Mozambique is a Southeastern African country endowed with rich natural resources, from stunning beaches to a fast-developing economy. This country has just recently, within the past ten years, attracted more interest from foreign investors in general, especially in industries related to natural gas, agriculture, and tourism. Among the very frequently asked questions by those interested in buying property in this emerging market, one can name the following: Is it possible for foreigners to buy property in Mozambique?
In this article, we take a look at the legal regime for property ownership by foreign nationals in Mozambique, how to navigate the country’s land law, and what investors should keep in mind before closing a real estate deal. Frequent questions will also be answered, and practical insights will be given regarding how to consider an investment in a property in Mozambique.
Can Foreigners Buy Property in Mozambique?
Yes, foreigners can buy property in Mozambique, but subject to some important regulations and conditions. Land ownership in Mozambique is controlled by complex laws, among them the Constitution of Mozambique, the Land Law, Law No. 19/97, and the Land and Property Registration Law, Law No. 6/2007. While most other countries in the world permit foreigners to buy and hold land directly, the Mozambican situation complicates this issue-escalating the debate, particularly with respect to rural land.
Ownership in Mozambique is essentially based on the legal distinction between land ownership and land use rights. All land in Mozambique is, by definition, owned by the state, and private ownership has been limited to the use and enjoyment of land rather than actual ownership. This would mean that, while ownership of land by foreigners is not technically possible, usufruct rights-giving a right to use and benefit from the land-or leasing from the government/private landowners are allowed.
1. Land Ownership in Mozambique
In fact, under the law in Mozambique, all land belongs to the state. This explains why land rights in Mozambique come through the concept of usufruct. Usufruct is a legal right wherein an individual or entity is allowed to make use of and deal in profits from a piece of land for a certain period of time, while ownership remains with the government. This is, therefore, the form of land “ownership” that foreigners can obtain.
Foreigners who need to acquire land in Mozambique have to apply for a long-term lease agreement with either the government or the landowners. In the normal situation, these leases can go up to 50 years but are renewable. For foreigners, these lease agreements are the most common and secure method through which they have access to land in Mozambique.
2. Foreign Ownership in Urban Areas
In urban areas, foreigners are generally allowed to buy property, subject to certain conditions. The most common arrangement is through long-term leasehold agreements. Foreigners are allowed to lease property in urban areas of Maputo-the capital city, Beira, and Nampula-which have developing real estate markets and hence varying opportunities in both residential and commercial properties.
For this reason, entitlement to urban land is given when there is an agreement on the negotiation of a lease with the government or the holder of urban land. The lease, though, while not able to provide full ownership, grants the foreigner the right to use the land for development, residential, or commercial purposes. The lease period can be different depending on the purpose of the investment and whether the land is used for residential or commercial use.
3. Foreign Ownership in Rural Areas
It is different in rural areas. Under the Land Law, foreign nationals cannot own land outright, and the government has strict control over the lease or use of land in rural parts of the country. Most lands in rural Mozambique are held under customary land tenure systems, with rights to the land being held by the local community or chiefs.
While foreign direct ownership of rural land is prohibited, foreigners can still buy use rights in the form of leases that may last for as many as 50 years. These are often subject to community approval in many rural areas. Although they are technically leases with the government, local communities must often be consulted, particularly in areas where land is managed under customary laws.
4. The Role of Foreign Companies in Property Ownership
This is another common way for foreigners to acquire property in Mozambique-by setting up a local company. In fact, foreign investors who establish a Mozambican-registered company may, under certain conditions, be able to buy property through that company. However, at least 51% shares of the company should be held by Mozambican citizens to maintain local control of the company. The ownership structure allows foreign investors to have usufruct rights to land through a company, providing them with the capability to lease it and further develop the property.
This is an option often used by big investors who want to commercially invest in real estate or great development projects, such as resorts or factories. Foreigners have the added advantage of investing freely through the setting up of a local company without restrictions in regard to individual property ownership.
Frequently Asked Questions About Buying Property in Mozambique
1. Can I buy a house or apartment in Mozambique as a foreigner?
Yes, foreigners can buy property in Mozambique, particularly in urban cities such as Maputo, where the real estate market is good. Again, as has been mentioned before, there is a restriction that foreigners cannot own land outright. Instead, you may lease land for residential purposes through a long-term lease agreement, often up to 50 years. On that land, you may either build or purchase residential properties.
