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How to Make a Fortune in 2024 by Investing in Muscat’s Luxury Apartments Under Construction (part 3 of 4)

How to Make a Fortune in 2024 by Investing in Muscat’s Luxury Apartments Under Construction (part 3 of 4)

Want to buy real estate in Muscat, Oman? Write us on WhatsApp and Real Estate Group will find the best options for you. Everyone buys from us!

Read Part 2 for the beginning

Chapter 4: Formalizing the purchase of a luxury property under construction in Muscat in 2024.

Formalizing the purchase of a luxury property under construction in Muscat in 2024 is a critical and complex process, as it involves many steps and procedures that need to be followed and completed. A luxury property under construction is a property that is still in the process of being built or completed, and that offers a high level of quality, comfort, and exclusivity. A luxury property under construction can be an apartment, a townhouse, a villa, or a penthouse, depending on the size, design, and features of the property.

In this chapter, Real Estate Group will explain the process of executing the purchase of luxury real estate under construction in Muscat in 2024 and answer the following questions:

  • How to complete the purchase of a property under construction with the help of a real estate broker?
  • How to get a residence permit in Oman when buying real estate, what are the options and conditions?
  • What documents do the buyer need to provide?
  • What documents should be requested from the seller?
  • When and how to pay?
  • What taxes, fees and other charges need to be paid additionally when buying an apartment in a house under construction?
  • What risks there may be and what you need to pay special attention to?
  • What types of risk insurance are available for buyers of apartments?
How to Make a Fortune in 2024

How to complete the purchase of a property under construction with the help of a real estate broker?

The first step to formalize the purchase of a property under construction in Muscat in 2024 is to choose a reputable and reliable real estate broker, as Real Estate Group wrote about in the previous chapter. A real estate broker is a professional and specialized service provider that can assist you with finding, evaluating, negotiating, and purchasing the best property under construction in Muscat that suits your investment goals and preferences. A real estate broker can also help you with selling or renting the property after completion of construction, depending on your investment strategy.

The second step is to sign a reservation agreement with the real estate broker and the developer of the property. A reservation agreement is a document that confirms your interest and intention to buy the property under construction, and reserves the property for you for a certain period of time, usually between 15 to 30 days. A reservation agreement also specifies the basic details and terms of the property and the purchase, such as the type, size, location, price, payment plan, completion date, etc. A reservation agreement also requires you to pay a reservation fee, which is usually between 1% to 5% of the total price of the property, and is refundable if you decide not to proceed with the purchase.

The third step is to conduct a due diligence on the property and the developer, with the help of the real estate broker and other experts, such as lawyers, bankers, engineers, etc. A due diligence is a process of verifying and validating the legal, financial, technical, and operational aspects of the property and the developer, and identifying and assessing any potential risks and issues that may affect the value, quality, and delivery of the property. A due diligence may include checking the title deed, the land registry, the building permit, the construction contract, the escrow account, the developer’s reputation, the project’s progress, the market conditions, etc.

The fourth step is to sign a sale and purchase agreement with the developer of the property, with the assistance of the real estate broker and a lawyer. A sale and purchase agreement is a document that finalizes and formalizes the purchase of the property under construction, and transfers the ownership and the usufruct rights of the property from the developer to the buyer. A sale and purchase agreement also specifies the final details and terms of the property and the purchase, such as the type, size, location, price, payment plan, completion date, warranty, after-sales service, etc. A sale and purchase agreement also requires you to pay a down payment, which is usually between 10% to 30% of the total price of the property, and is non-refundable if you decide to cancel the purchase.

The fifth step is to register the property with the Ministry of Housing and Urban Planning, with the help of the real estate broker and a lawyer. The registration of the property is a process of obtaining the official and legal recognition and documentation of the property and the purchase, and securing the rights and obligations of the buyer and the developer. The registration of the property also requires you to pay a registration fee, which is usually 3% of the total price of the property, and is split equally between the buyer and the developer.

