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In real estate, no buyer wants to pay more than what a property is worth, and certainly no seller wants to sell a property for less than its value. For that reason, it is vital to use the services of a real estate appraiser or sworn expert. A good real estate appraiser can determine almost the exact current market value of a property. The appraisal process covers a variety of factors, from value of transactions in the same area, to building amenities, to land value, to development cost, etc.
APPRAISAL FOR BEGINNERS: When available, comparison – taking into consideration current market value – is the easiest way to have a clear idea of how much a piece of property is worth. The market value of a property is the price that it would most likely fetch if it was put on sale in an open and competitive market. This method works for plots of land as well as it does for apartments, shops, warehouses, or buildings. Real estate experts say that the base their estimate on recent transactions concluded in the same area. Although this is the most widely used method of appraisal, it is not always the best reference, as no two buildings have the exact same features. There is also the rule of supply and demand to consider. A second approach to valuation is the investment method. To obtain for the investor a return in the form of a specified net income, an appraiser may adopt a simple mathematical formula. For example, an investor who requires an annual return of 15 percent on his capital may consider putting $300,000 into a shop. To meet his requirements, the net income should be $45,000 (15 percent of $300,000)/ the appraiser factors in the likelihood of receiving this rent when valuing the piece of property.
OTHER METHODS OF APPRAISAL: Another method of valuation is the residual approach, which is calculated based on a simple equation: the sale price of a completed building is equal to the cost of development plus a profit allowance. However, this method may not be as straightforward as it seems. To appraise the value of a plot of land, the appraiser gives an expert estimate of the value of the project that will be built on the plot; the appraiser then estimates the construction costs. The difference between the two figures is the residual for purchasing the land. Another approach is the business profit method. For example, if the owner of a service station decides to move or open another service station, and these two service stations have the same traffic, the same number of gasoline pumps, etc., then similar sales should generate similar profits. The appraisal price – to the buyer – of the new site is derived from this profit figure. Lastly there is the cost-of-replacement approach. Where a piece of land has been dedicated for a specific purpose, such as a town hall, church, school, or police station, the cost of providing the equivalent structure or service at a new location, should it become necessary to move, must be figured into appraisal price. When available, statistics and known costs are used in any appraisal process; otherwise, it is based on market assessments and appraiser’s assumptions.
THE EXPERT IS ON THE CASE: An appraiser’s first task is to study the assignment and collect the necessary information about the piece of property in question. The expert must obtain the property’s real estate certificate or ‘ifadah akariah’, and a document about its urban planning and exploitation status, or ‘itrifaq wa takhteet’. The next is to visit the site, examine the location, the size of the land, and the project. The appraiser also examines adjacent locations and collects other information about the piece of property and its neighborhood from the municipality or the local ‘mukhtar’. The process quickly takes the form of a police investigation. The expert must first prepare a field report, then, based on that report, a subsequent final report. The concluding report must include a preface that contains the objective of the assignment, a main section with all the collected and analyzed data, and a conclusion that sets forth the recommendation and estimates based on that analysis.
‘KHABEER MUHALLAF’: A real estate appraiser can sometimes be a sworn expert, or ‘khabeer muhallaf’ appointed by a Ministry of Justice decree, who works on assignments allotted by a judge. The term ‘khabeer muhallaf’ involves much more than pure real estate valuation. Courts often require the services and technical expertise of a sworn expert t help them reach appropriate and informed decisions when ruling in real estate cases. The job of sworn experts is not only to put a price on property but also to explain to the court the process that led to their conclusions. At the same time, sworn experts are free to market their services to the public.
REMUNERATION FOR APPRAISERS: A judge who requests the services of an appraiser defines in the ruling a lump sum for the expert’s services. This fee ranges usually between $150 and $2,000 depending on the estimated amount of work and number of hours involved. Developers usually pay a lump sum based on the expert’s experience and the difficulty of the assignment. For example, some real estate consultants, charge a minimum of $2,500 or 0.25 percent of the amount of their own price estimate. Generally, a lump sum of $150 is paid for the appraisal of an apartment, and a lump sum of around $200 is paid for the appraisal of a piece of land, provided no legal problems are associated with it. In cases where a legal study must be carried out due to seizure, renters’ rights, landfill, etc., the fee could climb to several thousand dollars. Get An Expert Opinion
In real estate, no buyer wants to pay more than what a property is worth, and certainly no seller wants to sell a property for less than its value. For that reason, it is vital to use the services of a real estate appraiser or sworn expert. A good real estate appraiser can determine almost the exact current market value of a property. The appraisal process covers a variety of factors, from value of transactions in the same area, to building amenities, to land value, to development cost, etc.
