Mauritius vs UK – it’s a mood thing

If you are considering alternatives to your current residential address – in another country – you might be weighing up the pros and cons of living in Mauritius vs the UK. First off – it’s a question of the weather. Mauritius has a temperate to warm climate all year round, while the opposite is true for the UK.

Mauritius has a multicultural society that loves happy colours. Island residents live in a kaleidoscopic natural world of turquoise lagoons, green palms, red flame trees, white frangipani, and much more. Bright and joyful colours feature in their spices, tropical fruit, Hindu temples, and traditional dress.

But turquoise days in Mauritius are replaced with grey skies in the UK. Sunlight is rare, while rain and dampness feature throughout the year. Temperatures drop to freezing in winter (July-August), rising to an average of 19 degrees Celsius in the warmest period (January-February). On those few balmy days, residents drop everything to get outdoors for a dose of Vitamin D.

UK house prices rise by 4.1% in the year to March 2023

According to the latest data from HM Land Registry, average house prices in the UK experienced a 4.1% increase over the 12 months ending in March 2023. This was down from 5.8% in the 12 months to February 2023 and the annual inflation peak of 14.3% in July 2022.

In the UK, the average house price reached GBP 285,000 (USD 358,301) in March 2023. Initial estimates indicate that average house prices in England increased to GBP 304,000 (4.1%), while Wales saw a rise to GBP 214,000 (4.8%), Scotland to GBP 185,000 (3.0%), and Northern Ireland to GBP 172,000 (5.0%) over the same 12-month period.

London is the most expensive when comparing average house prices among all regions in the UK, reaching GBP 523,000 (USD 657,514) in March 2023. However, London experienced the lowest annual house price inflation in England, with prices increasing by 1.5% in the 12 months to March 2023, down from 2.9% in February 2023.

Private rental prices increase in the UK

In the rental market, private rental prices across the UK continued to climb at record rates in the year ending April 2023. Overall, private rental fees in the UK increased by 4.8% during this period, surpassing the 4.7% growth rate in the year ending March 2023.

According to the Office for National Statistics, the Consumer Prices Index (CPI) rose by 8.7% in the 12 months to April 2023, down from 10.1% in March. In May 2023, food inflation was at a 45-year high, and the UK interest rate had risen to 4.5%.

Meanwhile, recent Knight Frank research flags a political challenge that may affect overseas buyers. “Proposals being floated by the Labour Party include higher stamp duty for overseas buyers and limits on international sales for new UK developments. The latter is a policy followed by London Mayor Sadiq Khan, but one that lives alongside the reality that some schemes are forward-funded by overseas sales. Overseas home ownership is less than 1% across the UK and in varying degrees of single digits across London, according to the Centre For London think tank.”

Cost of living in Mauritius

The inflation rate in Mauritius dropped from 11.8% in January to 7.9% in May 2023, according to Statistics Mauritius. This is much improved from the 10.7% recorded the previous year. However, the consumer price index (CPI) remains high at 131.2, compared to 121.6 a year ago. Rising food and energy prices and supply chain disruptions continue negatively impacting inflation across various economies. According to the Economic Development Board (EDB), the IMF projected consumer prices to increase by 9.5% for the year 2023 in Mauritius.

Meanwhile, data collated by Numbeo, a crowd-sourced global database of quality-of-life data, indicate that consumer prices in the UK are 58.8% higher than in Mauritius without rent but 83.6% higher, including rent. Respondents suggest that rentals in the UK are 181% higher than in Mauritius, restaurant prices are 132.1% higher, and groceries cost 25.7% more.

Tax reforms in Mauritius

The Budget Speech 2023-2024, delivered by Dr The Hon. Renganaden Padayachy in Mauritius in June 2023, highlighted a stronger-than-expected economic recovery in 2022, achieving economic growth of 8.7%, registered inflows of Foreign Direct Investment (FDI) of MUR 27 billion, generated tourism receipts of MUR 64.8 billion and exported goods and services of over MUR 320 billion.

The EDB Budget newsletter notes that tax reforms are under the spotlight. Aimed at restoring the economy’s competitiveness and creating fairness and equity for earners, the income tax rate will be applied on a “stepwise marginal tax basis”, reducing total income tax paid. The Solidarity levy of 25% currently applicable to resident taxpayers with an annual leviable income exceeding MUR 3 million will be abolished.

Good news for property investors

According to the EDB Budget newsletter, in 2022, private sector investments in the construction and real estate sectors stood at MUR 38 billion. In contrast, FDI in the real estate sector witnessed impressive growth, with over 600 sales within regulated schemes amounting to MUR 15.4 billion.

Some of the fundamental changes to be implemented are:

• A noncitizen holder (principal applicant) of a resident or occupation permit will be allowed to acquire one residential property outside of schemes (Smart City and PDS) for a price exceeding USD 500,000 and subject to payment of an additional registration duty of 10% provided that the property does not exceed 1.25 arpents and is not located on State land.
• Adding to existing schemes, a noncitizen and his family will be granted a residence permit when purchasing residential property at a minimum price of USD 375,000 under the new Sustainable City Scheme.

Where to buy property in Mauritius

The existing requirement for qualifying for permanent residency with the purchase of residential property for a minimum USD 375,000 remains in place. The benefit extends to the buyer’s spouse, children, parents and parents-in-law. In May 2023, SBM Private Banking launched an exclusive home loan package allowing Mauritian residents to apply for up to 100% financing and nonresidents to apply for up to 90%. The interest rate applied to MUR10m and above is SBM PLR – 1.10%: 5.95% p.a. with a minimum of 5.95%. (SBM PLR currently stands at 7.05%). Contact us for a property proposal and introduction to SBM.