Following the 2015 / 2016 Budget Speech, it may well be that there will be changes in the rules regarding ‘Integrated Resort Scheme’ (IRS). My understanding is that the IRS concept will be modified because it is considered a ‘ghetto for the rich’ by the new Government. Government policy is shifting towards a more inclusive concept of ‘smart cities’, accessible to all. Parliament has passed the Finance Act, concise copies of which will be made available.
Nonetheless, as the law currently stands for the IRS and residency, a foreign buyer will get automatic Permanent Residency (PR) upon acquisition of an IRS or ‘Real Estate Scheme’ (RES) property. The PR is valid for ten years and renewable thereafter for periods of ten years, as long as the person owns the property. His/her dependents (spouse and children under 18 years) will also get the PR status. The buyer will not be able to take employment or do business in Mauritius with the PR status alone. If he/she wants to work or do business in Mauritius as well, he/she must also apply for an ‘Occupational Permit as Investor’, an ‘Occupational Permit as Self Employed’ or for an ‘Occupational Permit as Professional’ and meet his/her respective criteria.
The IRS/RES villas are normally sold on an off-plan basis (sale for future delivery) or commonly called VEFA (Vente en Etat Future d'Achevement) in Mauritius. Under VEFA, payment is by instalment (25% at reservation, 5% when signing Deed of Sale which is three months after the reservation, 5%, 35% (post foundation stage), 10% (plastering stage), 10%, 5%, 5% (delivery of keys) ). The transfer of ownership is achieved by operation of law by the acknowledgement of the completion of the building through an authentic instrument. It is effective retroactively on the day of the sale. There are few IRS/RES properties which are sold ready-made.
IRS villas are high end luxurious villas aimed at an exclusive market – high net worth individuals. The minimum investment for an IRS villa is USD 500,000 according to law, but in reality, the real market value of an IRS villa starts from around USD 1 Million and upwards.
RES property is less luxurious and less prestigious than IRS but is cheaper when compared to an IRS. The minimum legal investment to acquire an RES property is USD 500,000 but in reality the RES properties start from around USD 600,000.
IRS/RES property has normally between two to four bedrooms and varies to anything between 175 to 300 m2 in general, or even larger in some cases. The bigger the size, the higher the price. The Registration Duty for a RES property is USD 25,000 (compared to USD 70,000 for IRS). RES are available in villas or duplexes near beaches or in eco-friendly/green surroundings. IRS/RES property is located everywhere but the best areas are the north/north-east of Mauritius. They have access to the best beaches. The West Coast is literally occupied by South Africans and is very posh, with high commercial value.
There is also the ‘Retired Non-Citizen Scheme’ for those who do not want to acquire an IRS/RES villa. They must be over 50 years old. They can hire a property (if they bring USD 40,000 minimum per year in which case they will get normal Residence Permits for three years, renewable thereafter) or buy an apartment (if they bring USD 120,000 upfront, in which case they will get PR after staying in Mauritius for three years).
Caution
The IRS and the RES in Mauritius may well make many foreigners dream of owning luxurious villas, often within walking distance from the beaches and having Permanent Residence. Glossy photos, sales and marketing literature, architectural plans and false guarantees are some of the tools used by fraudulent real estate developers to entice foreigners to invest in bogus IRS/RES Schemes.
Foreign buyers or investors must be very cautious before taking the leap into buying an IRS/RES property and should conduct thorough credibility checks on the people behind these projects, namely the promoters, selling agents, lawyers, banks, etc., since most of the IRS/RES are sold ‘off-plan’. A fraudulent real estate empire claiming to have 700 bungalows in various stages of construction collapsed last year. Most of the land on which the bungalows were built was not even owned by the promoter, and this left hundreds of hapless investors dumbfounded!
As a rough guideline, all IRS/RES projects must necessarily be approved by the Board of Investment (BOI). Most importantly, it is highly advisable that any such IRS/RES development be backed and guaranteed by a reputable bank in Mauritius. If it is not guaranteed by a bank, then there is always a risk that the project may be abandoned mid-way by the fraudulent developers, which would result in the investor losing all deposits and advance payments.
It is also important to find out whether the land on which the IRS/RES is built is freehold or leasehold. Moore Stephens Mauritius can assist you in finding, selecting and conducting credibility checks on IRS/RES promoters and other real estate agents.
Moore Stephens Mauritius offers a comprehensive IRS/RES service to those interested in investing in an IRS/RES villa.