APPRAISAL FOR BEGINNERS: When available, comparison – taking into consideration current market value – is the easiest way to have a clear idea of how much a piece of property is worth. The market value of a property is the price that it would most likely fetch if it was put on sale in an open and competitive market. This method works for plots of land as well as it does for apartments, shops, warehouses, or buildings. Real estate experts say that the base their estimate on recent transactions concluded in the same area. Although this is the most widely used method of appraisal, it is not always the best reference, as no two buildings have the exact same features. There is also the rule of supply and demand to consider. A second approach to valuation is the investment method. To obtain for the investor a return in the form of a specified net income, an appraiser may adopt a simple mathematical formula. For example, an investor who requires an annual return of 15 percent on his capital may consider putting $300,000 into a shop. To meet his requirements, the net income should be $45,000 (15 percent of $300,000)/ the appraiser factors in the likelihood of receiving this rent when valuing the piece of property.
OTHER METHODS OF APPRAISAL: Another method of valuation is the residual approach, which is calculated based on a simple equation: the sale price of a completed building is equal to the cost of development plus a profit allowance. However, this method may not be as straightforward as it seems. To appraise the value of a plot of land, the appraiser gives an expert estimate of the value of the project that will be built on the plot; the appraiser then estimates the construction costs. The difference between the two figures is the residual for purchasing the land. Another approach is the business profit method. For example, if the owner of a service station decides to move or open another service station, and these two service stations have the same traffic, the same number of gasoline pumps, etc., then similar sales should generate similar profits. The appraisal price – to the buyer – of the new site is derived from this profit figure. Lastly there is the cost-of-replacement approach. Where a piece of land has been dedicated for a specific purpose, such as a town hall, church, school, or police station, the cost of providing the equivalent structure or service at a new location, should it become necessary to move, must be figured into appraisal price. When available, statistics and known costs are used in any appraisal process; otherwise, it is based on market assessments and appraiser’s assumptions.
THE EXPERT IS ON THE CASE: An appraiser’s first task is to study the assignment and collect the necessary information about the piece of property in question. The expert must obtain the property’s real estate certificate or ‘ifadah akariah’, and a document about its urban planning and exploitation status, or ‘itrifaq wa takhteet’. The next is to visit the site, examine the location, the size of the land, and the project. The appraiser also examines adjacent locations and collects other information about the piece of property and its neighborhood from the municipality or the local ‘mukhtar’. The process quickly takes the form of a police investigation. The expert must first prepare a field report, then, based on that report, a subsequent final report. The concluding report must include a preface that contains the objective of the assignment, a main section with all the collected and analyzed data, and a conclusion that sets forth the recommendation and estimates based on that analysis.
‘KHABEER MUHALLAF’: A real estate appraiser can sometimes be a sworn expert, or ‘khabeer muhallaf’ appointed by a Ministry of Justice decree, who works on assignments allotted by a judge. The term ‘khabeer muhallaf’ involves much more than pure real estate valuation. Courts often require the services and technical expertise of a sworn expert t help them reach appropriate and informed decisions when ruling in real estate cases. The job of sworn experts is not only to put a price on property but also to explain to the court the process that led to their conclusions. At the same time, sworn experts are free to market their services to the public.
REMUNERATION FOR APPRAISERS: A judge who requests the services of an appraiser defines in the ruling a lump sum for the expert’s services. This fee ranges usually between $150 and $2,000 depending on the estimated amount of work and number of hours involved. Developers usually pay a lump sum based on the expert’s experience and the difficulty of the assignment. For example, some real estate consultants, charge a minimum of $2,500 or 0.25 percent of the amount of their own price estimate. Generally, a lump sum of $150 is paid for the appraisal of an apartment, and a lump sum of around $200 is paid for the appraisal of a piece of land, provided no legal problems are associated with it. In cases where a legal study must be carried out due to seizure, renters’ rights, landfill, etc., the fee could climb to several thousand dollars. Walls Alone Do Not Measure Your House
What constitutes your house? Is it the usable interior space alone? What about balconies? And can you own common areas like the lobby and stairwell? Developers may give you the overall size of an apartment, but can you figure out exactly that that figure includes? Knowing the exact dimensions of your new apartment is more difficult than it might first appear. Obtaining a detailed blueprint of your apartment is the best way to know for sure, and even then, opinions differ.