The sixth step is to pay the remaining balance of the price of the property, according to the agreed payment plan, with the help of the real estate broker and a banker. The payment of the property is a process of transferring the funds from the buyer to the developer, either in cash or through a bank loan or mortgage, and receiving the receipts and invoices from the developer. The payment of the property also requires you to pay a stamp duty, which is usually 0.5% of the total price of the property, and is paid by the buyer.

The seventh step is to receive the keys and the handover documents of the property from the developer, with the help of the real estate broker and an engineer. The handover of the property is a process of inspecting and accepting the property from the developer, and confirming that the property is completed and delivered according to the agreed specifications and standards. The handover of the property also requires you to sign a handover certificate, which is a document that acknowledges the receipt and the satisfaction of the property, and activates the warranty and the after-sales service of the property.

These are the main steps to complete the purchase of a property under construction in Muscat in 2024 with the help of a real estate broker. However, there may be some variations and deviations depending on the specific property, developer, broker, and buyer involved. Therefore, it is advisable to consult a professional real estate agent, a lawyer, a banker, and other experts before and during the buying process, and to read and understand all the documents and contracts carefully before signing them.

How to get a residence permit in Oman when buying real estate, what are the options and conditions?

One of the benefits of buying real estate in Oman is that it can qualify you for a residence permit, which is a document that allows you to live and stay in Oman legally and indefinitely. A residence permit also grants you some rights and privileges, such as access to public services, health care, education, etc. However, not all real estate purchases are eligible for a residence permit, and there are some options and conditions that need to be met .

The main option to get a residence permit in Oman when buying real estate is to buy a property in an Integrated Tourism Complex (ITC), which is a designated and approved development that offers freehold ownership and residency rights to foreign buyers. An ITC is usually a luxury and gated community that features a range of properties, amenities, and services, such as Al Mouj Muscat, Saraya Bandar Jissah, Muscat Hills, etc. 

To get a residence permit in Oman when buying a property in an ITC, you need to meet the following conditions:

  • The property must be worth at least OMR 50,000 (USD 130,000), and must be fully paid and registered in your name.
  • The property must be used for residential purposes only, and must not be rented or sold for at least four years.
  • You must have a valid passport, a health certificate, a police clearance, and a proof of income or savings.
  • You must pay a residence permit fee, which is OMR 600 (USD 1,560) for the first year, and OMR 300 (USD 780) for each subsequent year.
  • You must renew your residence permit every two years, and update your information and documents if there are any changes.

Another option to get a residence permit in Oman when buying real estate is to buy a property in a non-ITC area, which is any area that is not designated and approved as an ITC, and that does not offer freehold ownership and residency rights to foreign buyers. However, this option is more limited and restricted, and requires a special approval from the Ministry of Housing and Urban Planning. 

To get a residence permit in Oman when buying a property in a non-ITC area, you need to meet the following conditions:

  • The property must be worth at least OMR 300,000 (USD 780,000), and must be fully paid and registered in your name.
  • The property must be located in a specific area that is allowed for foreign ownership, such as Muscat, Salalah, or Sohar.
  • The property must be used for residential purposes only, and must not be rented or sold for at least four years.
  • You must have a valid passport, a health certificate, a police clearance, and a proof of income or savings.
  • You must pay a residence permit fee, which is OMR 600 (USD 1,560) for the first year, and OMR 300 (USD 780) for each subsequent year.
  • You must renew your residence permit every two years, and update your information and documents if there are any changes.
  • You must obtain a prior approval from the Ministry of Housing and Urban Planning, which may take several months and may be subject to additional requirements and conditions.

These are the main options and conditions to get a residence permit in Oman when buying real estate. However, there may be some variations and deviations depending on the specific property, area, and buyer involved. Therefore, it is advisable to consult a professional real estate agent, a lawyer, and the Ministry of Housing and Urban Planning before and during the buying process, and to read and understand all the documents and contracts carefully before signing them.

What documents do the buyer need to provide?

