Obviously the fact that we’re in a recession in the UK, the US and Europe hasn’t passed any of us by! Daily headlines are talking of falling property prices, repossessions and tumbling rental yields in our home markets, but for investors willing to look elsewhere there are still good opportunities in many overseas property markets.
More than that, if you choose your location well, your property could be paying for itself until you’re ready to move into it and retire. If you’re prepared to do your homework, buying property in Ecuador can be very rewarding for example.
Quito, the capital of Ecuador is rapidly increasing in popularity as a retirement destination for expats – particularly those who herald from North America. With its warm climate, breathtaking Andean mountain views and busy nightlife, it’s a major destination for those retiring in Ecuador. But more than that, Quito offers good investment returns on property and if you want to learn more about the Ecuadorean property market and how to buy property in Ecuador, read on!
A 120m2 apartment in Quito costs around £65,500 and it can be rented for around £480 per month, giving a rental yield of around 8.7%. Facts that should impress any property investor nowadays! The good news is that anyone can buy property in Ecuador, even on a tourist visa, however within 50 kilometres of the coast, permission will be needed to purchase. The property transfer system in Ecuador is pretty straightforward, but there are a couple of things to be aware of.
There are no multiple listing services available for property in Ecuador, so when you start your property search make sure you use more than one real estate agent. Many properties are also offered for sale directly by the vendor so check out local newspapers for adverts, or if you’re walking around and you see a property you like, ask – it may just be on the market for the right price! Once you’ve found your property and negotiated the price with the seller you need a lawyer to check that the property title is clear. The property lawyer will check that there are no liens, debts, mortgages or inheritance problems with the property.
After due diligence has been completed, the first document needed when buying property in Ecuador is the “Promesa de compra venta”. This document details the price, what’s being sold and by whom, and who it’s being sold to, as well as the length of time to complete the property exchange. This document is a binding agreement that’s notarised, and upon signing it usually requires a deposit of 10% be paid which will be non-refundable unless otherwise stated in this contract.
When your finances are in place and you’re ready to complete the purchase process you need to sign the purchase agreement or “compraventa”. This document will have been drawn up by your lawyer and if you don’t speak Spanish it’s Ecuadorian law that you must have a translator. When the compraventa is signed and the remaining purchase price has been transferred, your lawyer will then register your property at the land registry.
Costs for buying real estate in Ecuador are split between both the buyer and seller with the buyer paying the government taxes and transfer fees and the seller paying commissions. It usually works out at between 6.25 – 8.25% over and above the purchase price.