MORE THAN INTERIOR SPACE: The Cadastre Department in each administrative region provides detailed blueprints of a house to a scale of 1/200. A copy of an apartment’s blueprints costs between LL 6,000 and LL 25,000. Plans held by the municipalities and urban planning authorities are drawn to a scale of 1/50 and, consequently, are much more accurate. Variations that result from comparing the two scales can change the official size of property by several meters. The Cadastre Department measures only the area of an apartment, while urban planning authorities also include common areas, such as the stairwell in the block. This means that while the Cadastre Department may define the area of an apartment as 150 square meters, urban planning may raise this figure by including common areas. They may include shafts for ventilation and cables, a generator room, elevators, and the main entrance hall. Flower boxes outside a building, as well as any other areas considered common to all properties, are divided up and added to the size of each apartment.
COMMON AREAS: Some real estate professionals say that adding common areas to the size of a property makes sense because these areas are used by all residents and they add to the value of the property. There is disagreement even among professionals about the status of common areas. Some take the view that a homebuyer purchases whatever is part of an apartment, therefore this includes common areas. However, the General Directorate of Urban Planning’s stance is different. It maintains that since common areas cannot be bought or sold, it follows that they cannot be considered as part of an apartment. Regardless of these arguments, including common areas remains an ordinary practice among most developers. The question is how to measure and price them. One practice is that the buyer pays for common areas, provided these do not exceed an average of 20 percent of the area of the apartment. In such cases, the buyer should pay only one-third of the price per square meter for the additional area.
THE MARKETING APPROACH: For many developers, offering a package deal is one way to avoid the nuisance of calculating square meters. For example, instead of pricing the bedroom at $700 per square meter, the balcony at $500, and the stairs at $400, a lump sum for the whole property replaces individual prices for areas. When this is the case, a project that offers a garden, parking lot, cellar, or other additional features, is quoted at a slightly higher price per square meter overall. The difference depends on the marketing approach of the developer. The price of an apartment that includes a common area can be $800 per square meter, whereas the same apartment can be priced at $1,000 per square meter without the common areas. One can argue that nobody can buy an apartment without common areas. The obvious answer to this is that common areas are included in the total size of an apartment for sale.
PROCEEDING BY ZONES: Zoning is the procedure by which authorities give permission for constructing the functional areas on a plot: what proportion of the land can be used for construction, what maximum area of total exploitation is permitted. For this, coefficients have been set. However, not all of Lebanon is zoned. Moreover, two plots of land in different areas carrying the same zoning nomenclature may actually belong to different zoning categories, as each local authority defines and names its zoning divisions differently.
THE LIMIT OF CONSTRUCTION: To understand the limits of construction, two ratios need to be defined. The Ground Exploitation Coefficient (GEC) is the maximum percentage footprint of a plot of land that a building can occupy. For example a 1,000-square-meter plot with a GEC of 30 percent means that the base of a building cannot exceed 300 square meters. The GEC can range from five percent in agricultural areas to 100 percent in Beirut’s zone ‘A’. The total Exploitation Coefficient (TEC) is a multiple of the whole plot that defines the maximum construction area on the site. Thus, a 1,000-square-meter plot with a TEC of two allows a maximum construction area of 2,000 square meters. That maximum does not include underground surface areas (which is why there are so many deep holes in Beirut), balconies, and floors with pillars only. Furthermore, dividing the TEC by GEC determines the number of floors that can be built. That means that a building on a 1,000-square-meter plot with a TEC of 3.5 and a GEC of 50 percent can have a maximum of seven floors. If the builders want to increase the number of floors to be built, they must reduce the GEC factor, which means using less land. However, the number of total floor is also limited by law in every zone.
