Compass Properties - Frequently Asked Questions

Why choose Morocco?

Despite being only a three-hour flight from the UK, Morocco is a world apart and certainly provides something different for today’s overseas property buyer.
Bustling towns and cities provide some of the liveliest markets on the planet, while the sandy white coastline offers rest and relaxation set to rival some of the world’s most popular beach destinations. Morocco benefits from having coasts on both the Atlantic and the Mediterranean, giving visitors the choice of beach locations. It is even possible to ski on the snow-capped Atlas Mountains, proving that Morocco really is one of the most diverse locations around.
Morocco is a new developing market. Led by a progressive king, Mohammed VI, the country has identified foreign investment as a key lever of Morocco’s economic development.
Tourism is growing rapidly (e.g. 9% in 2010), providing seven percent of GDP.
The Government established a comprehensive plan to increase tourism from 2 million arrivals in 2002 to 10 million by 2010 and achieved this goal, bringing in $9 billion of foreign exchange and creating 600,000 new jobs. As part of this program, miles of coastline, urban locations and infrastructure have been transformed.
Morocco is a modern nation with an established agricultural and industrial foundation.
It has a new open skies agreement with the EU and is now accessible to the whole of Northern Europe with many inbound flights, ensuring solid communication links now and for the future.
Strict planning rules limit development. This control means that new property is sympathetically added and also restricts the supply. As a result, there is less competition for holiday lets and resale properties from an investment perspective.
Morocco has a wonderful historic culture. Muslims, Christians and Jewish religions have been living there in peace for 100s of years.
Despite being a hot climate, Morocco is surprisingly green and verdant as it gets a great deal of water from the Atlas Mountains.
The choice of property in Morocco is just as varied, with new-build apartments, townhouses and villas competing with traditional riads, villas and dars. It is this mixture of old and new which makes property in Morocco unique – thanks to clever planning and design, old architecture is complimented by its modern counterparts.
But the real icing on the cake is the country’s property prices, as no matter what type of home you go for, it simply won’t break the bank.

Investment potential?

Thanks to a government aim to increase tourism to the country, resorts have fast been springing up along the country’s coastline. Backed by King Mohammed VI, many of these developments boast hotels, golf courses, restaurants and, of course, villas and apartments.
And it is the support of the King that has turned Morocco's property market into such an attractive proposition. Many ‘emerging’ markets simply lack the basic infrastructure needed to support a burgeoning property market, but King Mohammed’s £2.2 billion contribution will ensure that all necessary facilities and amenities are in place. Put simply, this means that as these ambitious tourism targets are met, Morocco could well be the next holiday hotspot – a move that could only mean good things for Morocco in terms of both capital growth and rental returns.

Why choose Compass Properties?

Rather than cover many countries we have chosen to specialize in Morocco, including the Mediterranean Coast and traditional cities such as Marrakech, Tangier, and Tetouan. Our Moroccan employees have lived in these locations for many years and they have a comprehensive and detailed knowledge of the destinations.
With local offices in Morocco and partner companies for property management and rental, Compass Properties offers a complete service for anyone who wants to deal with the specialists.
The Compass Properties team has a wealth of experience, drawing on the talents of individuals from Morocco, Egypt, The United States of America, and Puerto Rico. Compass passionately believes in the present and future opportunities provided by the Moroccan property market and pride ourselves as being the industry leaders for off plan property in Morocco
Compass Properties is a dynamic, forward thinking company with strong roots developed over the last 15 years in Morocco.
We are currently partners in developing over many properties in Morocco, with additional developments planned for the near future. It goes without saying that each property will have a purchaser who must always be our primary concern. We ensure that all possible information and assistance is regularly made available to each of our clients. Our secondary goal is to ensure that all peripheral services, such as rental facilities and furniture packages, are also available.

What is the process of buying property in Morocco?

