Buying real estate in Peru as a foreigner?

We've created a guide to help you avoid pitfalls, save time, and make the best long-term investment possible.

Buying property in Peru as a foreigner: a full guide

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buying property foreigner Peru

Everything you need to know is included in our Peru Property Pack

Peru is a top pick for foreigners who want to invest in real estate. It offers breathtaking scenery, a unique culture, and friendly locals.

However, purchasing property in a foreign country can be complex, especially with all of the laws and regulations involved.

Don't worry! This guide is here to make it easy for foreign buyers to understand how the property market works in Peru. We'll cover everything you need to know in a straightforward and simple manner.

Also, for a more in-depth analysis, you can check our property pack for Peru.

Can you purchase and own a property in Peru as a foreigner?

If you are American, we have a dedicated blog post regarding the property buying and owning process in Peru for US citizens.

Foreigners can buy and own property in Peru.

They are in the same condition as Peruvians regarding property ownership, as stated in Article 71 of the Constitution of Peru.

Here is what is written in the Constitution: "Regarding property, foreigners, whether natural persons or legal entities, are in the same condition as Peruvians, without being able to invoke any exceptions or diplomatic protection in any case."

If a foreigner wants to buy a house in Peru, they can do it in two ways:

If they're in Peru:

  • they need a Business Visa or, if they have a Tourist Visa, they should get it stamped at Immigration with "authorized to contract" to sign contracts easily.
  • if they're married, both spouses must be involved in the purchase because Peruvian law requires both to participate.

If the foreigner is not in Peru:

  • they must grant a consular power of attorney at the nearest Peruvian consulate in their country of residence.
  • if they are married, their spouse also needs to grant the same power of attorney to the same representative.

This power of attorney allows someone in Peru to represent them in the purchase process (we mention it in our pack).

This process may take a couple of weeks. After that, the representative can complete the regular steps to purchase the property on behalf of the foreigner, and the property will be registered in the foreigner's name.

Restrictions regarding foreign ownership (the 50 kms rule)

The Article 71 also mentions certain restrictions.

There is a rule that says within fifty kilometers of the country's borders, foreigners cannot buy or own things like mines, land, forests, water sources, fuels, or energy sources, either directly or indirectly, on their own or with others. If they do, they risk losing those rights, and the property will go to the government.

There's an exception, though. If there's a situation where the government declares it urgently needs that property for a public purpose, they can make an exception to this rule, but they have to follow the law and get approval from the Council of Ministers.

Can you become a resident in Peru by purchasing and owning a property?

No, just buying and owning a property in Peru doesn't automatically give you the right to be a resident in Peru.

To live in Peru, you can apply for a residency visa for investors. It is a convenient visa if you want to establish, develop, or manage one or more legal investments under Peruvian law.

After living legally in Peru for two years, you might be able to become a citizen if you show connections to the country, like renting or buying residential property, living there the whole time, and knowing the language, culture, and values of Peru.

If you're not interested in becoming a citizen, you can apply for permanent residency after three years of living legally in Peru.

What does the real estate market looks like in Peru?

Market metrics

You can find fresh and updated data in our pack of documents related to the real estate market in Peru.

If we look at the the GDP per capita indicator, it seems that Peruvian people have become 0.4% richer throughout the past 5 years.

If the population's wealth grows, it can lead to a heightened demand for real estate, potentially resulting in price increases in the future.

Looking at the data reported by Numbeo, we can see that rental properties in Peru offer gross rental yields between 3.2% and 5.9%.

These yields are typically seen in markets with average demand and rental rates, where the rental income generated from the property covers the expenses associated with owning and maintaining it, while also providing a modest return on investment.

To know more, you can also read our dedicated article: is it a good time to buy a property in Peru?

The expat life

Living as an expat in Peru can be an incredible experience! Peru is a vibrant and culturally rich country with a lot to offer. From the ancient Incan ruins to the colonial architecture, Peru is full of history and culture. The people are friendly and welcoming, and the food is delicious.

The cost of living in Peru is relatively low, making it a great destination for budget travelers and expats. The climate is mild and the scenery is breathtaking. There are many outdoor activities such as hiking, rafting, and surfing.

One of the biggest attractions for expats in Peru is the language. Spanish is the official language, but there are also many local dialects. Learning Spanish is a great way to connect with the locals and immerse yourself in the culture.

Overall, living as an expat in Peru can be an incredibly rewarding experience. There is something for everyone to enjoy and explore. Whether you’re looking for a relaxing vacation or an adventure-filled journey, Peru has it all!

What are the best places to invest in real estate in Peru?

This table summarizes some of the best places to buy a property in Peru.

City / Region Population Average Price per sqm (PEN) Strengths
Lima ≈ 9 million 4,000 - 8,000 National capital, cultural attractions, business opportunities
Arequipa ≈ 1 million 2,500 - 5,000 Colonial architecture, gastronomy, proximity to volcanoes
Cusco ≈ 500,000 2,000 - 4,000 Incan heritage, Machu Picchu, tourism hub
Trujillo ≈ 800,000 2,000 - 4,000 Pre-Columbian ruins, colonial charm, surf beaches
Chiclayo ≈ 600,000 1,500 - 3,000 Archaeological sites, museums, cultural festivals
Piura ≈ 500,000 1,500 - 3,000 Beaches, year-round warm weather, agricultural center
Iquitos ≈ 500,000 1,500 - 3,000 Amazon rainforest gateway, wildlife, river cruises

Do you need a lawyer to buy real estate in Peru?