MAKING SENSE OF URBAN PLANNING: Some areas of Lebanon are classified as zones and some are not. The only way to find out about a particular plot is to check with the urban planning office in the respective district. The General Directorate of Urban Planning, a public sector institution within the Ministry of Public Works, suggests that all areas that have not been classified in Lebanon must adhere to a unified building code. That code stipulates the maximum GEC of any non-classified area at 30 percent and its corresponding TEC at 90 percent. However, most urban or semi-urban areas in the country have been granted specific, larger, coefficient rules. Beirut is the most visible example where zoning limitations have been greatly relaxed, with TEC factors often exceeding a multiple of two. In the Solidere area, the TEC multiple can go up to a factor of 12 for certain lots. While nomenclature differs from one jurisdiction to another, it is common practice to designate areas of heavy density as ‘A’, medium density as ‘B’, and low density as ‘C’. Other zones include those that contain villas, industry, commerce, agriculture, forests, historic sites, tourist amenities, or other unspecified elements.
HOW TO CLASSIFY A NEW ZONE: Establishing a new zone requires patience. The factors taken into consideration include the plans for the area, the relationship between population centers and their surrounding environmental concerns, and local agricultural activities. The new zoning will specify the intended use of the land, its boundaries, and exactly what activities will be allowed on it. The specifications for each zone will include a GEC, a TEC, and the minimum mandatory construction-fee area between the boundaries of the plot and streets or adjacent land. The specifications will also include the maximum number of floors permitted and the total height of buildings. Once proposed, the municipality must approve a zoning application within one month. If the municipality fails to do so, the zone is considered to be automatically approved. The file then goes to the directorate, which studies the case for six months and transfers it to the ministry of Public Works, which in turn seeks the approval of the Council of Ministers. When it classifies a zone, the Directorate determines the area classified, allocates a zone number, specifies the type of occupancy (industrial, commercial...) and delineates construction limits such as the GEC, the TEC, the maximum number f floors, and so on. Walls Alone Do Not Measure Your House
What constitutes your house? Is it the usable interior space alone? What about balconies? And can you own common areas like the lobby and stairwell? Developers may give you the overall size of an apartment, but can you figure out exactly that that figure includes? Knowing the exact dimensions of your new apartment is more difficult than it might first appear. Obtaining a detailed blueprint of your apartment is the best way to know for sure, and even then, opinions differ.
MORE THAN INTERIOR SPACE: The Cadastre Department in each administrative region provides detailed blueprints of a house to a scale of 1/200. A copy of an apartment’s blueprints costs between LL 6,000 and LL 25,000. Plans held by the municipalities and urban planning authorities are drawn to a scale of 1/50 and, consequently, are much more accurate. Variations that result from comparing the two scales can change the official size of property by several meters. The Cadastre Department measures only the area of an apartment, while urban planning authorities also include common areas, such as the stairwell in the block. This means that while the Cadastre Department may define the area of an apartment as 150 square meters, urban planning may raise this figure by including common areas. They may include shafts for ventilation and cables, a generator room, elevators, and the main entrance hall. Flower boxes outside a building, as well as any other areas considered common to all properties, are divided up and added to the size of each apartment.
COMMON AREAS: Some real estate professionals say that adding common areas to the size of a property makes sense because these areas are used by all residents and they add to the value of the property. There is disagreement even among professionals about the status of common areas. Some take the view that a homebuyer purchases whatever is part of an apartment, therefore this includes common areas. However, the General Directorate of Urban Planning’s stance is different. It maintains that since common areas cannot be bought or sold, it follows that they cannot be considered as part of an apartment. Regardless of these arguments, including common areas remains an ordinary practice among most developers. The question is how to measure and price them. One practice is that the buyer pays for common areas, provided these do not exceed an average of 20 percent of the area of the apartment. In such cases, the buyer should pay only one-third of the price per square meter for the additional area.
THE MARKETING APPROACH: For many developers, offering a package deal is one way to avoid the nuisance of calculating square meters. For example, instead of pricing the bedroom at $700 per square meter, the balcony at $500, and the stairs at $400, a lump sum for the whole property replaces individual prices for areas. When this is the case, a project that offers a garden, parking lot, cellar, or other additional features, is quoted at a slightly higher price per square meter overall. The difference depends on the marketing approach of the developer. The price of an apartment that includes a common area can be $800 per square meter, whereas the same apartment can be priced at $1,000 per square meter without the common areas. One can argue that nobody can buy an apartment without common areas. The obvious answer to this is that common areas are included in the total size of an apartment for sale.