Once you have decided that you want to buy a property in Morocco, it is important to choose a notaire. The notaire is like a solicitor in the UK and plays a big role in the Moroccan property buying process, so life will simply be easier if you have one arranged from the outset.
When you have found a property that you like, you should put in a verbal offer. When this has been accepted you will need to sign a preliminary contract, which is legally binding, and pay a deposit that will range from ten per cent for a resale home, to 40 per cent for an off-plan property.
Your notaire will then obtain the title deeds of the property. While this is relatively straightforward for a new-build home, it has been known to take up to a year for old riads, as every member of the vendor’s family needs to agree to the sale.
Around four weeks before completion you will receive a draft of the final contract, which must be signed and returned to the notaire. The signing of the final contract itself must happen in front of the notaire, although if you are unable to travel to Morocco, you are able to sign over power of attorney for someone to sign on your behalf. When the final contract is signed the remainder of the balance is due, including any fees and taxes.

What fees can be expected during the buying process?

When buying property in Morocco you will need to budget for 2.5 per cent estate agency fees, 2.5 per cent stamp duty / registration tax, as well as 0.5 per cent notary tax. You will also be liable for annual local taxes (similar to our council tax), but these are relatively low.

Estate agency fees are paid by property buyer’s and owners in Morocco (based on the French system) and are higher than the UK because there are fewer real estate transactions.
For the purchaser:
Every purchaser will be obliged to pay the below taxes & expenses to complete the legal process on his/her purchase.
All percentages are based on Moroccan recording price.

Part I
Registration:	2.50%
Notary Tax:	0.50%
Guarantee of Repatriation:	2,500 MAD
Title Deed Registration	1.00% + 75 MAD
Property Certificate:	75 MAD
Stamps & Issuance	1,500 MAD
Office of Exchange Paperwork (international buyers only)	1,500 MAD
Total Part I

Part II
Notary Fee	1.00%
Notary Fee TVA	20.00% of 1.00%
Total Part II

Sum of Parts I & II

For the seller:
If an owner were to sell his/her property after completion there are also various taxes and fees associated with a sale here in Morocco. I’ve provided a list below with more details.
Capital Gains Tax: 20% Capital Gains Tax or 3% of Sale Price
Capital Gains Tax (Taxe sur les Profits Immobiliers - TPI)
Capital gains tax is 20% of profit with a minimum of 3% of the sale price. TPI is based on the sale price less the cost basis.
Cost basis may be calculated by adding the following to the Moroccan recording price in your acte de vente:
Credit expense
Registration cost
Notary fees and tax
Repairs
Brokerage fees
Inflation (based on a government table)
The second option in calculating the cost basis is just to add 15% to the recording price plus the inflation rate and credit expense. This option is more frequently. The seller must pay the TPI within 30 days of the sale.
The TPI IS EXONERATED IF THE APPARTMENT IS OCCUPATED AS A PRINCIPAL RESIDENCE FOR AT LEAST HEIGHT YEARS.
Government Community Tax: 10% of Annual Rental IncomeNotaire Fee: 7,000 dh Agency Fee: The agreed commission plus VATSyndic Fees: TBD by SyndicCertificate Fee: 100 dh

How do I view properties in Morocco?

When considering a purchase, the next step is to take advantage of a viewing trip for the following reasons:

Get a feel for the area
Visit the Beach and Golf Course
See the local facilities and amenities
Sample the local cuisine
View the properties or developments of interest
Meet the team
Take photographs
Meet the locals
Personally assess the investment potential

We would recommend that you think of your viewing trip as a business trip, it will be an important step in your decision to purchase and may involve travelling. For this reason it tends to be unsuitable for children. Your viewing trip will also be a lot of fun. At Compass, it is our priority to ensure you that you feel relaxed when viewing. There is absolutely no pressure to buy and we are committed to making your stay as enjoyable as possible.

VIEWING TRIP OPTIONS:

All our property consultants live on the Costa Vista and have a thorough knowledge of the properties available. We will spend as much time with you as you require and will be able to answer any questions you may have based on our own personal experience. We have several options for you to choose from providing you with either a low cost or speedy trip.

Transportation to and within Morocco?

