Are there any restrictions on who can own real estate?
Real Estate (3rd edition)
The possibility to transfer real estate is limited by the Land Transfer Acts. Each of the nine federal states has its own land transfer act regulating the transfer of agricultural and forestry land and the acquisition of real estate by foreigners. The terms and regulations of every land transfer act are different, and whether an approval is necessary needs to be reviewed in every single case. EU/EEA citizens are treated equally to Austrian citizens. For others, however, the acquisition of real estate is subject to approval by the local land transfer authority. If applicable, the approval is a condition precedent by law and is necessary for the registration of ownership in the land register. This, in principle, applies both to share and asset deals.
In some areas of Austria, which are popular holiday destinations (e.g. Kitzbühel), there are further restrictions that prohibit the use of an acquired property as a holiday home and only allow the use as a main residence.
There are certain restrictions to acquisition of properties located in coastal, boarder or rural areas by foreigners or Brazilian companies controlled by foreigners, due to national security issues.
The transfer of title of real estate located in border areas and certain in rem rights by foreigners or Brazilian companies controlled by foreigners require approval by the CSN (national defense counsel), following specific law requirements.
The transfer and lease of rural areas of a certain size (varies on a local/municipal basis) by foreigners or Brazilian companies controlled by foreigners may depend on prior authorization by applicable governing authorities varying from Instituto Nacional de Colonização e Reforma Agrária (INCRA) – national colonization and land reform institute responsible for land reform and property distribution agricultural land, CSN or even the Federal Congress. The authorization request is presented at INCRA and the approval (by the competent body) shall analyze the activity to be developed, if other rural properties are owned by the same foreigner, as well as if in the municipality where the property is located other foreigners of the same nationality also own rural real estate.
3.1 Generally speaking there are no restrictions on natural persons, trustees, incorporated bodies or unincorporated bodies (whether foreign or domestic) from becoming a registered proprietor of real property, although certain formalities may apply depending on the type of proprietor.
3.2 However, the carrying on of business from or in relation to real property may also require local business licensing. The ownership of one residential property for personal use and up to two further residential properties for rent will not generally be deemed to be carrying on business in the Cayman Islands, whereas the letting of any commercial real estate will generally be deemed to be carrying on business in the Cayman Islands.
3.3 There are restrictions designed to protect local businesses against foreign investors proposing to carry on business in the Cayman Islands. Foreign investors in real estate development projects willing to persevere will often be granted the necessary licences if their investment is substantial.
Every citizen of Cyprus and the EU can become the registered owner of immovable property of Cyprus. The same applies for legal entities controlled by a majority of Cypriot or EU citizens.
There are restrictions with regards to non-EU citizens. In accordance with Cap 109 in order for an “alien” to acquire immovable property in Cyprus, the Council of Ministers’ permission must be sought. An “alien” is defined as a non-EU citizen or a company controlled by non-Eu citizens.
When the size of the immovable property exceeds the absolutely necessary size for the erection of a building to be used as a house or as business premises and in any case when the size exceeds 2675.60 square meters, the Council Ministers can grant a permit to an “alien” to acquire such immovable property, on terms, requirements and criteria that shall be determined in Regulations issued by the Council of Ministers and approved by the Parliament.
A contract of purchase shall be signed by an “alien” purchaser and is capable of being lodged at the land registry for specific performance purposes. However, the immovable property shall not be registered in the name of the “alien” unless the Council of Ministers grants a permit.
The same restriction applies to trusts, where the beneficiary is an “alien” as defined by the law.
Moreover, the restriction applies to acquiring a leasehold interest which exceeds the period of 30 years or when there is a right to renew for a period which together with the period of the original lease will exceed the period of 30 years. In the case where the lease is for a property which exceeds the absolutely necessary size for the erection of a building to be used as a house or as business premises and in any case when the size exceeds 2675.60 square meters and the lease exceeds the period of 10 years, Council of Ministers permission must be sought by an “alien”.
The restriction applies to the purchasing of shares of a company registered in the Republic of Cyprus, when such company owns immovable property in Cyprus and when such purchase will mean that the company will be controlled by “aliens”.