PROCEEDING BY ZONES: Zoning is the procedure by which authorities give permission for constructing the functional areas on a plot: what proportion of the land can be used for construction, what maximum area of total exploitation is permitted. For this, coefficients have been set. However, not all of Lebanon is zoned. Moreover, two plots of land in different areas carrying the same zoning nomenclature may actually belong to different zoning categories, as each local authority defines and names its zoning divisions differently.
THE LIMIT OF CONSTRUCTION: To understand the limits of construction, two ratios need to be defined. The Ground Exploitation Coefficient (GEC) is the maximum percentage footprint of a plot of land that a building can occupy. For example a 1,000-square-meter plot with a GEC of 30 percent means that the base of a building cannot exceed 300 square meters. The GEC can range from five percent in agricultural areas to 100 percent in Beirut’s zone ‘A’. The total Exploitation Coefficient (TEC) is a multiple of the whole plot that defines the maximum construction area on the site. Thus, a 1,000-square-meter plot with a TEC of two allows a maximum construction area of 2,000 square meters. That maximum does not include underground surface areas (which is why there are so many deep holes in Beirut), balconies, and floors with pillars only. Furthermore, dividing the TEC by GEC determines the number of floors that can be built. That means that a building on a 1,000-square-meter plot with a TEC of 3.5 and a GEC of 50 percent can have a maximum of seven floors. If the builders want to increase the number of floors to be built, they must reduce the GEC factor, which means using less land. However, the number of total floor is also limited by law in every zone.
MAKING SENSE OF URBAN PLANNING: Some areas of Lebanon are classified as zones and some are not. The only way to find out about a particular plot is to check with the urban planning office in the respective district. The General Directorate of Urban Planning, a public sector institution within the Ministry of Public Works, suggests that all areas that have not been classified in Lebanon must adhere to a unified building code. That code stipulates the maximum GEC of any non-classified area at 30 percent and its corresponding TEC at 90 percent. However, most urban or semi-urban areas in the country have been granted specific, larger, coefficient rules. Beirut is the most visible example where zoning limitations have been greatly relaxed, with TEC factors often exceeding a multiple of two. In the Solidere area, the TEC multiple can go up to a factor of 12 for certain lots. While nomenclature differs from one jurisdiction to another, it is common practice to designate areas of heavy density as ‘A’, medium density as ‘B’, and low density as ‘C’. Other zones include those that contain villas, industry, commerce, agriculture, forests, historic sites, tourist amenities, or other unspecified elements.
HOW TO CLASSIFY A NEW ZONE: Establishing a new zone requires patience. The factors taken into consideration include the plans for the area, the relationship between population centers and their surrounding environmental concerns, and local agricultural activities. The new zoning will specify the intended use of the land, its boundaries, and exactly what activities will be allowed on it. The specifications for each zone will include a GEC, a TEC, and the minimum mandatory construction-fee area between the boundaries of the plot and streets or adjacent land. The specifications will also include the maximum number of floors permitted and the total height of buildings. Once proposed, the municipality must approve a zoning application within one month. If the municipality fails to do so, the zone is considered to be automatically approved. The file then goes to the directorate, which studies the case for six months and transfers it to the ministry of Public Works, which in turn seeks the approval of the Council of Ministers. When it classifies a zone, the Directorate determines the area classified, allocates a zone number, specifies the type of occupancy (industrial, commercial...) and delineates construction limits such as the GEC, the TEC, the maximum number f floors, and so on.
Buyer's Checklist
Commercial Buyer's Checklist
Step 1: Know why you want to buy: If your strategy is geared towards selling your business, then it makes sense to effectively ‘pay yourself rent’ rather than an absentee landlord. As soon you have the capital for the down payment, you should consider turning that rental payment into a mortgage payment that will give you a return – just like buying a home instead of renting an apartment.
Step 2: Learn about the market you’ll be buying in: Use a knowledgeable commercial realtor to find your new property. If you’re like most business owners, you don’t have time to attend endless viewings. A competent realtor can save you time plus provide you with comparable demographics, plans for growth and new developments in the area.
Step 3: Consider buying/building more square footage than you need right Now: You can always grow into it, but this will also allow you to achieve some rental income until that time.
Step 4: Research: Check the zoning and land use restrictions for the property in question. There can be restrictions on certain types of businesses, which is where land use laws become a deciding factor on your area of choice.
