land pertaining to the property under the clients' name. Clients will have legal title not only to the land but also to what is built on it in case that developer goes bankrupt.
"Dación en Pago": This is a very immediate guarantee in case the Developer does not fulfil the contract. The client will have title to the plot of land and whatever is built upon it. In this case, one does not need to execute the First Grade Mortgage at Court. The Client can either sell the property or complete it with the money left in the Fideicomiso.
"Fianza de fiel cumplimiento" / Performance Bond: This guarantee assures the good execution of a contract by a provider or any other company. This guarantee assures that whoever orders the bank guarantee is going to fulfil his obligations for the benefit of the beneficiary of the guarantee. In case of non fulfilment of his obligations, the beneficiary can execute the guarantee asking the bank to pay him the amount agreed. In layman's terms this guarantee applies to apartments or condominiums, where the Developer is obliged by the Promoter to take out an insurance against the risk of not completing the building. The insurance will cover the build costs in case of Developer default but, will ensure that the Developer has sufficient assets to claim against before underwriting such insurance
Note: these are all the relevant forms of guarantee available under the Venezuelan legal system.
However, in a case where the developer goes bankrupt, the buyer can also pursue the matter (through a civil action in Court) against the Developer.
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- What other Guarantees does a buyer have when buying a property in Margarita Island?
All new properties in Margarita have a 10 year building guarantee as in the UK and Ireland. The architect and the constructor are responsible for the proper construction of the building within the first 10 years that the building is constructed ("Responsabilidad Decenal" Art. 1637 Civil Code). Therefore, if the construction faces any substantial or material problems, due to latent or patent defects in construction, within this period, they must rectify these and pay compensation. This article is part of Buyer's Statutory Rights, therefore even if it is not set out in the contract, it will apply.
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- What happens after I sign the Reservation Contract to buy a property in Margarita?
It will depend upon what is established in the contract to buy a property in Margarita. Legally speaking once the promissory contract is signed the buyer is obliged to pay the agreed price and the Developer to construct the property as was agreed. In practice, once you have signed the Reservation Contract ("Contrato de Reserva") and paid the Reservation Deposit, the vendor will take the property off the market. You would normally have 30 calendar days, after the signing of the Reservation Contract and payment of the reservation deposit, to make an Inspection Trip and to visit the site of the property for which the deposit was paid. This would be with our representative and you would at that stage decide if you still wished to proceed with the purchase. If you decided not to continue with the purchase for reasons attributable to the client, the reservation deposit would be refunded (minus an administration charge). If you decided to proceed,then the Purchase contract must be signed and the first instalment must be paid within 30 calendar days of signing the Reservation contract.
This is the customary practice, although this could change depending on the terms and conditions of the reservation contract.
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- What happens after I sign the Promissory Contract to buy a property in Margarita?
The Promissory Contract ("Contrato de Compraventa") is a legally binding document in which the vendor expresses his wish to sell the property and that the buyer wishes to buy it. Therefore, the Buyer is obliged to pay and the Developer to construct the property. Both obligations are based on the contract's Terms and Conditions. During the time between signing the Purchase Contract and the registration of the contract with the Land Registry, the buyer needs to obtain a Registro de Informacion Fiscal (RIF). This is a fiscal identification number for tax purposes and this can be organized by UK based solicitor, if the buyer wishes so.
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- What happens when the property in Margarita is completed?
When the property in Margarita is completed the buyer will have to pay the last instalment of the purchase price and sign the title deed. This completion process will be supervised by the Registrar of the Public Registry. This public officer is the one who gives legal validity to the transfer and thus, entitles the buyer to ownership of the property. Both parties - buyer(s) and seller(s) -must sign and make all final payments. It is important to have a Power of Attorney in case you are not able to be present at completion. It is proper to highlight that if you do not attend on the date when the completion was arranged for, you could face the loss of 30% of the property price and all rights over the property.
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- Do I have to sign the deeds in person when buying a property in Margarita?
If you cannot be present at the Notary Public to sign for the Title Deeds when buying a property in Margarita Island, the power of attorney must be signed in front of a notary public in your country and then sent to the Venezuelan embassy or consulate for authentication.
The buyer can also set up a Power of Attorney to allow a Venezuelan Lawyer to sign the title deeds on his behalf. This power of attorney will cost £250. It must be witnessed by a notary at the nearest Venezuelan Consulate and the Notary fees in the Venezuelan Consulate are £75.
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- Why, in the contracts, the prices for property in Margarita are always in Bolivares?
The Bolivar is the official currency in Isla Margarita. Therefore every real estate transaction on the island must reflect its value in the official currency (Bolivares) for legal purposes.
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- Do the payment instalments for property in Margarita that I make in Euros, get transferred into Margarita?
Yes. The promoters and developers with whom we work are one of the few that follow the legal requirement for your payments to be registered into the Venezuelan banking system, following which you will be issued with a foreign investment certificate which guarantees that the payments have been legally made.