Real estate can as such be owned by any legal entity, be it either private individuals, companies or organizations, as long as such entity has legal rights and obligations.
There is, however, restrictions in the Danish Act on Acquisition of Real Property (in Danish: erhvervelsesloven) which means that persons who are not residents of Denmark and who have not previously been permanently established in Denmark for a period of 5 years must obtain permission from the Danish Ministry of Justice in order to acquire real estate situated in Denmark. This applies also to companies not established in Denmark. However, nationals of and corporations established in a country that is a Member State of the European Union or a country that has acceded to the Agreement on the European Economic Area can under certain circumstances acquire real estate (except for vacation homes) without special permission. Due to the above restrictions, non-Danish investors will in general establish a Danish company to acquire and hold the property, which requires no permission even though the Danish company has been established for the sole purpose of acquiring one or more Danish properties.
There are no restrictions on who can own a real estate property per se except for the persons condemned for the violation of the legislation relating to housing conditions and which may be subject to a prohibition to purchase.
The sale of certain properties (especially those owned by the state or other kind of public entities) may, however, be subject to specific proceedings and controls by the French administration.
There are no specific restrictions – e.g. everybody can own real estate, persons, legal entities, closed-end and open-end property funds, public law bodies and foreign individuals and companies. Also minors and incapacitated persons are eligible to own real estate, however they are not granted the power of disposition.
There are restrictions for the acquisition of property rights in border zone areas of the country by individuals or companies that are not nationals of an European Union (EU) or European Free Trade Association (EFTA) country, and for the transfer of company shares or any change of partners of the companies that have ownership rights over assets located within such border zone areas. Permission needs to be obtained via application to a special commission prior to acquiring or renting the real estate or before proceeding to any shareholders’ structure change.
The commission is composed by the Secretary - General as president and his deputy, and representatives from the Ministries of Defense, Economy and Marine and Citizen Protection, who are appointed with their deputies by the respective authorities. The committee is authorized to suspend the restrictions, provided that it decides at a majority of the total number of members, and that the representative of the Ministry of Defense casts an affirmative vote.
1. Restriction of ownership of foreign entities and individuals
In general, the following parties may acquire real property without restrictions:
- - citizens of the EU / EEA, legal entities, organisations without legal personality registered in the EU / EEA;
- - individuals with dual citizenship (one of them being Hungarian citizenship), and citizens of Switzerland;
- - individuals acquiring ownership by way of succession, regardless of citizenship;
- - Hungarian branch offices of foreign enterprises registered outside the EU / EEA in case there is reciprocity between Hungary and such foreign country.
Acquisition of real property by other parties is subject to the approval of the territorially competent government bureau. The approval is granted if the acquisition of the real property does not constitute harm to local government or other public interests, or in case the foreign person wishes to live permanently and to pursue economic activity in Hungary, for which economic activity the acquisition of real property is required, and the acquisition of real property does not constitute an injury to public interests. Even if these conditions are met, the approval may be refused if the state of which the foreign person is a national does not provide equal treatment to Hungarian nationals under an international convention or reciprocity, except if the purpose of acquisition is to cease common ownership, or the foreign person has verifiably been residing and living in Hungary for a period of no less than five years, out of which the foreign person was employed for at least three years.
The above approval procedure does not apply to Hungarian companies established by foreign investors. Foreign persons may also opt for leasing real estate, which is not subject to the approval procedure.
2. Restriction of ownership of agricultural land
In general, only private individuals with Hungarian or other EU citizenship may acquire real properties qualifying as agricultural land. Furthermore, private individuals who do not qualify as farmers, may acquire agricultural land up to maximum one hectare. The acquisition limit of private individuals qualifying as farmers is 300 hectares. Notwithstanding the above, it is accepted by court practice for a legal entity to enter into a preliminary sale and purchase agreement with the seller promising to sell and the buyer promising to buy a real property once it is exempted from agricultural cultivation.