Step 5: Ask about the parking situation: Some commercial buildings offer parking and others share common parking with other businesses. Inadequate parking can limit your potential goals.
Step 6: Consider low down payment and longer-term loans: This preserves your capital for better utilization, keeps your cash flow high and allows you to redeploy ‘capital savings’ into other profit-generating business areas. Be sure you understand all of the economics.
Step 7: Account for maintenance costs: Refurbishing a commercial building can be an expensive exercise. Include costs of air conditioning and other refits into your budget.
Step 8: Consider buying tenanted property: Cut down on the risk of void periods by buying a property with the tenant already secured.
Step 9: Maximize viewing opportunities: Contact your designated consultant to arrange as many viewings as possible with the owners of the properties you are interested in.
Step 10: Agreeing to buy: Once you have decided on your property of choice,a sale and purchase agreement will be drawn up confirming the agreed price and your solicitor's details. Once the agreement is finalized your deposit shall be passed onto the owner or landlord to secure the property.
Step 11: Transfer of ownership title: The final stage of the commercial buying process is the transfer of ownership and title from the seller to the buyer. There is usually a transfer fee involved and this can vary from developer to developer. Commercial Buyer's Checklist
Step 1: Know why you want to buy: If your strategy is geared towards selling your business, then it makes sense to effectively ‘pay yourself rent’ rather than an absentee landlord. As soon you have the capital for the down payment, you should consider turning that rental payment into a mortgage payment that will give you a return – just like buying a home instead of renting an apartment.
Step 2: Learn about the market you’ll be buying in: Use a knowledgeable commercial realtor to find your new property. If you’re like most business owners, you don’t have time to attend endless viewings. A competent realtor can save you time plus provide you with comparable demographics, plans for growth and new developments in the area.
Step 3: Consider buying/building more square footage than you need right Now: You can always grow into it, but this will also allow you to achieve some rental income until that time.
Step 4: Research: Check the zoning and land use restrictions for the property in question. There can be restrictions on certain types of businesses, which is where land use laws become a deciding factor on your area of choice.
Step 5: Ask about the parking situation: Some commercial buildings offer parking and others share common parking with other businesses. Inadequate parking can limit your potential goals.
Step 6: Consider low down payment and longer-term loans: This preserves your capital for better utilization, keeps your cash flow high and allows you to redeploy ‘capital savings’ into other profit-generating business areas. Be sure you understand all of the economics.
Step 7: Account for maintenance costs: Refurbishing a commercial building can be an expensive exercise. Include costs of air conditioning and other refits into your budget.
Step 8: Consider buying tenanted property: Cut down on the risk of void periods by buying a property with the tenant already secured.
Step 9: Maximize viewing opportunities: Contact your designated consultant to arrange as many viewings as possible with the owners of the properties you are interested in.
Step 10: Agreeing to buy: Once you have decided on your property of choice,a sale and purchase agreement will be drawn up confirming the agreed price and your solicitor's details. Once the agreement is finalized your deposit shall be passed onto the owner or landlord to secure the property.
Step 11: Transfer of ownership title: The final stage of the commercial buying process is the transfer of ownership and title from the seller to the buyer. There is usually a transfer fee involved and this can vary from developer to developer. Residential Buyer's Checklist
Step 1: Find out how much you can borrow: If you’re looking at setting up a mortgage on your property, you need to know what value you qualify for. This is dependent on your income and the type of mortgage you want.
Step 2: Confirm why you want to buy: Are you looking to buy to rent as an investment or secure long-term capital appreciation as an end user? Figuring this out will help you select the type of property you wish to buy along with choosing the right location.
Step 3: Know all of the fees: Ask your consultant about all the fees and charges applicable additional to the basic property price advertised.
Step 4: Carry out a price check: Conduct some research on prices for comparable properties in the area you’re looking to purchase at so that you don't pay over the odds.
Step 5: Make a list of what property features are important for you: It’s rare to find perfection, so keep to your list and don’t lose focus of what’s important. Bring a notepad to each viewing, and take photos for reference. Make a snag list to ensure all issues are addressed by the seller.
Step 6: Make an offer: Once you have identified a property you’re interested in, submit your offer to the consultant who will then communicate your offer to the seller.
Step 7: Offer agreed: If your offer is accepted, you’ll need to submit a deposit check and copy of your passport / ID to your agent to start drawing up the buying process.