When purchasing a property in Peru, engaging a local lawyer can be essential to navigate the legal requirements and ensure a successful transaction.

One important document they can assist with is the Purchase-Sale Agreement (Contrato de Compraventa), a legally binding contract between the buyer and seller that outlines the terms and conditions of the sale.

The Peruvian lawyer can also help with conducting a Property Title Search (Búsqueda de Titulos de Propiedad) to verify the property's ownership status and identify any potential legal issues or encumbrances.

Furthermore, they can guide you through the process of obtaining necessary permits and approvals, such as approval from the local Public Registry or relevant authorities.

They will ensure that all applicable taxes and fees, such as the Property Transfer Tax and Notary Fees, are paid correctly and in compliance with Peruvian laws and regulations.

What are the risks when purchasing a property in Peru?

We've got an article dedicated to the risks associated with purchasing property in Peru.

We have written a whole article about the risks linked to real estate in Peru.

It covers only some issues, for a more detailed overview, check the document related to the due diligence in our Peru Property Pack.

Here is also summary table we've made for you (from the article).

Pitfall Description Recommended Action
Legal and Reliable Access to Water Water access might not be guaranteed, especially in rural areas. Verify water rights and access to utilities; consult local authorities or real estate experts.
Autovaluo Update Declared value of property might be outdated, affecting financing and capital gains taxes. Ensure Autovaluo is updated to reflect true market value.
Proper Property Registration Some properties may not be properly documented or have legal ownership issues. Conduct a comprehensive title search and verify seller’s legal right to sell.
Property's Measurements and Boundaries Public registry records might be outdated or inaccurate. Hire a qualified surveyor and verify property details with SUNARP.
Construction of Additional Floors (“Derechos de Aires”) Building additional floors on existing structures can lead to complications. Consult with structural engineer, verify legal and zoning restrictions, and address residents’ concerns.
Understanding Alcabala Tax A tax on the transfer of property, with certain exemptions available. Familiarize yourself with Alcabala tax, exemptions, and required documentation.
Proximity to Historical Sites Properties near historical sites are subject to strict regulations. Check property’s status with the Ministry of Culture or local municipality and be aware of potential restrictions and additional costs.
Understanding the “Minuta” The "Minuta" is a legally binding document committing you to the purchase. Be fully committed and ready to proceed before signing the "Minuta".
real estate Peru

Everything you need to know is included in our Peru Property Pack

What are the documents needed for a real estate transaction in Peru?

When buying a property in Peru, the following documents are needed:

1. National Identity Document (DNI) of the buyer

2. Tax Identification Number (RUC) of the buyer

3. Original property title deed

4. Tax clearance certificate from the municipality where the property is located

5. Certificate of habitability (for residential properties)

6. Tax payment receipts for the last three years

7. Certificate of registry of the property with the Land Registry

8. Notarized deed of sale

9. Notary Public's Certificate of non-existence of debts related to the property

10. Permit from the Ministry of Housing for the sale of the property (if applicable)

We review each of these documents and tell you how to use them in our property pack for Peru.

What strategies can you use for successful negotiations with Peruvians?

When negotiating for a house in Peru, it is important to take into account the local culture and customs. Here are some tips to negotiate well with a local:

  • Be polite and respectful. In Peru, respect is highly valued and being polite and courteous can go a long way in negotiations.
  • Be patient. Negotiations can take some time and it is important to be patient and not rush the process.
  • Be prepared. Make sure to do your research on the local market and be prepared to negotiate a fair price.
  • Be flexible. It can be helpful to be flexible with your expectations and be willing to compromise.
  • Be aware of local customs. It is important to understand the local customs and etiquette, such as using a third party to mediate the negotiation.

Do banks offer loans to foreigners in Peru?

Yes, foreigners can obtain property loans in Peru. The Peruvian banking system allows non-residents to apply for property loans, subject to certain conditions and requirements.

To obtain a property loan in Peru as a foreigner, you'll usually need a valid residence permit, proof of income or employment, and meet the specific criteria established by the lending institutions.

Some banks in Peru that can grant mortgages to foreigners include Banco de Crédito del Perú (BCP), Interbank, and Scotiabank Peru.

However, mortgage rates in Peru for a 20-year term range from 7% to 11%. While they are relatively high, they are still manageable. Consider exploring other countries for potentially better financing options.

What are the taxes related to a property transaction in Peru?

Here is a breakdown of taxes related to a property transaction in Peru.

Tax Description Calculation Who pays
Value Added Tax (VAT) A tax on the sale of newly constructed properties A flat rate of 18% of the property sale price Buyer
Rental Income Tax Tax on rental income generated from the property Ranges from 15% to 30%, depending on the amount of income earned Owner
Property Transfer Tax (ITBI) A tax on the transfer of real estate property Generally 3% of the property value Buyer
Capital Gains Tax A tax on the profit earned from the sale of a property 5% to 30% on the net capital gains (difference between sale and cost prices) Seller
Real Estate Tax An annual property tax paid to the municipality Ranges from 0.2% to 1% depending on the property value Owner

What fees are involved in a property transaction in Peru?

Below is a simple breakdown of fees for a property transaction in Peru.

Fee Description Calculation Who pays
Real Estate Agent Fee Fee paid to the real estate agent involved in the transaction Between 3% and 5% of the property sale price Seller
Registration Fee Fees charged by the Public Registry for registering the property transfer Around 0.81% but varies depending on the value of the property Buyer
Notary Fee Fees charged by the notary public for legalizing and recording the property transfer Varies from 0.10% to 0.25% of the property value Buyer

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.

buying property foreigner Peru