Agricultural land may be reclassified to an “exempted area” (i.e. area exempted from agricultural cultivation), in an administrative procedure by providing adequate justification for the reclassification. During the procedure a one-time land protection fee is required to be paid, the amount of which depends on the area in question, as well as on the quality of the agricultural land to be reclassified. Following reclassification industrial or commercial activity can be performed on the real property and the restrictions on the transfer of ownership no longer apply, i.e. the ownership of such land can be transferred to a legal entity.
of certain classes of real estate restricted to certain owners?
Persons resident outside India fall into the following three categories:
(i) non-resident Indians;
(ii) foreign nationals of Indian origin; and
(iii) foreign nationals of non-Indian origin.
(i) and (ii) can purchase or be gifted residential and commercial property (not agricultural land/plantation property/farm houses which may only be inherited by (i) and (ii)). (iii) cannot purchase any immovable property in India unless such property is acquired by way of inheritance from a person who was resident in India. (iii) can, however, acquire or transfer immovable property in India, on lease, for a period not exceeding 5 years.
A foreign company cannot acquire immovable property in India. However, a foreign company which has established a branch office in India may acquire immovable property in India which is necessary or incidental to its activity, subject to certain conditions. A foreign company which has established a liaison office in India cannot acquire immovable property in India, but can acquire property by way of lease, for a period not exceeding 5 years. A branch office is subject to taxation in India; a liaison office is not because it cannot earn revenue in India.
Foreign direct investment (“FDI”) into India is governed by the Consolidated FDI Policy. Investment can be made into an Indian company by subscribing to or acquiring instruments which are permitted, including equity shares, compulsorily convertible debentures, preference shares and certain other products available to foreign portfolio investors.
- Foreign investment in any form is prohibited in any incorporated or unincorporated entity (including companies, partnership firms, proprietary concerns, trusts, etc.) which is engaged or proposes to engage in “real estate business”, construction of farm houses and/or trading in transferable development rights. “Real estate business” means dealing in land and immovable property with a view to earning profit or income. It does not include the “development of townships, construction of residential/commercial premises, roads or bridges, educational institutions, recreational facilities, city and regional level infrastructure, townships”. It also excludes Real Estate Investment Trusts (“REITs”) registered and regulated under the SEBI (REITs) Regulations 2014. Earning of rent or income through leasing of property, which does not amount to a transfer, is also excluded from the scope of “real estate business”.
- The Consolidated FDI Policy currently permits up to 100% investment, in resident entities engaged in “Construction-development” projects, under the “Automatic Route”. “Automatic Route” means that prior approval of the government is not required for investment by non-resident entities in the capital of resident entities. Construction-development projects include the development of townships, construction of residential or commercial premises, roads or bridges, hotels, resorts, hospitals, educational institutions, recreational facilities and other city and regional level infrastructure. Each phase of the construction-development project is considered as a separate project for the purposes of the FDI policy. A foreign investor is permitted to exit the project and repatriate its foreign investment before the completion of a project under the Automatic Route (i.e. without government approval), provided that a lock-in-period of three years, calculated with reference to each tranche of foreign investment, has been completed. The transfer of a stake from one non-resident to another non-resident, without repatriation of investment, is not subject to any lock-in period and does not require government approval. However, the Indian investee company will be permitted to sell only “developed plots”, meaning plots where basic infrastructure has been made available.
- 100% FDI under the Automatic Route is permitted in completed projects, for the operation and management of townships, malls, shopping complexes and business centres. Upon the receipt of the foreign investment, transfer of ownership and/or control of the investee company from resident to non-resident Indians is also permitted. However, a lock-in period of three years applies, calculated with reference to each tranche of FDI.
- Certain additional conditions apply to investments by Foreign Portfolio Investors, Foreign Institutional Investors and Foreign Venture Capital Investors.
External Commercial Borrowing (“ECB”) is not permitted for investment in real estate or purchase of land, unless used for affordable housing, construction and development of Special Economic Zones and industrial parks/integrated townships.
Under Indian law, a minor is not competent to enter into a contract. However, property can be acquired by a minor by inheritance or by the guardian for the minor or out of funds gifted to the minor. Transfer of immovable property during the minority of the holder can be effected with Court sanction.