There is a wide range of charter airlines that fly into Morocco, especially during the summer season. British Airways also operates daily flights into the country, as does national carrier Royal Air Maroc, while Ryanair flies to Fez and Marrakech and easyJet has flights to Marrakech from London Gatwick.
Once in Morocco there is a range of internal flights available, but be aware that these can be expensive. If you prefer to drive, there is a wide choice of car hire firms in all of the major destinations. It is also possible to drive your own car into Morocco, via the ferry from either France or Spain. It is important to take care when driving as Moroccan roads can be dangerous and there is a strict fixed penalty system in place for a wide range of common violations.
The train network in Morocco has a great reputation with high-speed, air-conditioned services frequently operating at very reasonable prices. Despite this, if you are planning on travelling south, be aware that the network ceases in Marrakech.
Ryanair, Europe’s leading low fares airline have announced the completion of a five year agreement with the Government of Morocco to develop low cost air access and tourism to the country from Ryanair’s bases throughout Europe.
This reflects the Moroccan Government’s policy of encouraging significant growth in its tourism industry as well as providing low cost access for its citizens for business and leisure purposes. The agreement covers most of the regional airports in Morocco including Oujda and involves the commitment by Ryanair to develop up to 20 routes, delivering almost 1 million passengers per annum by the end of the five-year period.

Can I reserve a property?

YES. Many of our clients choose to put down a refundable deposit to fix the price of a property and take it off the market until they can visit the area to view it.

Will I need a Moroccan bank account?

It is a requirement to open a Moroccan convertible Dirham Bank Account. Compass Properties can arrange this for you.

What is the rental market like?

Morocco is a fast emerging destination but already has a long history and an established tourism market, particularly in countries such as France and Spain
The tourism market continues to grow and buy to let is a sound investment strategy, especially when buying in the year round tourism hubs such as Marrakech where it is common to see occupancy rates from 60 – 90%
Despite the global downturn, Morocco is the only country from the Mediterranean basin to see an increase in tourism arrivals. According to statistics from the Moroccan ministry of Tourism, the French are on top with 3.1 million tourists (+4%), followed by Spanish (1.8 millions, +10%), Belgians (469,000 tourists, +12%), Dutch (443,000 tourists, +12%), Germans (423,000 tourists, +1%), British (362,000 tourists, +7%) and Italians (318,000 tourists, +11%).

What is the tax situation?

There are two main types of tax status in Morocco – tax resident and non-tax resident. If you spend more than 183 days per annum in Morocco you will be considered a tax resident. A double taxation agreement with the UK does exist, however, meaning that you won’t be taxed twice for any income earned. In order to avoid any confusion it is advisable to seek the guidance of an independent tax expert, as the taxation system can be complicated.
Value Added Tax is 20% for new build property. Often included in the price.
Municipal taxes (rates). Exempt for the first five years and then between 10% -30% of the yearly rental value of the property with a reduction of 75% if it is your main dwelling.

Income tax: Exempt for up to 5 years in Morocco but following this the rental income should be declared on 60% of the total at levels between 13% and 44% in the following tax brackets:

Annual income	TAX
1 to 20,000 Dhs	Exempt
20,001 to 24,000 Dhs	13% with a reduction of 2,600 Dhs
24,001 to 36,000 Dhs	21% with a reduction of 4,520 Dhs
36,001 to 60,000 Dhs	35% with a reduction of 9,560 Dhs
60,001 Dhs and above	44% with a reduction of 14,960 Dhs

Capital Gains tax in Morocco is currently 20% but is reduced to 10% for properties held for 5 years and to 0% after 10 years. This is required on all real-estate transactions and includes the difference between the purchase price and the price at which the property is sold, reduced by the selling costs and increased by the purchase costs, investment expenses and interest payments. The tax is required on a minimum of 3% of the selling price. In order to be exempt from this tax the property must have been the vendor's main dwelling place for at least five years if the selling price is under 1,000,000 Dhs, or for at least eight years if the selling price is over 1,000,000 Dhs.

Are mortgages available?