Step 8: Understand the terms: Ensure you understand the commitments you're taking on prior to signing.
Step 9: Register the Property: Ask your consultant when you can expect to receive the full title deed.
Step 10: Get legal advice: At the stage of drafting the Sales & Purchase Agreement (SPA), consult a lawyer.
Step 11: Payment deadlines: Be sure you can commit to the transfer date and final payment before you make a deposit. Residential Buyer's Checklist
Step 1: Find out how much you can borrow: If you’re looking at setting up a mortgage on your property, you need to know what value you qualify for. This is dependent on your income and the type of mortgage you want.
Step 2: Confirm why you want to buy: Are you looking to buy to rent as an investment or secure long-term capital appreciation as an end user? Figuring this out will help you select the type of property you wish to buy along with choosing the right location.
Step 3: Know all of the fees: Ask your consultant about all the fees and charges applicable additional to the basic property price advertised.
Step 4: Carry out a price check: Conduct some research on prices for comparable properties in the area you’re looking to purchase at so that you don't pay over the odds.
Step 5: Make a list of what property features are important for you: It’s rare to find perfection, so keep to your list and don’t lose focus of what’s important. Bring a notepad to each viewing, and take photos for reference. Make a snag list to ensure all issues are addressed by the seller.
Step 6: Make an offer: Once you have identified a property you’re interested in, submit your offer to the consultant who will then communicate your offer to the seller.
Step 7: Offer agreed: If your offer is accepted, you’ll need to submit a deposit check and copy of your passport / ID to your agent to start drawing up the buying process.
Step 8: Understand the terms: Ensure you understand the commitments you're taking on prior to signing.
Step 9: Register the Property: Ask your consultant when you can expect to receive the full title deed.
Step 10: Get legal advice: At the stage of drafting the Sales & Purchase Agreement (SPA), consult a lawyer.
Step 11: Payment deadlines: Be sure you can commit to the transfer date and final payment before you make a deposit. Avoiding the first-time buyer blues
First time home buyers need to do their homework. They need to know their needs, what they want, and learn more about the process of buying a home. For many this decision is the biggest investment they will ever make. It pays to be in the know about the market, to know what is available, what to watch out for, what legal steps need to be taken, and what pitfalls to avoid.
ASKING THE RIGHT QUESTIONS Real estate agents ask first-time buyers about their preferences for a home, based on the following four factors: Location (for example whether it is near to your workplace); size (100 square meters, 15- square meters, 200 square meters, or 400 square meters); amenities (parking, a pool); its present state (condition if used, off plan, or newly built). These are some of the questions that buyers should ask themselves before they even start the search:
Brokers and developers almost always expect first-time home-buyers to be a little unrealistic. With a budget of $400,000 they might ask a broker to find them a 400 square meter house in Ramlet el Baida or the Sursock district. This is a triumph of optimism over reality, as prices in these areas start at no less than $4,000 to $5,000 per square meter. Prices of apartments on the seafront of Ramlet el Baida, hence with an unobstructed view f the sea, start at a minimum of $8,000 per square meter.
THE RIGHT SIZE, FINISHING, AND BUDGET According to developers, there is simple, average, deluxe, and super deluxe home. A home is considered simple when it is small, and has cheap features; for example, the floor is not paved with ceramic tiles, the doors are not made of expensive wood, there is no heating system, no A/C, and sometimes no elevator, or locally-made lifts are used. These kinds of houses usually come in sizes of between 100 and 130 square meters. The average home has better features: the elevator is of foreign origin, aluminum is used for the balconies and the windows, floors are ceramic, and the paint work has a better finish. Location, of course, also pays a part but it is obvious that expensively- finished houses are not usually constructed according to the neighborhood in which they are located. When developers intend to construct they make an economic assessment of the area. For example, in Kafarhabab, you can easily find big apartments with special features: the heating system and A/C are obligatory, the ceramic is thicker, the doors are made of oak, and the paint is top quality. Areas like Adma, Ramlet el Baida, or Ras Beirut follow a different pattern, with prices set according to the features and amenities. However, in this case, the location is more important. If the apartments do not have a sea view then they are not considered super deluxe and their prices reflect this. When the apartment has a sea view and there is a guarantee that this view will never be blocked, then theses homes have no fixed market price; they are sold according to supply and demand.