There are no legal restrictions on the ownership of real estate in Ireland. However, anti-money laundering legislation requires that a number of checks be carried out on a potential buyer, and the identity of the buyer, the source of funds and the ability to fund the acquisition of real estate will need to be verified.
There are no restrictions on who can own real estate. It is possible for foreign entities to directly own land and buildings in Japan or hold trust beneficiary interests under the laws of Japan. Having said that, it is quite common to own real property or to hold beneficiary interests through a Japanese entity. Lastly, it is necessary to conduct a tax analysis in order to determine which is more advantageous in terms of corporate tax, withholding tax, and other taxes.
There are three categories of land in Kenya – public, private and community.
The Government of Kenya, through the National Land Commission, holds public land in trust for all citizens of Kenya and may only lease or license such land on a limited basis. Individuals or recognised communities can own private land and community land respectively and may do so either absolutely (on a freehold basis) or by a leasehold.
Non-Kenyans, however, can only own land in Kenya on a leasehold basis for a maximum of 99 years. Foreigners can also not own land that is categorised as agricultural pursuant to the Land Control Board Act. These restrictions also apply to any company that is not wholly owned by Kenyan citizens.
Under the Land Act certain transaction are deemed controlled (such as land within the first and second row from high water mark of the Indian Ocean) and require consent the cabinet secretary before transferring to foreigners.
In Mexico, foreign individuals and entities cannot acquire direct ownership of land located in a strip of 50 kilometres along the coastline and 100 kilometres along the borders (“Restricted Zone”, which covers almost 40% of the entire national territory).
Likewise, Mexican corporations with foreign investment cannot acquire direct ownership of land in the Restricted Zone for residential purposes. If, however, the land is used for other non-residential purposes (i.e. commercial, industrial, timesharing or tourism activities), the acquisition by a Mexican entity with foreign investment is permitted upon filing a notice with the Ministry of Foreign Affairs.
Foreigners who want to acquire rights in real property located within the Restricted Zone may do so through a leasehold interest (as tenants) or through a Mexican trust. The trust is a commonly used vehicle where the trustee (a Mexican financial institution) acquires title to the real property for the benefit of the foreigners (beneficiaries), who are entitled to use, enjoy, occupy, possess and obtain proceeds from the real property according to the terms and conditions set forth in the trust agreement. Mexican trusts created for these purposes may not exceed 50 years, but the term can be extended upon request to the Ministry of Foreign Affairs.
Outside the Restricted Zone, foreigners can directly own real estate subject only to obtaining a permit from the Ministry of Foreign Affairs.
Likewise, religious associations, charities and good will associations can only own real estate that is essential for their specific purpose. Financial institutions are also limited to own direct title to real estate that is essential for their specific purpose.
There are no restrictions and foreign investors are not restricted from owning real estate. However, some restrictions exist relating to the occupation of certain properties which are subject to protective regulations and specific control by the Monegasque administration.
Romanian private individuals and/or companies, as well as the Romanian State (including local authorities) may hold real estate under a private ownership right. Also, nationals of EU member states may directly purchase buildable and agricultural land, provided certain conditions are met. Nationals of non-EU states may purchase land only under strict reciprocity conditions, however very few such treaties are in force.
Romanian companies may purchase and/or own properties under a private ownership right, regardless of whether their shareholding structure is composed of Romanian or foreign individuals or legal persons.
Therefore, taking into account the above-mentioned limitation on real estate ownership by foreign nationals, most real estate investments in Romania are made through a special purpose vehicle incorporated in Romania.
However, real estate may also be held under a public ownership right by the Romanian State e.g. (i) lakes, rivers, beachfronts, (ii) national infrastructure such as main roads, conduits, (iii) special constructions such as military constructions, electric power towers, off-shore platforms, etc. Public real estate is inalienable and cannot be encumbered.
In general, real estate can be owned by any person or entity, save for specific statutory exceptions. Some real estate objects can be only state-owned, such as land plots in the forest reserve funds and water supplies, specially protected areas, national parks, land under airports, sea and river ports.
