Buying Property in Gibraltar

The Buying Process made simple 

1. Identifying a property & paying a holding deposit – Property to buy Gibraltar

Once you have found your property, you pay a 2% deposit to the estate agent who holds this money in Escrow. The enables the property to be taken off the market. The 2% deposit is later deducted from the purchase price and is refundable if you decide not to proceed.

2. Investigating title & exchanging contracts 

The next step is to instruct lawyers who carry out a search at the Land Registry to check the title to the property, any restrictions, impending developments that may be nearby, current mortgage and charges against the property etc.. Preliminary Enquiries Before Contract are also sent to the vendor’s solicitor to ask for clarity on a wide range of points such as building alterations, planning consent, Energy Performance Certificates, Warranties/Guarantees in place, knowledge of problems with neighbours, property issues etc. . The gathering of all this information is to protect your interest and make sure you understand what you are buying fully.

The purchase agreement is drawn up by the vendor’s lawyers and sent to your Lawyer for approval. This agreement sets out the purchase price and the terms and conditions under which the property is being sold. Until a purchase agreement is signed, negotiations take place on a “without prejudice” and on a “subject to contract” basis. This means that until both sides have signed the agreement, no binding contract is made for the sale of the property. When in the contract is signed by both sides it is is known as “exchange of contracts”.

Once this is done, both parties are duty bound to complete the sale/ purchase. If either party default, the defaulting party is liable for all the costs and consequences of pulling out and not going through with the sale.

If a purchaser or vendor pulls out before exchanging contracts, he/she is not generally liable to the other side. However, if a holding deposit has been paid to an estate agent, they may be entitled to retain a proportion of this. This largely depends upon the terms under which the deposit was paid to the estate agent. Most estate agents ask buyers to sign a memorandum of sale or a reservation agreement. Buyers should read the terms of these carefully and ask their lawyers to review them before signing.

3. Completion

A Deed of Assignment, for a leasehold, or a Deed of Conveyance for a freehold property is then drawn up . This deed is approved by all parties to the transaction and may include the management company of an estate and the original developer. This deed is the document by which the buyer becomes the owner of the property.

The buyers Lawyer will provide a Completion showing details of the purchase price to be paid, the amount of money being advanced by a bank or building society and stamp duty and registration charges payable to the government. At this stage lawyers ask buyers to provide the balance of all required funds needed to complete the purchase of the property. These funds are paid into the lawyers’ client account and payment is made by them to the vendor’s lawyers.

If obtaining a mortgage, the funds will be requested from the bank or building society by the buyer’s lawyers. Buyers only need to provide the balance of the required monies over and above the amount of the mortgage advance. Once the deed is executed by all parties and the purchase price paid, the original historic title documentation and the keys to the property are handed over to the buyer’s lawyers.

4. Registering the deeds & paying stamp duty

No stamp duty is payable by first and second time buyers on the first £260,000 of the purchase cost.

There are a number of duties and disbursements as follows:

1) Stamp Duty: The Gibraltar Stamp Duties Act 2005 (as amended by the Stamp Duties (Amendment) Act 2010) relates only to transactions involving real estate property situate in Gibraltar. The rates of duty applicable are as follows:

(i) Nil % where:
a. The property value does not exceed £200,000, or
b. The property value does not exceed £260,000 in those instances where the purchaser is a first-time buyer or second-time buyer, or
c. Where the property is being transferred between spouses or, following the dissolution of a marriage, between former spouses.

(ii) 2% on the first £250,000 and 5.5% on the balance, where the property value exceeds
£200,000 but does not exceed £350,000, and

(iii) 3% on the first £350,000 and 3.5% on the balance where the property value exceeds
£350,000.

Additionally, if the property is purchased with the assistance of a mortgage, stamp duty is charged at the rate of 0.13% where the amount borrowed does not exceed £200,000 and 0.20% for amounts in excess of £200,000.

2) Land Titles Register: a fee of £125 per deed is charged for recording the transaction in the Land Titles Register.

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