Real Estate in Peru For Sale and For Rent
Why invest in Peruvian property
With the recovery of the real estate market in Peru in the last years real estate experts agree on the fact that the market is growing and growing, with amongst other advantages, an expected higher profitability for investors.
Furthermore, since there are no governmental restrictions on foreign investment on Peruvian property investing in real estate in Peru is an attractive business model.
Since Peru boasts the strongest growing economy in all of Latin America, due to the fact that Peru's president is the former World Bank economist Pedro Pablo Kuczynski, right now is the perfect time to invest in Peruvian Real Estate.
What makes the real estate market more attractive is that recent legislation passed which greatly reduces the tax burden for non-domiciled owners, meaning foreigners such as yourself. The capital gains tax for this group of owners of Peruvian real estate was reduced from 30% to 5%. In comparison to countries like the UK, where a non-dorn will face a capital gains tax between 18-28%. Or in the US, where non-dorm will face capital gains taxes on real estate equal to income tax rates, according to the Foreign Investment in Real Property Tax Act (FIRPTA). That means a capital gains tax reaching a maximum of 20% for non-dorns purchasing real estate in the United States.
In other words, you are likely to pay significantly less in capital gains taxes from real estate purchases as a foreigner in Peru than in many other countries. This translates into investment in Peru real estate being very tax-efficient. Coupled with the country's strong economy, a real estate investment in Peru sounds even more appealing.
Ultimately, it is all about finding a market that suits your individual needs. Whether it be real estate, corporate formation, or tourism industry, there is something profitable for every foreign investor.
Who we are
Premier Casa Peru Realty is an international full service real estate office based in Lima Peru, specializing in sales and rentals of residential and commercial properties.
Premier Casa Peru provides the highest standards of quality and integrity in all transactions related to property sales, management and advisory services.
Premier Casa's reputation for uncompromising real estate professionalism in everything we do is earned day to day by serving our clients and earning their trust.
Premier Casa Peru realty is growing rapidly to be recognized as one of Lima's leading realty and property management companies.
With an extensive network of properties available for sale and for long-term and short-term rental within Lima Peru, to provide a full range of real estate services, including property sales, commercial real estate, asset management, airport pickup, real estate tours and more.
Real Estate Sales
An exemplar of Peru real estate: A Four-Bedroom House with Direct Beach Access
This property is part of the gated beach community of Punta Corrientes near Cerro Azul in Cañete, Asia. This unique house has 4 en suite bedrooms, a maid's bedroom and bath built on a rock peninsula with a view of the Pacific Ocean.
The property is spacious enough to house 8 people. It is equipped with a light-filled open kitchen/dining/living area. The first-floor family room has spectacular views to beach on the south and wide open pacific to the west.
If one wants a break from the beach, the condominium amenities include 2 pools; in addition to 2 children's playgrounds families with kids, tennis courts, a club house, restaurant, and many more.
Pictures of the beach house can be found here.
Either it is a plot of land, a house, or a flat in Peru that you are intending to buy, you need to be aware of the major issues of this process. Our analysis delves into the most important procedures when it comes to purchasing Peru real estate, which will help you formulate your investment plan.
Both foreign residents and nonresidents may buy Peru real estate. Investment in Peru real estate property does not require government approval, unless such property is in vicinity of Peru's frontiers. Foreigners are restricted to own property that is close to government installations and military bases.
Foreigners' real estate ownership in Peru is generally absolute. It is common for expats to be represented by a real estate agent, as the whole process is more transparent, and the buyer is usually more confident in the completed transaction. The whole process of registering a property can be about 6 to 16 days. It is advised that foreign buyers seek out for a professional interpreter or lawyer to translate the official documentation, so they can ensure that you know about the current and previous owners, or if there are existing mortgages.
More specifically, this article advises Peru real estate buyers to take note of the following:
Obtaining a good title
Once you have located the property that fit your taste and budget, the next step is to gather information on the legal title with the Public Registry called SUNARP ("Superintendencia Nacional de los Registros Publicos"). In order to do so, you need the owner to give you his/her personal information (such as his/her full name), and details of the property that you have your eyes on. With these information in hands, you can request the "Certificado Registral Inmobilario", aka "CRI".
