Property Investment in Natal, Northeastern Brazil

Natal is located at the extreme northeastern tip of Brazil and as it has one of the best climates in the country, it is aptly named the ‘City of Sun’.  Natal is both charming and welcoming offering the best of both worlds – beautiful beaches and the convenience of a modern city with a wide range of amenities.

The 410km coastline is the area’s star attraction with its semi-deserted beaches, big sand dunes, palm trees, tropical lagoons and charming coastal villages.  Natal has received a considerable amount of investment to boost tourism and therefore Natal already boasts a good infrastructure for those visiting the area.  It has long been a popular destination for domestic tourists and in the 1990s, the Portuguese, Spanish and Scandinavians were the first foreign charter tourists to arrive.  In fact, the destination is becoming so popular, Natal has one of the highest rates of residency applications for any Brazilian city. Natal is also one of the four cities in north eastern Brazil to host theFIFA world cup in 2014.  To cope with this influx, a new airport is planned which will be the largest in Latin America.

This internal and external interest in Natal is likely to be great news for property investors and there are a wide range of property types on the market to meet the demand.  City centre dwellings are mainly apartments in tower blocks.  However the real interest tends to be in property developments for sale on the coastline which range from low-rise apartments to large villas.  Some of the coastal villages such asPipa are already well known and are good examples of how simple fishing villages can completely transform themselves to much sought-after upmarket destinations. There are already plans afoot for large and prestigious beach and golf resorts in the area so make sure you do your research dependent on whether you do or don’t want to be near these types of facilities.

Purchasing and living costs:

-Buyers should put aside approximately 7.5% of the purchase price for expenses including 3% ITIV (similar to VAT); 1.25% notary office, 0.75% registration of the deeds, 1% administrative expenses, 1.5% legal fees.

-International lawyers are well versed at helping investors buy property abroad but due to the specific conventions in Brazil it is useful to hire a lawyer who has experience of the market there.  They usually charge between 1 and 1.5% of the purchase price and will assists the buyer in applying for the compulsory CPF number and will undertake a number of important checks on the land and the property.  They can also sign the final title deed on the buyer’s behalf if necessary.

-There are no restrictions on foreigners buying Brazilian property and ownership is solid and secure. The buyer owns the land and property in its totality – similar to freehold in the UK.

-Brazilian mortgages are not currently available to overseas investors so all finance needs to be arranged in the UK. However when monies are transferred in to the country, they are registered at the Central Bank of Brazil to ensure that the Brazilian Government has recorded the investment into the country.

-Once a property is purchased, the owner may have to pay community fees (for general maintenance and upkeep) of between £40-£200, depending on type and size of property.  There is also a yearly real estate tax (IPTU) paid on a Brazilian property that varies between different municipalities, and is typically between 0.5% and 1%.

-Income earned from Brazilian properties is taxable whether the investor is resident or non-resident in Brazil. Non-residents are subject to a capital gains tax rate of 15% on any gains they make on properties in Brazil.