The buyer of a property under construction in Muscat in 2024 needs to provide the following documents to complete the purchase and the registration of the property:

  • A copy of the passport and the visa of the buyer.
  • A copy of the reservation agreement and the sale and purchase agreement of the property.
  • A copy of the payment receipts and invoices of the property.
  • A copy of the title deed and the land registry of the property.
  • A copy of the building permit and the construction contract of the property.
  • A copy of the escrow account and the developer’s guarantee of the property.
  • A copy of the handover certificate and the warranty of the property.
  • A copy of the health certificate and the police clearance of the buyer.
  • A copy of the proof of income or savings of the buyer.
  • A copy of the approval letter from the Ministry of Housing and Urban Planning (if applicable).

These are the main documents that the buyer needs to provide to formalize the purchase of a property under construction in Muscat in 2024. However, there may be some additional or different documents that may be required depending on the specific property, developer, broker, and buyer involved. Therefore, it is advisable to consult a professional real estate agent, a lawyer, and the Ministry of Housing and Urban Planning before and during the buying process, and to prepare and submit all the documents in a timely and accurate manner.

What documents should be requested from the seller?

The buyer of a property under construction in Muscat in 2024 should request the following documents from the seller, which is usually the developer of the property, to verify and validate the legal, financial, technical, and operational aspects of the property and the seller:

  • A copy of the passport and the visa of the seller.
  • A copy of the reservation agreement and the sale and purchase agreement of the property.
  • A copy of the payment receipts and invoices of the property.
  • A copy of the title deed and the land registry of the property.
  • A copy of the building permit and the construction contract of the property.
  • A copy of the escrow account and the developer’s guarantee of the property.
  • A copy of the handover certificate and the warranty of the property.
  • A copy of the approval letter from the Ministry of Housing and Urban Planning (if applicable).
  • A copy of the company registration and the trade license of the seller.
  • A copy of the portfolio and the testimonials of the seller.

These are the main documents that the buyer should request from the seller to conduct a due diligence on the property and the seller. However, there may be some additional or different documents that may be requested depending on the specific property, developer, broker, and buyer involved. Therefore, it is advisable to consult a professional real estate agent, a lawyer, and other experts before and during the buying process, and to check and review all the documents carefully before signing them.

When and how to pay?

The buyer of a property under construction in Muscat in 2024 needs to pay the following amounts at the following times to complete the purchase of the property:

1. A reservation fee, which is usually between 1% to 5% of the total price of the property, and is refundable if the buyer decides not to proceed with the purchase. The reservation fee is paid when the buyer signs the reservation agreement with the seller and the broker, and reserves the property for a certain period of time, usually between 15 to 30 days.

2. A down payment, which is usually between 10% to 30% of the total price of the property, and is non-refundable if the buyer decides to cancel the purchase. The down payment is paid when the buyer signs the sale and purchase agreement with the seller, and finalizes and formalizes the purchase of the property.

3. A registration fee, which is usually 3% of the total price of the property, and is split equally between the buyer and the seller. The registration fee is paid when the buyer registers the property with the Ministry of Housing and Urban Planning, and obtains the official and legal recognition and documentation of the property and the purchase.

4. A stamp duty, which is usually 0.5% of the total price of the property, and is paid by the buyer. The stamp duty is paid when the buyer pays the remaining balance of the price of the property, according to the agreed payment plan, and transfers the funds from the buyer to the seller, either in cash or through a bank loan or mortgage.

5. A balance payment, which is the remaining amount of the total price of the property, after deducting the reservation fee, the down payment, the registration fee, and the stamp duty. The balance payment is paid according to the agreed payment plan, which is usually based on the progress and completion of the construction of the property, and is usually between 60% to 80% of the total price of the property. The balance payment is paid either in cash or through a bank loan or mortgage, and requires the buyer to pay interest and fees to the bank if a loan or mortgage is used.

These are the main amounts and times that the buyer needs to pay to formalize the purchase of a property under construction in Muscat in 2024. However, there may be some variations and deviations depending on the specific property, developer, broker, and buyer involved. Therefore, it is advisable to consult a professional real estate agent, a lawyer, and a banker before and during the buying process, and to read and understand all the documents and contracts carefully before signing them.

What taxes, fees and other charges need to be paid additionally when buying an apartment in a house under construction?