At this stage, you should have a lawyer/translator help you understand this document, if you are not familiar with Spanish language. The document should inform the readers about the identity of the previous and current owner(s), the size and location of the concerned property, and the existence of any mortgages or liens against the property.
It must be stressed that you should never buy any real estate without examining the legal title. Buyers should always ask for the original documentation from SUNARP and should not rely on copies of such documents. What's more, as you analyze the legal title, make sure that it is up-to-date.
Don't neglect the covenants
Covenants and other deed restrictions dictate how owners of a house or a piece of land can and cannot use the property. Thus, it is essential that you enquire about these restrictions before buying Peru real estate. For instance, your intention might be to open an office, or to build an extension to the existing building. Covenants apply to a group of homes or lands, which is usually property that is part of a specific subdivision or development and normally put in the place by the municipality.
To obtain this information, you can ask the owner of the property to get it from the municipality where the real estate is located. If you buy a land outside town, make sure to check whether the land has all the permissions to build. Additionally, make a request for the "Certificado de Parámetros Urbanísticos" (building parameters certificate) and the "Certificado de Zonificación" (zoning verification certificate). These documents will help you make a decision with your architect to see whether or not the project you are harboring is feasible.
While you are at the municipality, don't forget to ask if the current owner has paid all the local taxes such as "Impuesto Predial" (property tax) and arbitrios (municipal services tax).
After having all the information above, your lawyer should draw up the purchase agreement. In the contract, it must be stipulated who is the contract party and their duties and legal fees. This document must be certified by a Notary and then filed with SUNARP.
The process of registering Peru real estate includes all costs of buying and then re-selling a property, including lawyers' fees, notaries' fees, agents' fees, registration fees, and so on.
Transfer tax, called "Alcabala", is generally imposed at 3%. The tax base is the value of the property set by the municipal, which exceeds the 10 official established tax units (Unidad Impositiva Tributaria or UIT). This means in order to assess the amount that you must pay, first deduct 10 UIT from the value of real estate, which is approximately USD$12,000. A UIT is a fixed amount of money imposed by Peruvian government for the purpose of handling payments for tax, fines, and other payments made to the government. UIT's value is updated annually. For 2017, 1 UIT is S/4,050 (around USD$1,200). Transfer tax is paid by the buyer.
The notary fee is imposed at 0.10% to 0.25% of the property value. It is paid by the buyer
The registration fee is also dependent on the property value. It is imposed at 0.81% of 1 official established tax unit (UIT), in addition of 2.5/1000 or 0.0025% of the property value over 15 UIT. The fee is paid by the buyer.
The following table should give you an overview of the transaction costs
Transfer tax (Alcabala)
0.0025% - 0.81%
Real estate agent's fee
3% - 5%
Total costs paid by buyer
3.91% - 4.06%
Total costs paid by seller
3% - 5%
It is important to note that the property tax must be paid at the beginning of the year after you have purchased the real estate. You can check with the municipality about the amount. There will also be municipal services tax to be paid.
Mortgages in Peru
Many foreign buys go for a mortgage when buying Peru real estate. To qualify for one provided by a Peruvian bank, you need to have a Peruvian residency/citizenship. The interest is around 10%.
Real Estates Rentals
The land of Machu Picchu makes an unusual but undoubtedly intriguing destination. Visitors are enchanted by Peru's scenic beauty and warmhearted people. Its pleasing weather and laidback yet affordable lifestyle are added advantages, especially for senior citizens who are looking for a retirement haven. Meanwhile, Lima, Peru's cosmopolitan capital, has become a city of significant hub for entrepreneurs and professionals from around the world.
Working people like such often move to urbanized areas like Lima and Arequipa and normally choose to live in corporate housing. Furthermore, there is a diverse range of options: single-family homes, high-rise apartment buildings, and smaller suburban housing. Finding a property to rent can be quite challenging, which is why our expert term is ready on the call to help you find one that is closest to your most liking.
