Authored by the expert who managed and guided the team behind the Peru Property Pack
Yes, the analysis of Lima's property market is included in our pack
If you're reading this, it's likely that Lima has caught your eye, and you're thinking about investing in an apartment there.
But what does the buying process entail? Is it straightforward? How much time should you expect it to take? What challenges might you face along the way?
In this article, we'll walk you through each step of the journey.
Actually, we know this market inside and out. We keep tabs on it regularly, and all our discoveries are reflected in the most recent version of the Peru Property Pack
The Steps to Buy a Condo in Lima
- 1) Research and Choose a Location
- Identify neighborhoods in Lima that suit your lifestyle and budget, such as Miraflores, San Isidro, or Barranco.
- Consider proximity to amenities like public transport, shopping centers, and schools.
- Research the safety and security of the area, as this can vary significantly across different districts. - 2) Engage a Local Real Estate Agent
- Find a reputable real estate agent who is familiar with the Lima market and can communicate in your language.
- Ensure the agent is registered with the Peruvian Association of Real Estate Agents (ASPAI).
- Discuss your requirements and budget to help the agent find suitable properties. - 3) Visit Properties and Conduct Due Diligence
- Schedule visits to shortlisted condos to assess their condition and surroundings.
- Verify the property’s legal status by checking the Public Registry (SUNARP) for any encumbrances or liens.
- Consider hiring a local lawyer to assist with legal checks and ensure all documents are in order. - 4) Make an Offer and Negotiate
- Once you find a suitable condo, make a formal offer through your real estate agent.
- Be prepared to negotiate the price, as this is a common practice in Lima.
- Ensure any verbal agreements are documented in writing to avoid misunderstandings. - 5) Secure Financing
- If needed, explore mortgage options with local banks, which may require a higher down payment for foreigners.
- Provide necessary documentation, such as proof of income and residency status.
- Consider currency exchange rates, as transactions are often conducted in U.S. dollars. - 6) Sign the Purchase Agreement
- Review the purchase agreement carefully, ideally with the help of a lawyer.
- Ensure all terms, including payment schedules and property condition, are clearly outlined.
- Sign the agreement in the presence of a notary, as required by Peruvian law. - 7) Complete the Transaction
- Pay the agreed amount, typically through a bank transfer to ensure traceability.
- Register the property in your name at the Public Registry (SUNARP) to finalize ownership.
- Obtain a copy of the registered title deed as proof of ownership.
Get the full checklist for your due diligence in Peru
Don't repeat the same mistakes others have made before you. Make sure everything is in order before signing your sales contract.
What You Need to Know Before Buying an Apartment in Lima
What are the initial steps to purchase an apartment in Lima?
The first step is to determine your budget and secure financing, which often involves getting pre-approved for a mortgage from a local bank.
Next, you should engage a reputable real estate agent familiar with the Lima market to help you find suitable properties.
Finally, conduct thorough research on neighborhoods to ensure they meet your lifestyle and investment goals.
How much should I expect to pay per square meter in Lima?
The price per square meter in Lima varies significantly depending on the district, with upscale areas like Miraflores and San Isidro costing around USD 2,000 to USD 3,000 per square meter.
In more affordable districts, such as San Miguel or Pueblo Libre, prices can range from USD 1,000 to USD 1,500 per square meter.
It's important to compare prices across different areas to find the best value for your investment.
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What are the legal requirements for foreigners buying property in Lima?
Foreigners can purchase property in Lima without restrictions, but they must obtain a Peruvian tax identification number (RUC) for the transaction.
It's advisable to hire a local attorney to ensure all legal documents are in order and to navigate the Peruvian property laws.
Additionally, all transactions must be conducted in Peruvian currency, the Sol, which may require currency exchange considerations.
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=> What are the legal requirements for buying property in Lima?
What are the typical closing costs when buying an apartment in Lima?
Closing costs in Lima typically include notary fees, registration fees, and taxes, which can amount to approximately 3% to 5% of the property's purchase price.
Buyers should also budget for additional costs such as legal fees and potential real estate agent commissions.
It's crucial to factor these costs into your overall budget to avoid any financial surprises.
How long does the property buying process usually take in Lima?
The entire process, from property search to closing, can take anywhere from two to three months, depending on various factors such as financing and legal procedures.
Securing a mortgage can add additional time, especially if you're a foreign buyer unfamiliar with local banking processes.
Working with experienced professionals can help streamline the process and reduce potential delays.
Buying real estate in Peru can be risky
An increasing number of foreign investors are showing interest in Peru. However, 90% of them will make mistakes. Avoid the pitfalls with our comprehensive guide.
What taxes are associated with owning property in Lima?
Property owners in Lima are subject to an annual property tax, known as "Impuesto Predial," which is calculated based on the property's assessed value.
The tax rate is progressive, starting at 0.2% for properties valued up to 15 tax units (UIT) and increasing for higher values.
Additionally, there is a municipal tax for public services, which varies by district.
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What financing options are available for buying an apartment in Lima?
Local banks offer mortgage loans to both residents and foreigners, with interest rates typically ranging from 6% to 9% annually.
Loan terms can vary, but most banks offer repayment periods of up to 25 years.
It's important to compare different banks' offerings to find the best terms for your financial situation.
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Are there any restrictions on renting out my apartment in Lima?
There are no significant restrictions on renting out your apartment in Lima, making it a viable option for generating rental income.
However, it's important to comply with local rental laws and regulations, including tenant rights and lease agreements.
Engaging a property management company can help manage the rental process and ensure compliance with local laws.
What should I know about the real estate market trends in Lima?
The Lima real estate market has shown steady growth, with demand driven by both local and international buyers seeking investment opportunities.
Key areas like Miraflores and Barranco have seen significant appreciation due to their desirable locations and amenities.
Staying informed about market trends can help you make strategic decisions about when and where to buy.
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How can I ensure the property I am buying is free of legal issues?
Conducting a thorough due diligence process is essential, which includes verifying the property's title and ensuring there are no liens or encumbrances.
Hiring a qualified attorney to review all legal documents and perform a title search can provide peace of mind.
Additionally, obtaining a property appraisal can help confirm the property's value and condition.
What are the benefits of buying an apartment in a pre-construction project in Lima?
Buying in a pre-construction project often allows for lower initial prices and the opportunity to customize certain aspects of the apartment.
These projects can offer modern amenities and facilities that may not be available in older buildings.
However, it's important to research the developer's reputation and track record to mitigate risks associated with construction delays or quality issues.
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What are the common amenities offered in Lima apartment complexes?
Many apartment complexes in Lima offer amenities such as swimming pools, gyms, and communal areas for socializing and events.
Higher-end buildings may also provide additional services like 24-hour security, concierge services, and private parking.
When choosing an apartment, consider which amenities are most important to your lifestyle and investment goals.