The buyer of a property under construction in Muscat in 2024 needs to pay some additional taxes, fees and other charges when buying an apartment in a house under construction, besides the price of the property. These taxes, fees and other charges according to Real Estate Group include:

1. A registration fee, which is usually 3% of the total price of the property, and is split equally between the buyer and the seller. The registration fee is paid when the buyer registers the property with the Ministry of Housing and Urban Planning, and obtains the official and legal recognition and documentation of the property and the purchase.

2. A stamp duty, which is usually 0.5% of the total price of the property, and is paid by the buyer. The stamp duty is paid when the buyer pays the remaining balance of the price of the property, according to the agreed payment plan, and transfers the funds from the buyer to the seller, either in cash or through a bank loan or mortgage.

3. A residence permit fee, which is OMR 600 (USD 1,560) for the first year, and OMR 300 (USD 780) for each subsequent year, if the buyer is a foreigner and wants to obtain a residence permit in Oman when buying real estate, Real Estate Group discussed in the previous section.

4. A bank loan or mortgage fee, which is usually between 1% to 2% of the loan or mortgage amount, plus interest and other charges, if the buyer uses a bank loan or mortgage to finance the purchase of the property .

5. A broker fee, which is usually between 2% to 5% of the total price of the property, and is paid by the buyer to the real estate broker who assists the buyer with finding, evaluating, negotiating, and purchasing the property.

6. A lawyer fee, which is usually between 1% to 3% of the total price of the property, and is paid by the buyer to the lawyer who assists the buyer with the legal aspects of the purchase of the property.

7. An engineer fee, which is usually between 0.5% to 1% of the total price of the property, and is paid by the buyer to the engineer who assists the buyer with the technical aspects of the purchase of the property.

8. A risk insurance fee, which is usually between 0.1% to 0.5% of the total price of the property, and is paid by the buyer to the insurance company who provides the buyer with a risk insurance for the property, which Real Estate Group has written about in the next section.

These are the main taxes, fees and other charges that the buyer needs to pay additionally when buying an apartment in a house under construction in Muscat in 2024. However, there may be some variations and deviations depending on the specific property, developer, broker, and buyer involved. Therefore, it is advisable to consult a professional real estate agent, a lawyer, a banker, and other experts before and during the buying process, and to read and understand all the documents and contracts carefully before signing them.

What risks there may be and what you need to pay special attention to?

The buyer of a property under construction in Muscat in 2024 needs to be aware of and prepared for some potential risks and issues that may arise and affect the value, quality, and delivery of the property. According to the expert opinion of Real Estate Group, such risks and problems include:

1. Delays: The completion and handover of the property may be delayed due to various reasons, such as the developer’s financial problems, the contractor’s performance problems, the supply chain disruptions, the weather conditions, the regulatory changes, the force majeure events, etc. Delays may cause the buyer to incur additional costs, such as rent, interest, fees, etc., and to lose potential income, such as capital appreciation, rental income, etc.

2. Defects: The property may have some defects or faults in the design, the construction, the finishing, the fittings, the appliances, the furniture, etc., that may affect the functionality, the comfort, the safety, and the aesthetics of the property. Defects may cause the buyer to incur additional costs, such as repairs, replacements, maintenance, etc., and to lose potential value, such as marketability, appeal, etc.

3. Legal issues: The property may have some legal issues or disputes in the title deed, the land registry, the building permit, the construction contract, the escrow account, the developer’s guarantee, the sale and purchase agreement, the handover certificate, the warranty, the after-sales service, etc., that may affect the ownership, the usufruct, the rights, and the obligations of the buyer and the developer. Legal issues may cause the buyer to incur additional costs, such as fines, penalties, litigation, etc., and to lose potential security, such as protection, recognition, documentation, etc.

4. Market fluctuations: The market conditions and trends in the Muscat real estate market, especially in the luxury segment and the property under construction niche, may change due to various factors, such as the supply and demand, the competition, the appreciation and depreciation, the inflation and deflation, the economic outlook, the political stability, the social events, etc. Market fluctuations may cause the buyer to incur additional risks, such as overpaying, underselling, losing money, etc., and to lose potential returns, such as profit, income, yield, etc.