When it comes to price ranges, renting an apartment in Lima tends to be costly in comparison to other Peruvian cities. According to the latest statistics, depending on the neighborhood and state of the property, you are likely to pay something along the following prices:
A studio apartment (around 40 sq. meters) in the center of the city: US $ 400
A studio apartment (around 40 sq. meters) outside of the main city: US $ 300
A 1-bedroom apartment (around 75 sq. meters) in the center of the city: US $ 600
A 1-bedroom apartment (around 75 sq. meters) outside of the main city: US $ 400
A 2-bedroom apartment (around 120 sq. meters) in the center of the city: US $ 900
A 3-bedroom apartment (around 200 sq. meters) in the center of the city: US $ 1300
A 3-bedroom house (around 200 sq. meters) outside of the main city: US $ 800
A 4-bedroom apartment (around 425 sq. meters) in the center of the city: US $ 3000
The mentioned prices are only indicative for unfurnished properties. Keep in mind that the rent can be higher if the house comes with furniture, electronics, and kitchen appliances.
Additionally, one of the most common questions foreigners living in Peru have is the applicable laws concerning property rental. This article will help you understand the pertinent laws in regard to this topic.
Rental Contract Term
According to Peruvian law, a maximum term of 10 years is established for all lease contracts. However, if the property is owned by the Peruvian state or an incapacitated citizen, the limit decreases to 6 years.
In regard to expired contracts, it is important to note that when the parties continue to act as if a contract were in force, this does not translate into a renewal of the contract on paper. Peruvian law merely considers this indeterminate contract to proceed under the same terms as the expired contract, until the tenant is requested to leave the premises by the landlord. By default, the tenant should receive a 1-month notice prior to the date of departure, and ask for the tenant to return the premises. Both parties are free to decide on a different notice period, as long as it is established in the contract.
These rules apply to either party when they wish to resolve a lease contract before the expiry of the contract: the resolving party must give prior notice of no less than 1 month, or on a mutually agreed timetable. It should be noted that neither party will incur in penalties upon resolution, unless established otherwise in the contract, which is not uncommon in case the tenant leaves before the term.
Property Improvements by the Tenant
Peruvian law stipulates that a landlord is obliged to reimburse the tenants for any necessary and useful improvements they have made to the property during the term of their contract. Necessary improvements are defined as an enhancement to the property, with the purpose of preventing any deterioration or damage. Useful improvements are not necessarily required but elevate the overall value of the premises.
Keep in mind that the term for a tenant to claim the imbursement of the necessary and/or useful improvements expires 2 months after having returned to the property.
Notwithstanding the positive nature of these improvements, it is important to receive the landlord's approval before making any changes to the property. Your landlord also has the right to insist that he/she is not under the obligation to reimburse you any improvements.
As soon as the contract ends, the tenant has to return the property to the owner. According to applicable laws, the resolution of the contract can take place whether by:
Expiry of the term
Lack of payments
Sub-leasing of premises
Violations of other terms established in the contract
Use of the property for different purposes than the agreed-upon terms
Generally, eviction lawsuits tend to drag on for several months in Peruvian courts. However, recently, a new regime was adopted by the government under the Legislative Decree N 1177.
Under this regime, the landlord can evict the tenant by means of a "Unique Procedure of Eviction", by suing him/her with a "Literate Justice of the Peace". The judge will give the tenant no more than 5 working days to return the property to the landlord, or establish that the contract signed is still in effect. However, to claim the benefits of this regime, the owner has to fill in the "Form of Property Lease Destined for Housing (FUA - Formulario Único de Arrendamiento de Inmueble Destinado A Vivienda). This has to be certified by a notary, along with the lease contract.
The eviction procedure as a whole is complicated and lengthy. It is crucial to seek the legal advice of an experienced lawyer to deal with eviction notices.
To sum up, finding a place to live in Peru can be a bit tricky considering the abundant options available, especially in large cities. Therefore, it is best to consult a licensed expert to help you with your search and guide you through the rental procedure. Premier Casa's helpful is at your service. Contact us for all your rental needs in Peru.
Disclaimer: The information provided in this article is general information only and may not reflect Peru's current legislation. This guide is not intended to be a substitute for legal counsel on any subject matter.
History of Peru
If you are a history buff, Peru will not disappoint you for its history is among the most enticing ones in all of South America.
Peru's history dates as far back as 3200 BC, with the Norte Chico civilization in Caral. Perhaps Peru's most known era was that of the Inca Empire from the 13th-16th centuries. At its most glorious periods, the empire occupied what is now Peru, Bolivia, Chile, Ecuador, and Argentina.
