15.12.15

Buying an apartment in Uruguay


Apartments in Punta del Este, Uruguay
The purpose of this article is to better prepare you to buy an apartment in Uruguay. It begins with some of the advantages of buying an apartment compared to a single-family home. It then goes on to explain how to choose your local apartment buying team, where to find apartments for sale, how to avoid buying a seller’s problems, and how to determine basic ownership costs before you make a buying decision.

What is called an apartment in Uruguay is an individually owned residential unit in a building of units, the same as a condominium in North America. The largest concentration of apartments in Uruguay is in Montevideo, where almost half of the country’s population of lives. The second greatest concentration of apartments is in the beach resort town of Punta del Este.

Advantages of buying an apartment compared to a single family home 


Apartments in Montevideo, Uruguay
Building maintenance and landscaping is taken care of by others 
One of the biggest pluses of buying an apartment in Uruguay over a single family home is that landscaping and general building maintenance is taken care of by others. You, as an apartment owner, do not need to find and hire workers, explain the work, and make sure all the government paperwork and taxes are handled properly. You simply make a regular payment to the building administrator who overseas the landscaping and building maintenance on the apartment owners behalf.

Enables you to live a lock-and-go lifestyle 
It is much more secure to leave an apartment in a well-managed building vacant than a single family home. You can lock the door and go without worrying about someone dumping garbage in your yard or squatting on your property without anyone knowing about it.

Provides added personal security and convenience

Many apartment buildings in both Montevideo and Punta del Este have porters on duty in the lobby. The duty of the porter is to let owners and their approved guests in and out of the building. Porters often help out in other ways such as accepting parcels and packages and recommending various home service providers.

Availability of additional amenities and services 
In Punta del Este, many apartment buildings provide amenities and services in addition to porters, which are paid from the gastos comunes (common expenses). These amenities can include social and game rooms, gyms, patios, barbecue areas, swimming pools, and saunas. Additional services may include maid service, and valet parking.

Some apartment buildings in Punta del Este have additional services available that cost extra, like a maintenance staff that will make small repairs inside your apartment, pickup and drop-off laundry service, and spa services.

Note: The purpose of this section is not to suggest that an apartment is a better choice than a single family home for everyone, but just to point out the relative advantages.

Apartments on Pocitos beach in Montevideo, Uruguay


Choosing your apartment buying team 


The basic apartment buying team in Uruguay includes a real estate agent, an architect, and a legal professional called an escribano.

Real estate agent 
In other posts I stress the importance of choosing a good real estate agent in Uruguay so you don’t end up using an agent simply because they happened to be advertising a property you inquired about (and who is working for the seller). A good real estate agent is one who is knowledgeable, well connected, competent, and is looking out for your best interests.

The best place to learn about a good real estate agent in Uruguay is often from others who have had a good experience. If you are not fluent in Spanish select a real estate agent who is bilingual, and get references from other English speakers.

Tip: Only pay attention to real estate agent recommendations that come from satisfied clients who have completed a successful transaction. Many people will recommend a friend, relative, or social acquaintance based on their likeability, without really knowing how effective they are at their job.

In Uruguay, the buyer and seller each pays his own ‘side’ of the real estate commission. I have observed commission rates of 3% from the seller to the listing office, and 3% from the buyer to the company that represented him or her (for a total of 6%). If a party buys through the listing broker, that listing broker will usually collect both sides of the commission.

Note: a 22% value added tax is charged on the real estate agent’s commission.

Architect 

Architects have a broader role in Uruguay than many other countries. In addition to designing, planning, and overseeing construction projects, architects will often provide home and building inspections.

If you have any questions about the structural integrity of the apartment you are considering or the apartment building it is in, get the opinion of an architect. Even if you don’t have any specific concerns it can be a good investment.

An architect will usually visit an apartment and provide a verbal opinion for an agreed upon fee.

Escribano
The Escribano (often called a notary) performs specific legal functions, which include preparing real estate agreements, checking property titles, and recording deeds. The escribano is usually hired by the buyer to protect the buyer’s title interests. Escribanos charge a percentage of the purchase price for their services. The most common rate I have observed being charged by escribanos is 3%.

Note: a 22% value added tax is charged on the escribano’s fee.

Birds of a feather often do flock together, and it could be that your real estate agent has good recommendations for an architect and an escribano. However, it is prudent to ask for (and check) references.

Also, if you do not speak Spanish, use the services of an architect and an Escribano who are bilingual. Real estate transactions can sometimes get complicated, and it is a great benefit to have direct and clear communication with all the members of your team.

Where to find apartments for sale 

Apartments on a park in Montevideo


Your real estate agent
Many real estate agents see their job as promoting their own company’s listings. However, there are some buyer’s agents who will work with all available sources to find the best property for their client’s needs.

Real estate websites  
There is not a multiple listing service in Uruguay. However, there are real estate websites that aggregate the listings of many brokers, providing a broad range of properties to view and compare. http://apartamentos.com.uy/    http://www.buscandocasa.com/

Link: How to search for Uruguay real estate on a Spanish language website 

Note: Keep in mind that an apartment that has sold may still be shown on real estate websites. This is often because several offices list the same apartment and when one office gets an accepted offer, they do not contact and notify other offices.

Real estate magazines and newspaper classified ads 
Montevideo and Punta del Este both have glossy real estate magazines where brokers advertise their properties for sale. The most popular Uruguay newspaper to find properties is El Pais, which also shows the properties advertised in their paper online.

