Leasehold laws

There are lots of desirable properties that grace the shoreline of Mauritius with the most pristine beach views and glorious sunsets that can be enjoyed with favourite sundowners.

But unfortunately, most of these properties aren’t accessible to expats because they are protected by Mauritian laws, meaning that only locals can buy them.

Timo Geldenhuys – managing partner, Mauritius Sotheby’s International Realty – speculates about why such rules apply and talks about the pros and cons of buying a home on the island. Specific schemes

According to Mauritian rules, foreigners can only buy into specific housing schemes on the island. ‘It’s not an open market. Foreigners land here, but they can’t just buy any property and into any scheme. It’s all government approved, and expats can often only buy freehold properties. There are a few exceptions, of course,’ explains Geldenhuys. Most coastal properties are leasehold, and the general rule of thumb is that only Mauritians can own leasehold land. ‘Most of these developers own the lease and build the development further back. None of the residential owners own the leasehold portion in front. It’s a 99-year lease renewable to the existing leaseholder.

‘It’s been like that since the inception of the foreign property market in 2005. And therefore you don’t have natural beachfront homes belonging to foreigners,’ says Geldenhuys.

The reason behind it

To Geldenhuys’ knowledge, the Mauritian government has never come out to explain exactly why the rules are the way they are. It’s his suspicion, though, that the rules are there to protect locals and to ensure that they’re never priced out of the market by rich foreigners keen on buying up all the pristine properties located in the sought-after coastline areas.

‘I don’t think they will ever say, “this is the reason we’re doing it”, but those are just the rules. Only freehold land in dedicated areas can be owned by foreigners,’ he adds.

That’s not to say that foreigners don’t stand a chance of getting a beach view at all. Geldenhuys says: ‘The developments may still be oceanfront facing, with nothing between you and the ocean – it’s just that the buffer zone, which is the leasehold bit, is the zone not built on.’

However, if a South African is married to a Mauritian partner, there’s nothing to stop them from buying a beachfront leasehold property and just putting it in the Mauritian partner’s name.

The advantages

There are many advantages to living in Mauritius, and Geldenhuys rattles these off easily. ‘It’s got great connectivity; it’s well situated to do business in Africa, the Middle East and Europe. We’re on the same timeline as Dubai.

‘There are numerous flights that fly in here daily (taking Covid out, of course). We have very advantageous fiscal benefits – no inheritance or dividend tax, and personal income tax of only 15%.

‘So fiscally it’s a great place to base yourself, compared to South Africa where you pay 42% tax. There’s also good healthcare and good schooling,’ he says.

The cons

When ask about the disadvantages, he pauses to have a think but then offers a few that he feels have only been realised in the last few years, because the pandemic has brought them into sharp focus.

‘We’ve been very cut off from the world as we’re an island. Life has carried on as normal, but we’re completely isolated, so no tourists coming in and out. I feel this has been a negative.

‘It’s been tough on the tourism sector and spin-off businesses like car rentals and those small businesses offering dolphin trips. The restaurants – a large percentage of those have been massively affected, but somehow they seem to have survived.

‘The island has opened up recently and it’s amazing to see the difference and see people walking around again, so that’s a good thing.’

A long-term commitment

When it comes to buying a property on the island, he also warns against doing it for a short-term financial gain.

‘It’s not a very fluid market. It’s a medium- to long-term buy and when you want to sell, we don’t have high turnover of property. You may have to wait six months to a year to sell it. It’s not like London, New York, or Ballito in Durban where there is a high turnover of people moving in and out.

‘So, people thinking of living here short term or those who are speculative buyers, I’d say to them: “Mauritius is not your market”.’