While modernity and globalization were the phenomena that dominated the rest of the "Old World" outside of the Inca Empire, the Incas remained isolated in the Andes mountains, solving common human problems using inspired ingenuity. According to Inca scholar Gordon F. McEwan, the Incas did not possess the use of wheeled vehicles, nor did have enough animals to ride or can draft animals that could pull wagons or plows. Although they were expert metallurgists, their knowledge of iron and steel was absent, making do with bronze for their tools and implements. The scholar also noted that there was no system of writing, which was fundamental to the administration of European kingdoms and empires as well as for the transmission of knowledge and civilization. Then again, these supposed disadvantages did not seem to hinder the Incas from constructing one of the greatest imperial states in human history.
In the 1500s, the land of Peru was forcefully occupied by the Spanish conquistadors. Consequently, it led to a war between the invaders and the Inca that lasted nearly a decade. While the Spanish had advanced military equipment and tactics, the Inca knew the land better than anyone, had mountain fortresses, and were no physically foreign to the high altitudes and strenuous conditions. However, in the end, the Spanish claimed the victory, mainly because of the foreign disease that they brought which the pure mountain immune systems of the Incas could not handle. The colonization resulted in the importation of the Spanish spoken and written, Spanish culture, and modern technology, which integrated with that of the Incas, forming the distinct Peruvian culture that we know today.
Facts about Peru
- The Culture is influenced by a unique fusion of Andean and Spanish traditions.
- In the mountains, there are still many Andean descendants, who live in farming villages at high altitudes making a living mainly by obtaining for themselves from the land.
- Coming down to lower elevations and the sea, Spanish influence is prevalent, with more metropolitan cities, like Lima, which resembles many of the big world capitals. Living in Peru means that you are up to experience the modernity weaving with shimmers of tradition on a daily basis.
- In Peru you will find amazing food for example chicken stews, guinea pig, choclo corn, and more than 4,000 types of potatoes native to the Andes).
- Tourist Visa: The tourist visa is the quickest and easiest document a U.S or Canadian citizen can obtain to enter Peru. Without applying for it at an embassy or consulate, upon arrival to the airport in Peru, you can achieve it, which takes as little time as stamping a passport. Entering the country via tourist visa in this manner is the method employed by most tourists and backpackers. You cannot work on this visa. Travelers can spend up to 183 days in Peru without needing to renew on this visa. At the end of this period, tourist visa holders will need to leave the country. Returning to Peru will renew the visa for another 183 days.
- Work Visa: A Peruvian working visa can be obtained by any foreigner who enters the country for multiple purposes with lucrative efforts that will boost the national economy. The work visa can be achieved either independently or as an employee. You will need an employment contract, and administrative relationship or services agreement. In order to work in Peru as a foreigner, you will need to apply for a work or business visa. The special visa is called "el Carné de extranjeria", which could be translated as "Foreign Resident ID Card". You will need to pay an initial fee of $200 US dollars and $20 US dollars a year. Depending on the status of your employer, a work visa is good for either 183 or 365 days, but can be renewed for the duration of the employment.
- Investor Visa: For those interested in moving to Peru with an investment plan in mind, there are fast-tracked ways to get residency if you have enough capital to make a sizeable investment. The main conditions for an investment visa include a proof of your capability of settling, developing, or managing single or multiple investments in Peru. The investment must be valued at a minimum of $154,000 USD.
- Retirement Visa: Retirement visa is one of the most favorable forms of residency for qualified applicants planning to move to Peru. The requirements to obtain a Rentista visa include a permanent $1000 monthly income while living in the country, plus $500 for each dependent applying. Rentista Visa holders are exempt from paying annual resident taxes and Peruvian Income Tax. Retirees can also import possessions from home, tax and, duty-free.
- At present, the conversation rate of USD to Peruvian Sol translates into a competitive purchasing power ($1 USD = 3.24 PEN).
- A month rent for a three-bedroom apartment in Lima can be $900 a month.
- Dinner for two at a casual restaurant can be less than $8, $30 in a medium restaurant and groceries for a family of 2-3 can cost under $20 a week
- The landscape of Peru can be described with three main regions. The selva (jungle), covered by the Amazon rainforest, encompasses almost 60% of the country. The costa (coast) is an arid plain with valleys created by seasonal rivers located in the west. The sierra (highlands) comprises the Andes mountains and the highest point of the country, Huascarán Sur, at over 22,000 ft.