Further, there are restrictions for foreign ownership of real estate in Russia:
- Foreigners cannot own land in the border territories;
- Foreigners (and Russian companies with over 50% of foreign investment) may not own agricultural land, but may lease them.
Further, in some cases prior consent of the Russian authorities is required to acquire real estate. For instance, acquisition of strategic assets may require prior consent of the Russian Government.
There are no legal restrictions for legal entities and natural persons from EU member states, while legal entities and natural persons from non-EU countries are allowed to acquire real estate only under the condition of reciprocity, i.e. if Slovenian legal entities and natural persons are allowed to acquire real estate in that country of origin.
Spanish law establishes a title registration system for the purposes of providing certainty and publicity as to the ownership of real estate assets. Transfers of real estate assets must be executed in a notarial deed (called "escritura pública") before a Notary Public and registered at the relevant Land Registry in order for transfers to be enforceable with respect to third parties. Land Registries provide legal notice of ownership, encumbrances and other matters relating to immovable property. Generally, any acquisition or conveyance of, or encumbrance over, real estate assets not registered at the relevant Land Registry has no effect against bona fide third parties. The principle behind this system is to establish an a priori control of the legality of actions by private parties in order to ensure certainty of good title in real estate transactions and reduce the possibility of fraud.
As a general rule, the person who registers title first has a better right to the property than anyone registering title thereafter.
There are no such restrictions under Swedish law. As a general principle any legal entity may purchase and own any type of land. One limitation to this general rule can however be found in statutory restrictions for business entities to acquire agricultural land from natural persons. For such an acquisition to be valid, the purchaser must obtain a permit from the Swedish Board of Agriculture (Sw. Jordbruksverket) within the legally stipulated timeframe.
Under the current implementation of the Land Code, foreigners (an individual or a juristic person in which foreigners hold more than 49 % of the capital or the number of foreign shareholders exceeds 50% of the total) are generally restricted from owning real estate, with certain exceptions stipulated therein (e.g., the foreigner received the land by inheritance), as set forth in specific laws and regulations. In addition, a foreigner cannot be granted ownership by law as a result of adverse possession.
Here are the material exceptions:
- Investment Promotion Act 1977
A foreigner who receives investment promotion under this Act will be permitted to own plots of land for the purpose of the promoted business operation, as the Board of Investment deems appropriate. However, in the case of dissolution or transfer of business, the foreigners must dispose of such plots of land within one year of the dissolution date or transfer date (as the case may be).
- Industrial Estate Authority of Thailand Act 1979
A foreign business operator in an industrial estate may be granted the right to own plots of land within such industrial estate as the Board of Directors of the Industrial Estate Authority of Thailand (“IEAT”) deems appropriate. In the case of dissolution or transfer of business, the foreigners must dispose of such plots of land to the IEAT or the transferee of the business within three years of the dissolution date or transfer date (as the case may be).
- Petroleum Act 1971
For the purpose of operating petroleum business under this Act, the Petroleum Committee has the power to permit a foreign concessionaire to own plots of land, as it deems necessary.
- Condominium Act 1979
For other kinds of real estate, the Condominium Act 1979 permits foreigners to own a condominium, subject to qualifications under the Act, provided, that foreigners may not own more than 49% of the total area of the condominium.
The ownership right is regulated as a fundamental right under the Constitution of the Republic of Turkey. However, it has been also stated that the ownership right may be restricted by law for the public interest and the usage right of the property shall not be contrary to public interest.
Natural persons with foreign nationality, foreign legal entities and Turkish companies with foreign capital are defined as foreign persons. In this respect there are some restrictions for foreign persons who desire to buy real estate in Turkey.
- Natural persons with foreign nationality can purchase real estate property and acquire limited rights in rem subject to legal restrictions, bilateral international relationships and circumstances requiring action deemed necessary in the public interest. Foreign natural persons may own up to 30 hectares of property in total and may acquire a limited in rem right. By obtaining the permission of Council of Ministers, this amount may be raised to 60 hectares in maximum. Foreign natural persons can acquire property or a limited in rem right in a district/town up to 10% of the total area of the district/town. Also purchasing a property in military forbidden and security zones is not possible.
