What are the Basics of Real Estate in Belize?
The basics of real estate in Belize will, in one very important way, look very familiar to those who are coming here from North America. Belize, unlike the rest of Central America, has a legal system which is based on English Common Law, so fee simple titles to properties in Belize work in virtually the same way as they do in North America.
However, while property ownership in Belize is similar to what you may be used to, in Belize, the real estate market and how it operates can be quite different from what you may have experienced in the US or Canada. In this article, I take a closer look at some of these differences, and if you are just starting your research on Belize, I recommend reading our Introduction to Belize first.
Can I legally own property in Belize?
As far as property ownership is concerned, foreign nationals can legally own property here in the same way as a Belizean national. Unlike in some countries in Central and South America, there is no differentiation between Belizeans and others concerning holding legal title to property.
Are Realtors licensed in Belize?
Unlike in the North American real estate market, realtors are not required to be licensed here in Belize; thus, just about anyone can hang a sign and become a realtor here. While the quality of full-time realtors in the country has likely improved over time in Belize, there is still a bit of wild west mentality in the business, so one needs to be very careful and undertake as much due diligence as possible for any purchase.
It’s not only realtors who are operating under much looser conditions in Belize than in North America, but even Brokers are able to operate with few regulations and very little oversight. In most US states, brokers have to be experienced real estate agents before they are permitted to take a Broker’s Exam, and they are also required to carry insurance to protect clients. In Belize, there is no bond or insurance requirement for real estate brokers.
Is there a real estate MLS in Belize?
Unfortunately, at present, Belize does not have a functioning Multiple Listing Service, and this is the one factor that makes looking to buy real estate in Belize a very different experience than it is in many other places.
Without an MLS, each realtor or broker posts their own listings, and oftentimes, you will run into agents who do not want to show you listings of any other agent or brokerage. There is no near-universal agreement for splitting commissions here, so agents often simply won’t inform clients about everything that is available in an area, as they want to keep clients in house.
When I planned to move from San Pedro to Corozal, because I then understood how the system works here, I decided that rather than having a single agent pick me up to show me some properties, I did a month or more of research prior to coming over to Corozal, and then I decided to rent a car for the day so that I could make appointments to see four of five different properties, all with different agents, with no agent acting as a buyer’s agent.
In some ways, while coordinating four or five meetings with different agents in a single day was a bit of a hassle, I liked meeting each agent individually, as I was able to not only compare and evaluate the different properties, but the agents as well.
Where do I find information about current listings?
Another obstacle created by the lack of a real MLS system in Belize is that it can be very difficult to get up-to-date, accurate information about previous sales, price comps in the area, and all of the other data that one usually finds in an MLS listing.
Recently, the Association of Real Estate Brokers of Belize, a trade organization which has been lobbying the government for licensure of realtors and other Real Estate legislation in Belize, has started work on an MLS; however, it is really a simple set of links to the listings of member brokers, as it does not include any data concerning the price history, recent sales, or any other relevant information.
Thus, in most cases, you will likely need to scroll through the web to find listings posted online on the websites of various brokers, such as familiar real estate franchises Remax, Century 21, and Keller Williams, as well as many smaller local firms which operate in Belize.
Things have likely improved for real estate in Belize a bit over the past several years, but when I was still living in Hawaii and first starting my search for a property on Ambergris Caye in early 2018, I spent hours trying to contact listing agents, often to discover that the either the property had been sold, taken off the market, or the agent was no longer with the company, and no one knew anything about the listing!
I believe that the manner in which the real estate business in Belize functions is one major reason that many old timers in Belize strongly recommend that folks interested in living here come to Belize and rent a place for at least six months to a year before even considering buying property here.
Can I get a bank mortgage for real estate in Belize?
For foreign nationals, real estate in Belize is essentially a cash business. This makes sense if you take into consideration that a Belizean bank would be taking a huge risk in loaning money to a foreign national who could simply pack up and leave the country, leaving the bank with an asset which could take years to sell.
After one has been in Belize long enough to be granted Permanent Residency, it may be possible to obtain a local mortgage; however, by North American standards, the interest rates are extremely high, and the required down payment can be in the neighborhood of 50%.
Is there any owner financing for real estate in Belize?
