Dr Renganaden Padayachy, the Minister of Finance, Economic Planning and Development for Mauritius, announced ways to promote short- and medium-term economic growth in his Budget 2021/22 speech. This bodes well for construction and real estate.
These are 8 highlights from among the Budget 2021/22 real estate sector incentives:
MUR 2bn earmarked to support the purchase of residential land and property by individuals
5% of the cost of acquisition for a house, apartment or land to build a residence to be refunded up to MUR 500,000 in the financial year 2021/2022
5% of home loan to be refunded up to MUR 500,000
Exemption on registration duty on first MUR 5m of cost of residential property in Mauritius (previously restricted to properties with a lesser value)
Government to work with commercial banks to introduce a scheme to cover 80% of home loans for self-employed individuals and contractual employees plus 100% of home loans for others
Promoters under the Property Development Scheme (PDS) may sell a plot of serviced land if the total area of all serviced land for sale does not exceed 25% of the area planned for construction of residential properties.
Registration duty on remaining IRS or RES residential property for sale will be levied at 5% or USD 70,000, whichever is lower.
In conclusion, the Prime Ministers’ Office will not need to approval the disposal of property under the Economic Development Board (EDB) schemes (e.g. PDS, IRS, G+2). The EDB must simply notify them.
Table of Contents
Budget 2021/22
In response to the Budget 2021/22 speech, Temple Group notes, “Housing and other construction activity are empirically the locomotives to any economic growth. The budget measures are a step in the right direction, incentivizing the buyer as well as getting liquidity with the banks to be rolled into the marketplace.”
One incentive is an exemption on registration duty for the first MUR 5m of a purchase of a built-up residential property by a first-time buyer.
Says Oliver Ma, a partner at PWC Mauritius: “The Minister has tried to be innovative with his measures for the real estate sector reeling from the pandemic. The partial refund of the cost of a property and the cover of an individual’s mortgage could well prove a boon for the industry.”
Better together
“A Mauritian citizen buying a house, apartment, or bare land to construct his residence in the financial year 2021/22 will benefit from a refund of 5% of the cost of the property, up to a maximum of MUR 500,000,” says Ma. “If the property is sold within one year of the date of acquisition, the amount received under the scheme will have to be refunded.”
The sale of remaining immovable property in IRS and RES will be enabled by repealing certain provisions of the regulations.
According to an EDB Budget 2021/22 newsletter, gross direct investment (inflows) in 2019 were MUR 21bn. The first three quarters of 2020 (January to September) generated MUR 9bn.
France and South Africa represent the main sources of FDI flows, followed by the US, UK, Switzerland, UAE, and India. Real estate activities are in the top five industry group contributors to Gross Value Added (GVA) in Mauritius.
Seeking fresh talent
The EDB plans to attract fresh talent through amendments to the occupation permit requirements and permanent residence scheme. The organisation will position Mauritius as a preferred destination for retirees and long-stay tourism.
“With the reopening of our borders from July 15, 2021, we are welcoming investors, travellers, tourists, and residents back to Mauritius to invest, live, work, enjoy and retire,” says Ken Poonoosamy, CEO at the EDB. “We will work closely with all stakeholders to ensure that the measures announced are implemented as swiftly as possible and pave the way towards a better future for Mauritius.”
English