Buying Guide -

Due to a solid and promising economic climate, Brazil is amongst the fastest growing and most sought-after worldwide property locations, while returns on investment from Brazilian real estate are currently amongst the highest in the world.

Brazilian property value increases of 20% over the past few years have attracted many a shrewd investor looking for a reliable market in which to invest. These returns directly reflect the exciting growth spurt Brazil is currently undergoing, while high levels of inward investment and a stable economy are encouraging increasing numbers of property purchasers to Brazil.

Reasons why property in Brazil is a good investment

•  Year-round sunshine, with average summer temperatures of 21°C.

•  Some areas in the north east of Brazil saw property price returns of 20%+ last year.

•  Current favourable currency exchange, making it cheap for foreigners to invest.

•  President Lula has brought great hope and improvements to Brazil, including a decrease in inflation to an all-time low.

•  Foreign investment is actively encouraged and you can own 100% of land and property.

•  Cost of living a mere 20% of the cost in the UK/Europe. Property maintenance costs are low.

•  Inflation low at 5.7%.

•  Increase of thriving manufacturing industries relocated to Brazil.

•  Expected to produce all of its own oil within the next year.

•  Great natural beauty with fantastic scenery and 7,000km of beaches.

•  According to some economists, Brazil will be amongst the economic leaders of the future, along with Russia, India and China.

•  Friendly nature of the Brazilian people. Vibrant cities with carnivals and music.

•  Low international risk of war, terrorism or SARS in Brazil.

Making an Offer

When you have decided upon a property in Brazil a verbal offer will need to be made through the agent and often some negotiations will follow. At this stage a lawyer should be appointed by you to formalise your final price agreement and to oversee purchase proceedings, including deposit or reservation payments. With off-plan purchases, the price is however, often fixed and dependent upon the current phase of construction.

The buying procedure may vary slightly according to which developer you are purchasing from so when buying on a new development, you will need to ask for specific procedures relating to the development.

Appointing a Lawyer

It is wise to appoint a lawyer who is fluent in your language so that you fully understand all the legalities and proceedings, who will carry out all necessary checks on the property or land in Brazil and fulfill the legal requirements of the sale.

Legal costs are generally between £ 500 and £ 1,000 depending on the value of the property purchased.

Your lawyers will:

• Check the current owners have the correcttitleto the property
• Check for any charges and liabilities still owed on the property
• Check your contract and advise youon the obligations for both parties
• Help you through the payment/funds transfer
• Ensure the propertyis registered in your name

Land Registration

The property registry system in Brazil is well developed and safe and real estate registration in Brazil is carried out by private notary publics. All property is registered at one single registry, which records details of the entire commercial history and the physical identification of each property. It is obviously very important to ensure that any property you buy has a clear title. Access to registry information is available to the public and includes relevant details on ownership, mortgages and other pending debts. In the larger cities, these services may be automated.

Brazilian CPF

You will need a Brazilian ID called a CPF in order to buy property. To get a CPF: You will need your birth certificate translated into Portuguese by a certified translator and legalized by the Brazilian Consulate in your home country. This will then need to be taken to the Banco Do Brasil with your passport and birth certificate in order to formally apply for a CPF. A small fee is payable and they following day you will receive your assigned CPF number at the Receita Federal. The CPF card will then be posted to you within two months to an address in Brazil.

Costs

Transaction costs, including stamp duty, fees etc. canaverage at between 3% and 8% of the purchase price. These costsmay differaccording to location, type of property and the State you buy in. If it takes a significant amount of work to establish title and ownership, the costs could amount to more.

Breakdown:

• A down-payment for your chosen property of usually about 10,000 $R ($3,500 USD).
• Property transfer fees of approximately 4%-5% of the purchase price.
• Payment can often be made all at once or in installments of 12, 24, 36 or 48 months, but interest rates can be as high as 35%. If you opt to pay in installments, bear in mind there is also a currency risk: if the value of the Brazilian Real goes down, your property becomes cheaper, and vice versa.
• 1% import tax on the transfer of funds from abroad.

Money Transfer

Funds are sent directly from your own bank to the seller's bank account in Brazil, via the Central Bank of Brazil. The bank records your funds entering into the country and in order to release the funds, the seller must present the contract to the bank. We strongly recommend you use only this official route, or you may have problems transferring funds out of Brazil when you sell your property in the future.

There are generally no limitations to returning funds overseas provided they were originally registered with the Central Bank at the time of purchase.

Mortgages

The mortgage market is underdeveloped in Brazil and as yet foreigners cannot obtain a mortgage in Brazil. Buyers usually arrange alternative financing in their own countries. In 2005 about 50,000 mortgages were granted to Brazilian nationals but at high rates. However, we expect mortgages to become available in the foreseeable future as interest rates drop and as banks continue to develop their products.

Some developers of new build and off-plan developmentsoffer installment plans over between 12to60 months. The charges applicable vary according to developer and repayments are usually index linked.