A conference was held at the Hôtel Fairmont on Wednesday, October 20. 

During the third breakfast conference of Monaco’s Young Economic Chamber, Alain Vivalda, President of the Monegasque Real Estate Chamber, and Stéphane Valeri, President of the National Council, addressed Bill 252, which concerns regulation of the property developer profession in the Principality.

This bill was already adopted by the National Council on May 10, but the Prince’s Government must vote on it no later than November 17.

Better regulation of the property developer profession

We don’t want opportunistic developers

150 real estate agencies in Monaco, 317 property developers in 2021, compared to about ten a decade ago, and 428 sales on average made each year. It was using these figures, “which speak for themselves and illustrate the current problem” that Alain Vivalda introduced his remarks.

For the President of the Monegasque Real Estate Chamber, the problem is not only the number of professionals that are authorised to practice in the Principality, but their quality and level of expertise: “We want the trade of property developer to become a professional one. We do not want bogus property developers who are only here for the purposes of speculation, and do nothing to improve the property.  We do not want opportunistic developers who take advantage of the system to legally profit from low capital gains.”

His comments were echoed by Stéphane Valeri: “It’s unhealthy to allow people not to pay property transfer taxes, not to employ estate agents, but to sell and resell un-renovated property at ever higher prices. “

This practice, founded solely on speculative bubbles, is harmful for the profession, for the sector and for the Principality, according to Alain Vivalda. However, the President of the Real Estate Chamber was keen to pay tribute to the property developers present in the room, who contribute to renewing the Monegasque real estate offer by carrying out work using local companies, thereby raising the standing of the building and avoiding protracted works or disrepair to common areas.

20 million euros lost per annum

Open only to Monegasques since January 2020, the profession of property developer must also be regulated to ensure fairness between professionals. Among the profession’s current advantages: VAT exemption (subject to conditions), exemption from transfer duties (if the property is resold before four years) and the absence of a required minimum value for the work.

The President of the National Council pointed out that there was a de facto legal vacuum, exploited by too many opportunists in order to profit from these advantages. According to Stéphane Valeri, the fiscal impact of these abuses is estimated at 20 million euros per annum. The National Council therefore voted a bill proposing changes to the tax regime for property developers.

If the bill is passed into law, professionals will have to renovate at least 5% of the property within five years. Those who do will pay 2.25% stamp duty, compared to 4.5% for those who do not comply with this provision. Property developers who use Monegasque contractors will also benefit from VAT exemption on any work they carry out on the next property they renovate.

The Prince’s Government must now decide. If the bill is approved, it should come into force by spring 2023 at the latest.

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