The Cape Verde islands are enjoying substantial growth as a result of a boom in tourist numbers and overseas investors buying property on the islands. 

Prices are relatively low at the moment and if you choose an investment in the right property in the right development, capital growth and rental yield potential are high.

The Cape Verde islands are an emerging property investment market and are probably where Spain or the Canary Islands were 25 years ago - both are now, of course, established markets. With its superb climate, stunning beaches, low cost of living, easy access from the UK and massive potential for tourist growth, Cape Verde property offers a sound investment opportunity.

Purchasing Cape Verde property is relatively straightforward.

The important thing is to fully understand every stage of the property purchase, particularly with regard to anything you will be required to sign.

A solicitor should be appointed to help you through each step of the purchasing procedure. (Emerging Real Estate hold details of independent solicitors to pass on to clients).The solicitor will check land ownership (in the event there may be any dispute concerning the plot) and also check the plans so that you are fully aware of exactly what is included in the purchase price. You will also need to recruit the assistance of a sworn translator in order to deal with all documentation as the language of the Cape Verde islands is Portuguese.

 

Searches

Your lawyer will carry out land searches at the local Municipal Authority and Land Registry Offices. These reveal whether there are charges registered against the property or any restrictions on the title. The existence of a valid habitation permit is a precondition for a valid conveyance of built property to take place in Cape Verde.

 

Documentation

The lawyer will obtain the following documents for you:

• The Certidao do Registo Predial (the land registry certificate)
• Planta de Localizacao (the official map showing the property's exact location)
• Certidao Matricial (the tax information certificate).

If the property is not registered, it is necessary to obtain a Certidao Pela Negativa (a certificate confirming that the property in not registered in anyone's name). A Certidao Matricial Para o Efeito (which is a tax certificate confirming this). With these two documents, it will be possible to register the property.

 

Power of Attorney

You will probably need to give your lawyer Power of Attorney so he/she can represent you when the promissory contract and deed are signed and also to request the necessary tax cards on your behalf. This will have to be done in Portuguese but you should request a copy in your own language. This will have to be signed before a Notary and legalised by the Cape Verde Honorary Consul in Liverpool. Your lawyer will obtain a tax card on the purchaser’s behalf.

 

The Promissory Contract of Purchase and Sale

Signing the Promissory Contract of Purchase and Sale - Contrato Promessa de Compra e Venda is the next step. At this stage the purchaser is normally expected to pay the deposit. (10% to 30% is common practice).

In Cape Verde, the parties are contractually bound once this Promissory Contract of Purchase and Sale is signed. This sets out the terms of the transaction (property details, price, method of payment, completion date, warranties, penalties, etc). This contract should be signed before a notary public in Cape Verde. Until this contract is exchanged, the vendor is not committed. Transfer tax or IUP tax is due at this point.

 

Deed of Conveyance - 'Escritura'

The final Deed of Conveyance called the 'Escritura' has to be signed before a notary public in Cape Verde. This is the document that gives the purchaser complete title to the Property. The signing of the deed must be scheduled with a minimum of 30 days' notice.

 

Registering the Property

The purchase will have to be registered at the local Land Registry and also the local municipal authority. In Cape Verde, subsequent to the signing of the deed, the notary will prepare and send a report to the local municipal authority regarding the transaction. The municipal authority will then update their records and register the new ownership of the property. Notary, land registration fees and stamp duty are usually around 2.5% of the property's value. These are payable on signing the Deed of Conveyance.

 

Services

A contract will need to be signed with the providers of services e.g. water, gas and electric. Your lawyer can arrange this if necessary. It is also advisable to arrange for final meter readings to take place prior to completion.

 

The Taxes

The Taxes regarding Property are as follows:

Transfer Tax - flat rate of 3% on the attributed value to be paid before the Deed of purchase and sale.

Holding property/ Annual Rates - flat rate of 3% on 25% of the attributed value to be paid annually in April (or in two installments in April and September of each year)

Capital Gains Tax

• Capital gains regarding plots for construction are taxable if their sale value exceeds a 100% increase of the value at which they were initially purchased.
• Capital gains regarding any other property are taxable if their sale value exceeds a 30% increase of the value at which they were initially purchased.

In both the above points, the capital gain is taxed at a flat rate of 3% and should be paid within 30 days of the Deed, together with the submission of a "Declaracao de mais valias" (Capital Gains statement).

Inheritance/Gift Tax - Any property transmitted by inheritance or by gift is taxed at a flat rate of 3% on the attributed value.