Signs
If you have a neighborhood of interested, visit it frequently and be on the lookout for signs. Many apartment sellers in Uruguay simply put up a “For Sale” sign as their primary means of advertising.

Building Porters  
If you have one or a few specific buildings picked out where you want to buy an apartment, ask the porters who work in those buildings if they know about apartments for sale. Porters are often the first ones to know about a new apartment coming on the market.

Apartment buildings on the Brava Beach in Punta del Este, Uruguay


Avoid buying a seller’s problems 

Sometimes a seller is not selling his or her apartment for a personal or financial reason. Sometimes they are selling their apartment to escape a problem that has come up. Do your due diligence and ask your real estate agent to help you check if the apartment is being sold because of one of the following problems:

A serious physical problem with the apartment or building 
There could be a major wall starting to pull away, chronic plumbing problems, or an unsolvable humidity problem. To avoid this, make careful observations of the property, talk to the property administrator, talk to other apartment owners, and have the property inspected by your architect before submitting an offer.

Existing or likely legal action 
There could be a legal action (or a strong likelihood of a legal action) against a building’s owners association. A legal action against the building should be discovered by the escribano during the title search. However, you can save a lot of time and trouble by finding out sooner. So, ask the property administrator and other owners in the building if there is a lawsuit or threat of a lawsuit against the building.

Tip: If you really like an apartment that is for sale in a building with a pending lawsuit, ask your escribano his or her opinion about the option of preparing a contract that makes the seller responsible for a resulting judgment.

Issues of solvency
There are sometimes instances when a building’s owners association, in an effort to keep ownership costs down, refuses to vote for cost increases needed to keep a building in its best condition. There are also instances when a property administration company is less than professional and does not act on the owners behalf. This sort of breech could include anything from taking kickbacks from companies that perform maintenance to absconding with the owner associaion’s treasury.

When considering an apartment, ask the property administrator if the building’s needs are being adequately funded by the owners and if the building has adequate financial reserves.

Also, talk to other apartment owners in the building. Ask if the building is being well maintained and if they are satisfied with how the building is being administrated.

A special assessment 
Most apartment building maintenance and repairs are paid from the owners’ dues. However, sometimes a large expense comes up, like the need for new elevators, and a special assessment is levied against each apartment to cover the cost. The existence of a special assessment is something you can often learn about by asking the property administrator or apartment owners in the building.

A difficult or noisy neighbor 
To determine if there's a difficult or noisy neighbor, ask the seller directly about the neighbors. (They may not tell you outright if there is a problem, but they might give you a clue.)  Also, introduce yourself to the neighbors and let them know you are considering buying an apartment in the building and you want to learn how they like living in the building. A few casual interviews like this can often give you an indication if there is a spirit of peace and harmony, or if there are tensions or rival factions in the building.

Apartments near the marina in Punta del Este, Uruguay


Learn what your ownership costs will be before making a buying decision 


Gastos Comunes
As mentioned, gastos comunes are the common expenses shared by the people living in a building. These costs include lighting the common areas, building upkeep and improvements, and landscaping. The gastos comunes also cover staff wages for porters, and administration costs.

In general, a building with a lot of apartments and few services will have the lowest gastos communes. While some upkeep and service costs are proportional to the size of the building, many costs are the same for a large building as for a small building. As an example, the cost is the same for a 24-hour porter no matter if the cost is being divided among 50 units in a larger building or 12 units in a smaller building.

Heating 
Winter heating is a significant cost that can vary greatly depending on the apartment and the heating source. Large apartments with lots of glass and high ceilings will cost much more to heat than a smaller more efficient apartment. In any case, it's a good idea to check the history of heating costs of a unit you are considering. If that information is not available (as is the case with a new apartment) then ask about similar types and sizes of apartments with similar heating systems to get an idea.

There are still some buildings (though not common) that include heating costs in the gastos communes. If this is the case, you need to know.

Taxes 
The main property tax in Uruguay is the Contribución Inmobiliaria (real estate contribution), which is a local municipal tax. There is also the Impuesto a la Enseñanza Primaria (primary education tax). These taxes are based on registered values determined by the government. Because the registered values are not the same thing as the market value, make a visit to the local government office of Dirección Nacional de Catatastro and check the registered values and tax rates for the apartment you are considering.

Note: In Montevideo there is also a residential tax and sanitation fee.

Apartments on the Peninsula
in Punta del Este, Uruguay
Be aware that Uruguay also has a tax of assets (Impuesto al Patrimonio) that can include real estate. This tax is based on a percent on the property’s registered fiscal value, after adjustments, and is paid annually. It is only due on properties over a certain registered fiscal value, and if it is your principal dwelling, the tax is based on half of the registered fiscal value. This tax is a little complicated because it is based on a graduated tax bracket, has a different threshold for single persons and married couples, and has different rates for properties owned by a local or foreign corporation.

Note: There are reports that the Impuesto al Patrimonio is being phased out over time.

If determining a close estimate of the taxes that would be due on a property you want to buy is beyond the scope of you real estate agent, get the information from your escribano. Let them know you need an estimate of all the taxes you will have to pay before you can make a buying decision.

Note: Are you interested in learning more about Uruguay? If so, sign up to receive my Free Monthly Newsletter, the Uruguay Insider. And when you do, I'll immediately send you a link to download Uruguay in Pictures—a  free PDF guide I've prepared, showing you the top eight places to travel and live in Uruguay.

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