The Gibraltar property market, due to several factors, is a healthy and stable market. This very fact together with other elements make it most attractive for overseas clients and investors to purchase property locally. Some of the main reasons for investing in Gibraltar include:
- A stable market which is somehow always on the move
- A decent rate of return which varies between 5% and 9% to be made from renting property out to clients, either on a short-term or long-term basis
- A very user-friendly legal and general paperwork system
- A low corporation tax or personal tax system in the case of making rental income
- No capital gains tax when you sell
- A market which has always been marked by a high demand, normally considerably higher than supply, which keeps it on the move.
- And now that Brexit seems to be a reality to come at some point, a large number of UK buyers are considering Gibraltar as a place to make an overseas investment, with no currency exposure to worry about combined with fabulous infrastructure and balmy Mediterranean weather conditions.
With all the above reasons in mind, and having made a purchase of a property in Gibraltar and having enjoyed its use and/or some good rental earnings, the time has probably come to move on and sell it and to harvest some profits to possibly invest back again in something larger or newer. I often hear: “I am abroad, how do I proceed?” The answer is gin-clear. Just get someone to do the conveyance for you. Here are some important points to consider and follow:
Appoint a solicitor or business consultant or estate agent to do the job for you if you do not wish to be present. The person you choose has got to be a professional with a good experience in conveyance. However simple it may look, transferring a legal title deed of a property from a company or person on to another has its complexities and there is no doubt this must be done professionally. In Gibraltar there are excellent professionals to choose from. Their fees vary, but as a norm they are about 1% of the transaction value or a little less if we are talking about a very large deal. It is essential to get this point clear from the moment we appoint someone to act on our behalf to avoid surprises at a later stage.
The following step is to make the relevant power of attorney to the person chosen above. Bear in mind your chosen consultant must sign on your behalf when the exchange of contracts is agreed upon and must also sign over the transfer of the property deed when the relevant dates arrive. The Power of attorney may be a general one or more often a specific one to enable our chosen professional to represent us in the sale of our property. Ideally you must go to a Notary Public in Gibraltar and grant this document to your representative. This could also be done in The UK, but make sure it includes “The Apostille of The Hague”. This is to make sure it is usable in certain overseas Jurisdictions including Gibraltar.
Another essential point is to address you representative in written and to clearly set out your instructions to pursue the sale of the relevant property. Price, conditions of payment, deposits, contracts and time frame to conclude the transaction and a good amount of relevant points are all to be set out clearly in this document. Normally your solicitor or business consultant will meet up with you and agree to all the points. The minimum price to be accepted for the sale, his fees and the timing amongst other notes of relevance to secure a smooth sales deal.
Who pays the expenses? This varies from jurisdiction to jurisdiction. In general terms the buyer must pay for all the purchase expenses but make sure of this before you move ahead. In Spain, for example, the above case rules except that the buyer must make a 3% retention of the final sales price in order to cover the municipal capital gains tax. This is not exactly the case in Gibraltar but check these points with your consultant as laws change every now and then and you must obviously comply with the existing regulations at the time of completion of the sale of the property in question.
How safe is it to operate with an appointed consultant in Gibraltar? The answer probably is as safe as anywhere else. Safe if you appoint the right person. Besides you should set out in your letter or document with your consultant how you wish the payments to be done. When I act on behalf of a client, for example, I specifically request the buyer to make or transfer the funds directly to the client or vendor. This is a much clearer and safer way of doing business and saves your consultant a few possible headaches. Gone – or almost gone – are the days when there used to be cash involved. This is something I have always recommended clients to avoid. The dangers involved are too many to mention in this article. Just do things legally as they should be done and pay your dues is the golden rule, and then hopefully your sales deal should run as smoothly as a well oiled and tuned engine.