If you are buying an existing house or apartment in Mozambique, it is necessary that the property has proper legal documentation with regard to the land lease agreement and a clean title to the property. You should seek services from a local attorney who will confirm the status of the property before you commit yourself.
2. How long can a foreigner lease land in Mozambique?
Foreigners have the right to rent land in Mozambique for a period of up to 50 years, which is extendable upon expiration of the lease term. Such leases usually apply to residential and commercial property, depending on the nature of the investment.
In the urban areas, the government is generally flexible, especially to foreign investors who would want to set up business premises or housing estates. In the rural setting, the lease conditions are likely to be under closer scrutiny and the investment should be approved by the local communities, especially if the property is held in customary tenure.
3. Are there restrictions on what I can do with property in Mozambique?
Yes, there are limitations as to how property can be used even in the countryside. If you rent land either in town or the countryside, you will have to determine if the use made of the land is in conformity with the lease. In the countryside specifically, community consent might be needed regarding some forms of development.
In urban areas, the restriction to use of property is minimal, but you will still need to follow any local zoning laws and building regulations, particularly when looking at developing or changing the property in some manner.
4. How does one buy property as a foreigner in Mozambique?
Buying property in Mozambique can be done in several ways:
1. Do Due Diligence: Do proper research to find out if the land is with the necessary legal documents before engaging in the transaction of any property. It also involves confirmation of the agreement for land lease, verification of an individual owning the lease, and also ownership disputes.
2. Negotiate a Lease: If buying the land as leasehold, negotiate the terms with the government or the current owner of the land. The lease will spell out how long it lasts, what one can and cannot do with the land, and other obligations.
3. Registration of Property: After securing the lease, registration of the property with the appropriate government authorities is the next step. This is vital in ensuring that your rights to the property are legally recognized.
4. Sales Agreement: You will also have to sign a sales agreement with the seller if you are buying an existing building. This should spell out the agreed price and the terms of sale.
5. Pay Taxes and Fees: These include registration fees, legal fees, and other stamp duties if applicable over the property transactions in Mozambique.
It is highly recommended that local real estate agents and attorneys be involved in this process to ensure that everything is done as it should be.
5. Is it possible to secure a loan with a bank to purchase real estate in Mozambique?
It is very hard to find financing to purchase a home if you are a foreigner living in Mozambique. Just a few of the banks can lend mortgaged loans to foreign investors, although when you actually come for it, this is very tough for the non-resident to secure financing without some huge down payment or without proof of income in Mozambique.
Generally speaking, foreigners will have to either pay cash or obtain loans from private lenders or international institutions. Paying in full or having your financing options available before committing yourself to purchasing a house is always advisable.
6. Is Mozambique a good place to invest in real estate?
Mozambique is a developing real estate market that has plenty of opportunities, especially in tourism. With the improvement in infrastructure, economies grow, and demand for residential and commercial buildings will increase. Additionally, the country boasts a long coastline with natural beauty, therefore being an attractive destination for tourism-related investments such as resorts, hotels, and vacation homes.
However, like many emerging markets, it also comes with the baggage of political instability, legal complications, and infrastructure issues. Foreign investors have to be extremely careful and do their due diligence by working with local professionals who know how things work and be ready to question almost everything when it comes to doing business through the property market.
Conclusion
Foreigners can also buy property in Mozambique, but only through the legal framework that has no outright ownership of land by a foreigner. Under restricted direct ownership of land, foreigners may obtain long-term leasehold agreements with permission to use and develop the land for residential or commercial purposes. The urban real estate market in Mozambique permits opportunities for foreign investors, especially in the large cities like Maputo, while the rural market is more complex this is due to community land tenure systems.
Investment in Mozambique real estate would be better enabled by nationwide familiarity with land laws, collaboration with local professionals, and due diligence. With its emergent economy and investment opportunities, Mozambique is a tantalizing foreign prospect in this area; however, the market must be approached with great care and adherence to respect for local regulations.
