Questions and Answers for Foreigners about Uruguay
Why should I buy in Uruguay?
• Uruguay is Latin America’s safest country!
• Top-ranked in political and economic stability!
• Top-ranked in transparency and lack of corruption!
• No social turmoil. There is a true middle class, and Uruguay has South America’s lowest-income gap.
• A solid legal system with respect of contracts and private property!
• Very good Health system!
• Mild climate!
• Well developed, good and modern infrastructure and doesn’t feel like a third world country!
• Pristine clean beaches along the whole coast!
• Good air quality!
• Clean water sources!
• Fresh farmland meat, vegetables, and fruits!
• Friendly local people!
• You truly feel welcome in this country!
What can a foreign buyer purchase in Uruguay?
There are no restrictions on any property type for foreign buyers. All you need to buy real estate in Uruguay is a valid passport and proof of funds. The government protects foreign investment by the country’s laws. Foreigners have the same property rights as Uruguayans and can carry out any economic activities they desire.
How can I buy property?
In any way as an individual, local, or foreign corporate vehicle!
Do I need to be a permanent resident to own a house or to do business in Uruguay?
No, residency is not required for owning property or doing business as long as the maximum length of stay 180 days per year is not exceeded.
With whom should I buy property?
First of all, make sure you have a good local real estate broker who also speaks your language, knows the market, can guide you through the whole buying process and a good notary, which is a type of a buyer attorney “Escribano” in Uruguay. This combination guarantees for an unproblematic transaction. Team Haverkate at Engel & Voelkers offers you a choice of very good “Escribano” at special rates.
It is impossible for one agent to get the best deal for a buyer and at the same time for the seller!
Many Real Estate firms in Uruguay and other countries are practicing “Dual Agency”! Dual Agency means your agent has an existing direct relationship with the seller of the properties he offers for sale.
Dual Agency is in many countries not forbidden by law but can create a dilemma for a professional agent and maybe a severe disadvantage for the client as well. Primarily a problem when it comes to the negotiation part of price and repairs.
As a California trained Real Estate Broker, I’m very aware and sensitive of this worldwide industry flaw, which easily can create a conflict of interest. We think we can work the most effective and best for our buyer and his interests if we don’t have a direct relationship with the seller of a property. Even many educated buyers are not aware of this situation. We suggest you always ask your potential agent before you start working with him how he or his firm handles this problem.
We see many buyers coming to Uruguay to shop for properties and running around with all different brokers, who are showing them their Inventory. Especially the houses they would like to sell because they have an existing relationship with the owner of the property. While the buyer does not realize that that agent is not only working for them. They would much rather work with one representative but a real “buyer’s agent” who has, at the same moment access to the entire local market.
We have resolved this by not taking on listings directly. We work mainly with one of the Largest Inventories of a worldwide firm like Engel & Voelkers. We offer the same commission conditions to the buyer but make sure that always an Engel & Voelkers listing-agent represents the other side. Of course, we know the entire Inventory but can herewith avoid direct contact with the homeowners when it comes to a transaction.
So, all the displayed properties you see on our www.Realestate-in-uruguay.com are properties represented by Engel & Voelkers listing agents, where we have direct access but no direct relationship with the sellers.
In cases where we don’t find what the buyer is looking for at the E&V Inventory, we are free to look outside with other reputable brokers. That way, we can ensure to cover the entire market and find the best properties for a buyer. Also, in this case, we are only representing the buyer.
Since there is no Nationwide Database in Uruguay (like the MLS in the USA), many foreign buyers don’t realize that many brokers offer the same properties. The client could end up seeing the same property with different agents, which creates a mess for everybody. Buyers would be much better off in this market to work with one chosen Buyers Agent. You give your criteria only to your trusted Real Estate agent and can establish a loyal relationship. After all, Real Estate is a personal relationship business.
At the end of the day, it shouldn’t matter to us personally, which seller sells his house, but it does matter which property is best for our buyer. We can much more effectively negotiate the best possible price for our buyer looking out only for his best interest. It is impossible for one agent to get the best deal for a buyer and at the same time for the seller!
So, if you choose to work with Team Haverkate, you can be assured that we only work for you and guide you through the whole buying process and beyond. Moreover, we can represent you on any transaction in Uruguay and show you any property on the market.
Always make sure Your Broker is Licensed in Uruguay
Always make sure you work with a registered Real Estate firm who has a license with the Uruguayan Board of Real Estate. Team Haverkate works under the Engel & Voelkers license in Uruguay.
What does a Notary Public called “Escribano” or “Escribana” in Uruguay do?
He protects the interest of the buyer in the purchase process like an escrow/title officer in the United States and verifies the deed/title history 30 years back. He drafts the pre-sale purchase agreement and final sales contract, structures the purchase and handles the down payment or deposit and final payment. The “Escribano” records the purchase at the Public Registry.
How does the Public Registry work in Uruguay?
Every property is identified by a number called “Padron” and recorded by its Padron number at the Public Registry, which is subdivided into geographical sections. The registry has all the ownership history, liens, and mortgage information to guarantee that the buyer receives a clean title.
How does the purchase process work in Uruguay?