Because there are no local mortgages for foreign nationals who want to move to Belize, owners are at times willing to offer financing to buyers in hopes of generating a faster sale.
While, of course, a seller and buyer can negotiate any type of agreement, most owner financing appears to seek a down payment of 30-50%, for a term of 3-5 years, with a balloon payment of the balance of the loan at the end of the 3-5 year term. Generally, the monthly payments are amortized as if it were a 20 year note.
One risk for the buyer in this arrangement is that if for some reason they can not make the monthly payments, or they are unable to perform on the balloon payment, the seller retains the large down payment as well as the property.
The short-term owner financing agreement might be beneficial to a buyer who is selling a house, or waiting on other funds in their home country, and as I was selling both a home and a business in Hawaii prior to relocating to Belize, I did take an owner financing deal, however, this type of financing really only makes sense for one who has a substantial cash down payment and is certain that they will be able to make the balloon payment.
Finally, one also might find some financing, especially for empty lots, directly from a builder or developer, and one should do very careful due diligence on any of these deals, as the landscape is littered with projects which were started but never completed. Personally, I would not buy into any project unless the infrastructure and promised amenities are complete, and there are occupied homes in the development.
What is the Stamp Tax?
A Stamp Tax/Transfer Fee is payable on all transfers of real estate in Belize. This is money paid by the purchaser to the government of Belize. For a foreign national, the Stamp Tax is 8% of the purchase price of the property, and it is paid at Closing. Belizean nationals also pay the Stamp Tax, but it is at 5% of the purchase price.
The first $10,000 USD are exempt from the Stamp Tax, so when you are calculating the Stamp Tax due at closing, subtract $10,000 USD from the purchase price. Unfortunately, after Closing, there is still a chance that the Belize Land’s Department will reassess the value of the property, and if they do so, they will ask you to pay additional Stamp Tax.
Unlike in many other jurisdictions, in Belize, even with a 100% cash sale, at Closing, you will not be issued a Title. After you have completed Closing, and the funds have passed to the seller, you will be issued a Land Transfer Document, and while you are able to take possession of the property, it can take from several months to over a year for you to receive your property Title.
Reassessment of the Stamp Tax
While you are required to submit full payment of the Stamp Tax at 8% of the purchase price of the property at Closing, the Land’s Department, in some cases, may decide to reassess the value of the property. If they do reassess the property, and assign a higher value to the property, you will be required to pay the difference in Stamp Tax owed prior to receiving your title.
For example, if you buy land and a house at $200,000 USD, your Stamp Tax Payment will be $16,000 USD. However, if the Land’s Department reassesses the value of property, and assigns it a value of $250,000 USD, the total Stamp Tax due would be $20,000 USD, so you would owe an additional $4,000 USD in Stamp Tax.
Appeal of Reassessment of the Stamp Tax
If the Land’s Department does reassess your property and bill you for additional Stamp Tax due, if you disagree with the reassessment, there is an appeals process, and I have read reports from a number of people who have started the appeals process, but I have seen no credible reports of the outcomes of these appeals.
Final thoughts on the Basics of Real Estate in Belize
When thinking about the basics of real estate in Belize, the advice of the oldtimers I have met here seems to be the big takeaway. With an essentially all-cash market for real estate in Belize, it is best to proceed slowly, and if at all possible, come down and rent a place for at least six months before purchasing property.
Many local folks say that property is extremely easy to buy here for a foreign national, but it can be really difficult to sell, so for like almost everything here in Belize, one is often rewarded for exercising a great deal of patience.
The Stamp Tax of 8% was something that really threw me for a loop when I bought my first property in San Pedro, but by the time that I bought the place in which I live in now here in Corozal, I viewed the Stamp Tax something akin to prepaid property tax.
I think of it in this way primarily because property taxes in Belize are extremely low, almost nonexistent, so it now makes some sense to me that the government collects the tax up front, on transfer, rather than through higher yearly property taxes.
If you are just starting your search for a place in Belize, good luck! Also, many people who are looking at real estate in Belize are also interested in being granted Permanent Residency in Belize, so check out our article on residency, as it is never too early to be aware of what is required after you make the big move.
Finally, if you have any questions or would like to see any specific topics covered on Belize FAQs, please feel free to send me a message through our Contact Form.