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Frequently Asked Questions

Transaction costs




How do I find roundtrip transaction costs for any one country?

The Global Property Guide provides transaction costs in two formats:


1. Transaction costs ‘typical case’.

Go to the country you are interested in. ‘Typical case’ transaction costs are visible on the data panel on the top right hand side of the Country Overview.

Sample:


For the ‘typical case’ the following assumptions are adopted:

  1. The property is purchased by a non-resident in the country where he/she is buying
  2. The property is worth US$250,000 (€250,000 for Europe)
  3. The property is paid in cash
  4. The property is a condominium located in a major city
  5. The property is not newly built
  6. The property is bought from an individual (not a developer or a corporation)

2. Transaction costs as a range.

Use the menu to navigate to the Buying Guide section of the country you are interested in.



Costs paid by buyers and sellers vary widely. Agents and lawyers costs are often negotiable. Purchasers of expensive properties often pay proportionately less registration fees than purchasers of new properties. The reasons for the variation between the high and the low end of the range are explained in detail in the footnotes.



How can I compare transaction costs across countries?

Go to the country your are interested in, or to the continent page, and click on the Regional Stats menu – ‘Buy/Sell Costs’



Why bother with transaction costs? Arent they more or less the same everywhere?


No, in fact these costs vary enormously across countries. In Russia and Bulgaria, transaction costs can reach around 25% of the property value for a typical transaction of a resale property (this includes VAT, because untypically, Bulgaria levies VAT on sale of old properties). On the other hand, property buyers will be relieved to know that transaction costs are very low in Estonia, Slovakia and Lithuania, typically below 4%. Transaction costs in the UK are near the bottom of the scale at around 5%.


An example of our data: European transaction costs




Sources: What are the sources of the Guides transaction costs data?

Our research is primarily conducted via the internet. We do a systematic search of the best property sites, government web sites, law sites, and all other sites where transaction costs are mentioned. We then sift through this data, comparing the various accounts, and attempting to judge which are the latest, most reliable breakdowns of the data. In addition we use inputs from government agencies and the World Bank Doing Business.



Can the transaction costs data sources be trusted?

Well, not 100%. We do not have the capacity to do original legal research, and in this area, it is often not in lawyers or realtors best interests to be particularly clear about the minutiae of charges. However, we do our very best to comb all available sources.


However we would be grateful to be told where we have made a mistake, or where charges have changed.


Some criticisms we receive about our transaction costs numbers, however stem from misconceptions. Particularly, charges faced by non-resident foreign buyers (which we cover) are sometimes different from those faced by residents, (which we do not cover).



Definition: What does the phrase roundtrip transaction cost mean?

It means the transaction total cost of buying and then re-selling a residential property, including notionally all costs except the sale price itself. It can be broken down into four major cost areas:


Registration costs are the fees and taxes incurred in registering the property with the competent land cadastre or registry. These include registration fees, stamp duties, and notary fees).


Real estate agent fees best capture various search costs. Real estate agent acts as a middleman in a property purchase, matching buyers with sellers, acting as intermediary in price negotiations. They typically assist buyers during the registration process.

Legal fees are paid to lawyers or to the conveyancer in the preparation of sales and purchase agreement. In some countries, the use of lawyers is mandatory. Lawyers are typically asked to ensure that there are no liens on the property. Legal fees are different from notary fees.


Sales and transfer taxes are imposed by local and national governments on the sale and purchase of real estate. They include Deed Taxes, Transfer Taxes and Value-added Tax (VAT).


Some other incidental costs such as survey fees, acquisition fee for tax number or residency permit or costs for setting up a company are not included in our calculation, for various reasons. Annual property taxes and capital gains taxes are also not included, although they are typically paid before the property is registered.



What assumptions does the Global Property Guide make in calculating transaction costs?

Our transaction costs figures reflect the purchase of old properties, not new (therefore in most cases VAT is not included).


Second, our numbers reflect foreigners’ costs, not locals’ (often very different).


Note that where foreigners are required to purchase property through companies, the cost of forming and maintaining a company is not included.




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