YES. Many Moroccan banks offer mortgages of up to 70% over 20 years for non-residents.
Some International Banks including Societe Generale and Banque Populaire (major French banks) operate in Morocco and are prepared to provide mortgages for properties and, depending on your individual requirements, consideration should be given to this approach.
Banque Populaire have offices in London: 38 Star Street, W2 1QB, 0207 258 0243
There are no British banks in Morocco so it is not possible to get a loan secured on your Moroccan home from a UK financial institution.
Current interest rates on Moroccan mortgages are from 5-7% and while these can be arranged on both a variable and fixed-term basis, it will still work out cheaper if you able to raise finance in the UK – perhaps by re-mortgaging an existing property.
If you do decide to borrow from a Moroccan bank, be aware that they will only lend up to 40 per cent of your net salary (same in many southern European countries). It is also important to note that not all Moroccan banks will lend to overseas property buyers, and those that do will only supply repayment loans; there is no such thing as interest only mortgages.

Do I need a lawyer?

Compass Properties has several independent English-speaking Moroccan lawyers/notaires that we can recommend to help you through the process.

Common legal issues?

Properties without the correct title deeds are commonplace in Morocco but, despite what you might hear, it is imperative that you do not purchase a property without the correct documentation. If you are not in possession of the title deeds, you do not officially own the property – regardless of how much you paid.

What about freehold and land registry?

All properties in Morocco are freehold and have title deeds (“Melkia”) that are registered in the Land Registry. This shows who owns the land and whether there are any encumbrances on the title such as mortgages, rights of way etc.

What is the first step?

When you have identified a property that you wish to purchase, the first step will be to place a small deposit that will take the property off the market while the “Compromis De Vente” is signed. This deposit should be held by a notaire in a secure client account.

What is the “Compromis De Vente”?

The exchange contract or “Compromis De Vente” is the initial purchase agreement and usually signed when placing a deposit. This contract sets out the terms and conditions and binds you to the purchase. If you cannot be in Morocco to sign this document you can give your lawyer Power of Attorney to sign on your behalf.

What is the “Acte de Vente”?

Upon completion of the property and issue of all licences, both parties, in the presence of a Notary, sign the Sale and Conveyance deed or “Acte de Vente” and payment made of all outstanding monies. As with the Private Contract you can give your lawyer Power of Attorney to sign on your behalf.

Is Building structure insurance necessary?

For an individual villa it is necessary to arrange insurance. For a property within an urbanisation the insurance forms part of the management company’s role and the cost is within the community maintenance charge.
Newly built homes in Morocco come with a 10 year build guarantee by law

Is Building contents insurance necessary?

As in UK.

New-build versus resale properties?

This choice really depends on your personal circumstances, wants and needs.
Off-plan or new homes sold by reputable developers perhaps offer the quickest route, simply due to the fact that they should always have title deeds secured. They also promise on-site facilities and amenities that can be useful – despite the colour of the local markets it may prove tedious bartering over your daily loaf of bread. New-builds also tend to offer coastal locations and, if you are planning on renting your property out, established rental management schemes.
However, if you were attracted to Morocco by its vibrant culture you may simply prefer to plump for a charming riad, villa or dar and if buying with a full title and through a reputable agent this is very safe.

What is the Moroccan climate like?

The Moroccan climate varies greatly from region to region. The coast has a warm, Mediterranean climate and July and August are the hottest months. Inland areas have a hotter, drier, continental climate throughout most of the year, with the nights coolest in the months of December and January.
The early summer months promise warm days, cool nights, and little chance of rain. Morocco generally remains quite dry for most of the year, with an average annual temperature of 30 °C in summer and 21°C in the winter.

Visas, residency and work permits?

British citizens do not need a visa to enter Morocco for stays up to 90 days. If you wish to stay longer than three months, you will either need to leave and re-enter the country or apply for an extension at the foreign registration department of your local police station. It is also here that you apply for a residence permit should you wish to do so, but you must set the wheels in motion within two weeks of arriving, otherwise you will be required to leave the country after 90 days. Once issued, a residence permit is valid for ten years, but it is worth seriously weighing up the advantages of residency before applying.
If you are planning on working in Morocco you will need your employer to apply for a work permit on your behalf. They will be required to prove that you are doing a job that couldn’t be filled by a Moroccan national, and the application process can be time consuming.