- The jungle regions typically have high temperatures (annual average around 88°F) and heavy rainfall. The coastal region, in contrast, feels more temperate and moderate with low rainfall but high humidity (average temperatures range 63-74°F annually). In the summer, the mountain regions have frequent rain, with humidity and temperature dropping as you ascend further up the Andes. Cusco, for example, at over 11,000 ft, has an average annual temperature of 52°F in the summer and 45°F in the winter.
Doing Business in Peru
While international investors tend to overlook Peru's economy in favor of South American giants like Brazil, in reality, Peru offers certain perks and benefits for foreign investors as a way to attract external funding to boost their national economy. Investing in Peru is considered a wise entrepreneurial strategy where sizeable investments (whether into real estate market or business formation) can result in residency benefits. Peru's affordable life can also mean great returns on real estate.
Peru Investment Visa
- First thing first, you will need an investment visa in making a financial footprint in Peru. The key requirement to obtain this stamp on your passport is that the investor must develop or establish a business; or purchase property in the value of $154,000 USD. This legislation is subject to change so make sure you keep yourself posted with the current policy.
- When it comes to investing in a business in Peru, the investment is required to be made directly from a bank account in the name of the investor in a single-sum bank transfer, the amount of which must be at least $30,000 USD. The investor must also submit a business plan approved by a Peruvian economist and he/she must also employ a minimum of five Peruvian citizens within the first year of business.
- Peru visa for investment lasts for one year and can be extended continuously, as long as all requirements are still being met. An advantage Peru investment visa provides is legal residency. Note that the visa holder must be in the country for no less than 183 days of the calendar year. As this is an investment visa and not a working visa, the visa holder is not allowed to work directly in Peru but serves strictly as an investor.
- Peru is characterized with a rich diversity of natural resources such as gold, natural gas, silver, petroleum, copper, iron, coal, potash, ore, and hydropower. In 2011, the country's GPD growth rate went to nearly 7% as private investment in the mining sector increased, which translated into a $305.8 billion GDP. This is because 60% of Peru's total exports relied on its mining sector, which contributed 8.8% to the GDP growth of country in 2010.
- Needless to say, because of the abundant natural resources, the trading and exporting markets are huge for investment in Peru. Since 2000, there has been an average annual growth of 5.5% in the export of goods and services. Such positive increase is mostly due to Peru's favorable international trade conditions.
Real Estate Market
- The Peruvian real estate sector is an important and growing business sector. Lima, the capital city, has a high potential real estate market because of a high housing demand and higher living standards.
- Peru real estate market can be very profitably attractive to a U.S, Canadian, or European investor due to the affordable living cost in the country and favorable exchange rate. The current exchange rate is $1 USD = 3.24 PEN (nuevo sol).
- In the Peru's Lima real estate market, the country's most expensive city, house price to rent ratios in Peru are comparatively high, meaning your profits will be more here than in many other Latin American countries. Depending on the property type, the price varies. Residential city-center apartments with 4 bedrooms, 2 bathrooms and a balcony can be $110,000 for sale. Just outside of the center, this number drops to an average of $90,000 for a 3-bedroom apartment. When it comes to property rentals, you can expect rented 1-bedroom furnished apartments in the beautiful building in Miraflores to go around $1,400 a month (another nice 1-bedroom bohemian furnished apartment two blocks away from Barranco Main Square for $650). These options are designed for residential long-term clients. The average annual net salary in Lima is around $6,300 USD.
- Before making any investment abroad, it is crucial to understand the political situation of that country. Knowing that the country is safe and stable will give you a peace of mind and assurance about your investment.
- Peru is a presidential representative democratic republic with a multi-party system. A presidential term is 5 year and cannot be extended consecutively. The Peruvian government is directly elected and voting is mandatory, meaning there are fines for not doing so, for all Peruvians from the age of 18 to 70. The country is a member of the World Trade Organizations, APEC, along with the Andean Community of Nations, as well as the United Nations.
- The Global Peace Index ranked Peru 71 out of 163 countries for overall peace and safety. Although it did not score well in violent demonstrations and perception of criminality categories, it scored very well in political stability, security officers and police, terrorism impact, and political error.