- Foreign legal entities established in a foreign country under their local laws can only own real estate property and limited rights in rem within the scope of special provisions of Turkish law, including the Petroleum Law, Tourism Incentive Law and Industrial Area Law. Legal entities other than foreign trading companies (foundations, associations, etc.) cannot acquire real estate and can not establish restricted right in rem.
- Turkish companies with foreign capital, in which persons with foreign nationality or foreign companies own at least 50% of the shares or have the right to appoint/dismiss persons with management rights, may acquire and use real estate property or limited rights in rem to carry out the activities stated in the companies’ articles of association, by getting the approval of the city’s Governorship where the real estate property is located. The same property rights apply where companies with foreign capital become direct/indirect shareholders of a company incorporated in Turkey, and own 50% or more of the company’s shares.
Additionally, if the foreign person (company or real person) acquires a land, a project shall be submitted to be developed on the land within two years to the Ministry of Environment and Urbanization. Otherwise the Ministry has to right to liquidate the real estate.
No, save in the case of minors and incapacitated persons. In the case of registered land, where the land is owned by multiple people or entities, the Land Registry will only register a maximum of four people or entities as the registered owners. Those registered owners will hold the legal title in the land on trust for all of the beneficial owners.
In general, there are very few restrictions on who can own real estate or interests therein.
The federal government (specifically the Committee on Foreign Investment in the United States ("CFIUS")) has the authority to review transactions (including real estate transactions) that could result in control of U.S. real estate by a foreign person. CFIUS has the ability to require that a transaction be cancelled, that a foreign person divest itself of real estate or other asset(s), or require that certain mitigation measures be adopted to limit foreign control of such real estate or other asset(s) if it determines that doing so is in the best interest of U.S. national security. The majority of U.S. real estate transactions do not require CFIUS filings. Some parties to a transaction, however, elect to make a voluntary filing, in order to receive comfort that CFIUS will not later require divestiture or the imposition of mitigation measures. In recent years, CFIUS' influence has increased and it has also reviewed and intervened in a larger percentage of transactions.
At the state level, most states have no additional restrictions, though there are a small number of states that restrict the right of a non-U.S. person to buy, own, and sell large parcels of land.
Please see our answer to question 4 for a complete list of the types of land title and their permissible holders.
With respect to foreign persons:
- For business purposes, foreign parties may only own real estate by establishing a type of Indonesian Limited Liability Company called a foreign investment (Penanaman Modal Asing – “PMA”) company.
- For residential purposes, foreign individuals resident in Indonesia (i.e. holding work permits) can own a residential home where the land in question has a HP (as defined below) title or a strata title apartment unit under HPSRS title (as defined below), subject to fulfilling certain requirements such as minimum sale value and maximum land size. In practice, however, since HPSRS titles are not yet fully implemented, it remains difficult for foreigners to own strata titles.
Natural persons with foreign nationality, foreign legal entities and Moroccan companies with foreign capital are defined as foreign persons. As a general rule, from a Moroccan law perspective, except in some specific business sectors such as agriculture, fishery, media, banking and insurance, there are no restrictions on foreign persons acquiring real estate, either directly or indirectly through the purchase of a company holding real estate assets.
From a real estate perspective, some lands are classified as agricultural lands. According to the provisions of the Dahir relating to the purchase of agricultural land in rural areas dated 23 April 1975, foreign individuals, or entities whose share capital is held at least in part by foreign entities, are not allowed to acquire agricultural lands for agricultural purposes and may only lease such lands for up to 99 years.
However, if the foreign investor plans to carry out a non-agricultural project on an agricultural land, such as an industrial or housing project, a specific temporary and final certificate of non-agricultural purpose shall have to be obtained from the administration that will allow the foreign entity to acquire the land.
The process for the issuance of such certificate which involves different authorities such as the local town planning agency, the Wilaya (regional government office), the Investment Regional Centre and other administrative bodies is often long and complex.