The buyer selects a property with its real estate agent, and buyer and seller agree verbal on a price through their agents. The buyer selects his “Escribano” and the buyer Escribano contacts the Escribano of the seller. The Escribano drafts a “Boleto de Reserva” based on the verbal agreement of buyer and seller to secure the purchase terms. At that time, the buyer has to deposit 10% of the sales price with its Escribano, and this deposit stays in the trust account “Escrow.” A fine of usually 10% of the purchase price is set in case either party breaches the purchase contract called the “Escritura de Compraventa.” The seller, for his part, hands over all the documents related to the property, including the title deed, which rules out any possibility of selling the property in question to a third party. Then it takes about 30-45 days to study the title, chain of history, and tax situation. A closing date is set for the balance to be paid, signing the final documents, transfer of the property, and public registration.
How much negotiation room is there at the indicated prices?
Due to the absence of a general MLS system showing the history and per m2 price of a property, it is much more difficult to come up with easy comparable like in the USA. Therefore it is even more important for you to work with a full-time real estate professional who knows the inventory, market values, and comparable. Properties are usually sold as is or seen and we advice – even if the profession of a “home inspector” doesn’t exist like in the USA – to send a reputable contractor out to inspect before drafting the written offer through a notary.
The prices are not always as negotiable as back home, and it depends on each property and sellers situation. You have to be cautious and professional about it in order not to offend the seller. If the seller has the feeling that the buyer does not take his offer seriously, he might reject any further negotiations. Here it is customary to conduct price negotiations only when there is a real intention to get to an agreement, and you are well-advised to let your professional realtor do that work for you.
What are the purchase transaction costs for the buyer in Uruguay?
Real Estate Agent Fee: 3% plus VAT (22%); Notary Public Fee: 1.5% plus VAT (22%) (if the notary/law firm we recommend is used as it is usually 3% plus VAT); Notarial Taxes (“Montepios”): 0.55%; Expenses approx. USD600 – 800 (obtaining all Certificates, Deed Registration Stamp Duties & and all payments to government agencies).
Real Estate Transfer Tax (ITP): 2% of the Fiscal Catastral Value of the Property (which is usually substantially lower than the market value. This amount can vary slightly due to exchange rate fluctuation and will be determined at the time of closing date).
Altogether, the transaction costs for the Buyer are total approximately 7% in Uruguay.
Do I have to be in the country to complete the purchase?
You don’t need to be in the country to close. Through a notarized “Power of Attorney,” you can appoint someone you trust to handle the contract signatures of any purchase for you. The cost of a notarized power of attorney is approx. US$400.
Does owning a property qualify me to obtain residency?
Not automatically. Many other aspects need to be fulfilled as for example, proof of income etc. We can recommend Immigration Specialists who speak English and German. Please see our page on Residenzia/Immigration.
Is there any Seller financing available?
Usually only short term up to 2 years at the prevailing interest rate and only if a seller agrees on it.
Is there any bank financing for non-residents available in Uruguay?
Hard to get and if no longer than 20 years. Only up to 50% of the property value at an interest rate of at least 5 to 6% after showing a minimum of two years of income generated within Uruguay.
Can you get title Insurance in Uruguay?
Yes, we work and can connect you with international companies who provide this service, but it is usually not necessary as the title system works very well in Uruguay.
Are there any restrictions or taxes when transferring money?
No, no restriction on money in or out of the country (Repatriation of Capital) as long proof of funds is provided. Foreign currency can be used: Euros, Dollars, etc. No forced currency conversion. Banks offer accounts in US Dollars and Euro besides the local currency UY Pesos.
Can I buy into the health system?
Up to the age of 65, the admission is usually not a problem, and the contributions are the same regardless of age at around 120 to 180 US$ per month. In general, the medical standard is quite high in Uruguay.
What is the average living cost in Uruguay?
On average, about 70 % of the required cost of living in the US or Europe to maintain your lifestyle depends on how close you get to the Punta Del Este area. In a supermarket in Punta Del Este on the coast, you will spend double for groceries what you would pay inland in the same chain or a little grocery store.
Much cheaper than in the US or Europe is medical care. A good all-round health plan offers a choice of different hospitals for a monthly fee of 100 -120 US Dollars. In general, the medical standard is quite high in Uruguay.
For a two-person household, you look at the following approx. Monthly utility costs:
• Water: US$ 35.00
• Electricity: US$ 200.00
• Gas: US$ 15.00
• Internet: US$ 55.00
• Telephone Base charge: US$ 10.00
How do they calculate living space on property information?
In Uruguay, there is no basis in this regard, which would correspond roughly to the living space standard in the USA. The calculations and details of the seller are very individual. It is often spoken of the entire “constructed” area, meaning that terraces, the garage, BBQ, deck and the pool area are included, which makes it hard to compare house prices by “per square meter” price!
Can you help with the Immigration and Residenzia process?
Our agents are used to working with clients from all over the world, and Ralph Haverkate is a US-trained international CIPS broker who will be able to give clients valuable answers to many of their questions but if you need help with the paperwork and government applications and visits we work with a very efficient and knowledgeable local Immigration specialist together who speaks fluent English and German and will make your process very easy for a much lesser cost than what lawyers will charge you.
If we buy for pure investment, can you help with renting out our property?
Yes, we do short and long term rentals for our client properties.