5. Unforeseen events: The buyer and the developer may face some unforeseen events or circumstances that may affect the value, quality, and delivery of the property, such as accidents, injuries, illnesses, deaths, divorces, bankruptcies, frauds, scams, thefts, fires, floods, earthquakes, wars, pandemics, etc. Unforeseen events may cause the buyer to incur additional losses, such as damages, liabilities, claims, etc., and to lose potential benefits, such as enjoyment, satisfaction, happiness, etc.

These are some of the main risks and issues that the buyer needs to pay special attention to when buying a property under construction in Muscat in 2024. However, there may be some other risks and issues that may arise and affect the value, quality, and delivery of the property. Therefore, it is advisable to consult a professional real estate agent, a lawyer, a banker, and other experts before and during the buying process, and to conduct a thorough due diligence, a careful inspection, and a comprehensive risk assessment on the property and the developer.

What types of risk insurance are available for buyers of apartments?

The buyer of a property under construction in Muscat in 2024 can protect themselves and their property from some of the potential risks and issues that may arise and affect the value, quality, and delivery of the property, by obtaining a risk insurance, which is a contract that provides the buyer with a compensation or a coverage in case of a loss or a damage caused by a specified risk or event. 

Want to buy real estate in Muscat, Oman? Write us on WhatsApp and Real Estate Group will find the best options for you. Everyone buys from us!

There are different types of risk insurance available for buyers of apartments, such as:

1. Developer’s guarantee: A developer’s guarantee is a type of risk insurance that is provided by the developer of the property, and that covers the buyer from any delays, defects, or legal issues that may affect the completion and handover of the property. A developer’s guarantee usually specifies the terms and conditions of the coverage, such as the duration, the scope, the limit, the exclusions, the claims, etc. A developer’s guarantee is usually included in the construction contract and the sale and purchase agreement of the property, and does not require the buyer to pay any additional fee.

2. Escrow account: An escrow account is a type of risk insurance that is provided by a third-party agent, such as a bank or a lawyer, and that protects the buyer from any frauds, scams, or defaults by the developer of the property. An escrow account is a separate and secure account that holds the funds of the buyer until the completion and handover of the property, and that releases the funds to the developer only upon the fulfillment of the agreed conditions and milestones. An escrow account usually specifies the terms and conditions of the protection, such as the amount, the schedule, the release, the cancellation, etc. An escrow account is usually included in the construction contract and the sale and purchase agreement of the property, and requires the buyer to pay a small fee to the third-party agent.

3. Title insurance: A title insurance is a type of risk insurance that is provided by an insurance company, and that covers the buyer from any legal issues or disputes that may affect the ownership and the usufruct rights of the property. A title insurance is a policy that guarantees the validity and the enforceability of the title deed and the land registry of the property, and that compensates the buyer for any losses or damages that may result from any defects or errors in the title or the registration of the property. A title insurance usually specifies the terms and conditions of the coverage, such as the duration, the scope, the limit, the exclusions, the claims, etc. A title insurance is usually optional and requires the buyer to pay a premium to the insurance company.

4. Home insurance: A home insurance is a type of risk insurance that is provided by an insurance company, and that covers the buyer from any accidents, injuries, damages, or losses that may occur to the property or the contents of the property, due to various causes, such as fire, flood, earthquake, theft, vandalism, etc. A home insurance is a policy that provides the buyer with a compensation or a repair for any losses or damages that may affect the property or the contents of the property, up to a certain amount or value. A home insurance usually specifies the terms and conditions of the coverage, such as the duration, the scope, the limit, the exclusions, the claims, etc. A home insurance is usually optional and requires the buyer to pay a premium to the insurance company.

These are some of the main types of risk insurance available for buyers of apartments in Muscat in 2024. However, there may be other types of risk insurance that may suit your needs and goals, such as mortgage insurance, liability insurance, life insurance, etc. Therefore, it is advisable to consult a professional real estate agent, a lawyer, and an insurance company before and during the buying process, and to compare and choose the best risk insurance for your property.

We hope this chapter from Real Estate Group will help you in making your purchase of luxury real estate under construction in Muscat in 2024.

Read the continuation in part 4

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