That way when you come to sell your property, there is no risk of being caught by any restrictions on taking your money out of the country, with you being liable to pay only the usual taxes on any expected income or capital gains.
Not registering payments can incur hefty fines and, depending on the amount, can also be subject to more serious penalties.
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- What if my Reservation Form to buy a property in Margarita is incomplete?
In order to take a property off the market, we must have the following client information to complete a Property Reservation Form: full names and surname of all buyers, respective passport numbers, Correspondence Address, Email, Telephone landline & mobile and Project, Plot, Model & Price. No exceptions can be made.
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- What if I cannot make payments or sign contracts according to the specified deadlines?
Clients should not reserve properties if they are not able to pay the reservation deposit or sign the reservation contract in the specified times. Clients who cannot pay all instalments in due time or cannot sign the Purchase contract in due time will face interest on the arrears and other penalties (such as loss of their deposit and the right to buy the house).
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- Do I get help towards costs of an inspection trip to Margarita Island?
If clients purchase a property and conduct an inspection trip after placing a deposit and before signing the purchase contract, we will pay Euros 1000 cash back on completion of the property to the client.
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- What will UK based solicitor will charge to buy a property in Margarita?
Fees are 1% with a minimum of £950 and a maximum of £1450. Preparation of a Power of Attorney is charged at £250 and Escrow accounts are charged at £300. There are also charges for other services required, for example: land inspection, process to obtain the RIF £100, lawyer representation on the Island £75, Notaries fess to register the Power of attorney £75. Please contact The International Property Law Centre directly for further information and up to date pricelist: JULIO MASTROGIACOMO Direct Dial: 0844 578 4005 / 07970989985 Email: juliom@maxgold.com
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- Is finance available to buy a property in Margarita Island?
Finance to buy a property in Margarita is not available, because banks do not have access to credit history of foreign clients. Even if this were possible, interest rates are extortionate compared to the western world due to high inflation.
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- Can I have a bank account in Euros, US Dollars or Pounds Sterling with a Venezuelan bank when buying a property in Margarita?
No. With Venezuelan banks one can only have accounts in the local currency Bolivares.
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- How do I sign a power of attorney from abroad when buying a property in Margarita?
If you cannot be present at the Notary Public to sign for the Title Deeds when buying a property in Margarita Island, the power of attorney must be signed in front of a notary public in your country and then sent to the Venezuelan embassy or consulate for authentication.
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- How much has my pension to be in order to become eligible for a retirement visa?
One would need to receive more than US$ 1200 per month for one person or $1700 per month with a spouse.
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- How can I get to Margarita Island?
The duration of UK direct flights to Isla Margarita Porlamar airport are approxiamately 9 and half hours from Gatwick (every other Wednesday) and Manchester (every second Thursday) with First Choice.
Packages can be purchased to stay in any of the following destinations: Pampatar, Playa Puerto Cruz, Playa El Agua, Porlamar, Playa Caribe, Playa Tirano, Playa El Humo. Please see the website http://www.firstchoice.co.uk (do not make it as a link!)
One may find bargain flights from http://www.holidaywarehouse.co.uk with Air 2000. (do not make it as a link!)
Prices vary usually from £400 to £800 but some low cost carriers are already flying to other Caribbean destinations for £99 single so it shouldn't be long before these prices are also charged for Margarita Island routes">
Alternatively one can book a regular flight (with Air France, Iberia, Alitalia, Conviasa, Air Europa, Condor, KLM, Lufthansa and TAP Portugal) to Caracas from any major city and then connect to Isla Margarita with one of the many daily shuttle flights lasting 35 minutes. Flights are available from North America with American Airlines, Delta Airlines, Aeropostal, Continental Airlines and Air Canada.
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- Are foreign driver licences valid in Venezuela?
Only until you hold a residency visa after which Venezuelan Driver licence is required. In any case you only need a valid medical certificate in order to drive legally.
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- Is Margarita Island dangerous?
Margarita has the lowest crime rate in the country. However, one must take normal safety precautions as anywhere else in the world. There is absolutely no comparison between Caracas and Margarita.
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- Which areas are best for night life in Margarita Island?
Playa del Agua and Porlamar
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- When are national holidays?
VENEZUELAN AND MARGARITA ISLAND HOLIDAYS
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- What is the weather like in Margarita Island?
Margarita Island is out of the hurricane belt. This is a very important consideration that many people overlook when considering a move to the Caribbean.
The sun shines almost constantly on Margarita with the daytime temperature on average equalling 28 °C. Even in the summer months, when the temperature may reach 36°C (99°F), the climate is very comfortable due to the cooling breezes.
This means that combined with around 340 days of sun a year, the climate of the island is nearly perfect, if you are looking for a glorious sunny location for your holiday home.
It rarely rains in Margarita; the average annual rainfall is 27 inches a year. The island landscape tends to be cactus and pale green yabo plants. Rainfall is more abundant in the green hills.
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