There is talk once again in Mexico for removing the requirement for foreigners to buy real estate with a trust, a fideicomiso, which some say would drive demand for real estate touristic properties in the country. Two national newspapers, El Financiero and Mexico News Daily recently wrote that the real estate industry plans to lobby for a renewed discussion in Congress over the elimination of the bank trust foreigners must use to purchase property. The president of the Real Estate Confederation of Latin America, Antonio Hánna, recently said removing the requirement would drive up demand by 30% in the five years following the change.
Currently only Mexicans by birth or naturalization, or Mexican companies, can directly own real estate within 50 kilometers of the ocean or 100 kilometers of international borders. Foreigners who wish to hold land within those areas, known as the restricted zone, must do so with a bank trust. The buyer, who must pay an annual fee to the bank, has the right to use the property but the bank holds the title. So removing this requirement would also reduce the cost of owning real estate in Mexico for foreigners.
Sales of vacation homes and apartments totaled 1,725 last year. Removing the bank trust requirement and the number could soar to 2,423 after five years, said the confederation.
The change would require an amendment to the constitution, which is what the Mexican Association of Real Estate Agents (AMPI) lobbied for a few years ago. The proposal got as far as Congress, but became bogged down in the Senate, said AMPI president Gustavo Solares. He, too, predicted that removing the fideicomiso requirement would detonate activity in the market.
Hat tip to David Connell.