LOCATION MAKES ALL THE DEFFERENCE Your first goal is to find a suburb or neighborhood what offers homes that meet your needs, at a price you can afford. A good location is one close to work, good schools, shops, restaurants, and public transportation. Some brokers point out that proximity to place of work and children’s school is more important to some buyers than budget. This is why, they say, home-buyers are ‘invading’ Beirut regardless of their spending limit. On the other hand there are, according to brokers, a significant number of people who take into account social, cultural, partisan, and family consideration. Homes may be found by simply asking around in a chosen area. Parents, friends, and the developers themselves may play a much more important role here.
CHECK FOR HIDDEN DEFECTS If on the first visit the house appears to meet your needs, and feels like it could be home, and then arrange a second visit. This is even more important because it is then that you can begin checking around for details that may not have been obvious at the initial inspection. Given the large size of the financial commitment in buying a house, it is unwise not to have the prospective home professionally inspected before signing any deal. Property defects usually come in two general categories: Obvious and hidden. Anybody can see obvious defects. Hidden defects need an expert to detect. Sometimes brokers may suggest that, if you want to avoid the expense of paying for an expert, you should check with neighbors or investigate the reputation of the developer. As for obvious defects, even an amateur can check the water faucets to see whether they leak. Flipping light switches on and off and flushing the toilets to find out whether they properly are easy, but effective, tests. Has the tiling been done so that it is even and well-finished? There may be cracks on the property’s interior walls, exterior walls, and floors. Here an amateur could easily come to the wrong conclusion. Some cracks are superficial, and easily fixed. Others may indicate serious flaws. For moisture problems look for water stains on the ceiling, walls, and the floors. All doors and windows should open and close easily, yet fit snugly so that wind and rain are kept out. Don’t forget unevenness: floors shouldn’t slope, and walls shouldn’t swell.
JUMPING THROUGH LEGAL HOOPS It is not enough to check the walls and plumbing. There are legal aspects also to be checked before finalizing any deal. First, you should ask an engineer to visit the relevant Real Estate Registry and look for the Real Estate Journal to check for compliance with safety standards in the construction, and if there is any claim or lawsuit regarding the building. The legal term for such a claim is ‘ishara’. The second step is to pay a visit to the Ministry of Finance and to the Registry of Topography. At the Ministry of Finance, you should obtain the rental evaluation (‘qima taajiriya’) of the apartment that you intend to buy, because this document will be requested when you register you house, as taxes are decided based on this evaluation. This document is drawn up after a building is partitioned into apartments; in other words, after the ifraz has been done. The ministry evaluates the taxes payable on an apartment according to its rental assessment for one year. From the Registry of Topography, you should acquire a map for the plot and the plan of the construction (especially to check whether the zoning standards are respected and the plot has no conflicts with adjacent plots). The area of the apartment with respect to the plan is called ‘ifadat kail’. These two documents will show whether the developer has committed any acts that contradict the construction permit. The owner should provide the ownership deed (‘sanad melkieh’). However, one of the most important legal documents is the ‘irtifaq wa takhtit’, which is essential to check whether the government has planned any future project that might affect the building in which you intend to buy your new apartment. This document is obtained at the Federation of Municipalities in each district. A six-lane highway outside the living room window may be the noisiest neighbor ever.
IT’S THE RIGHT TIME TO BUY Developers and brokers agree that now is a good time to buy a home because banks are currently giving home loans with easier terms to those who have a steady income. Interest rates have deceased noticeably over the past few months, and banks are competing over acquiring new housing loans by relaxing their requirements and facilitating and speeding up the application and approval processes. The Public Institution for Housing and the Housing Bank are offering more lenient loans, and the Central Bank is subsidizing a new loan program. Avoiding the first-time buyer blues
First time home buyers need to do their homework. They need to know their needs, what they want, and learn more about the process of buying a home. For many this decision is the biggest investment they will ever make. It pays to be in the know about the market, to know what is available, what to watch out for, what legal steps need to be taken, and what pitfalls to avoid.
ASKING THE RIGHT QUESTIONS Real estate agents ask first-time buyers about their preferences for a home, based on the following four factors: Location (for example whether it is near to your workplace); size (100 square meters, 15- square meters, 200 square meters, or 400 square meters); amenities (parking, a pool); its present state (condition if used, off plan, or newly built). These are some of the questions that buyers should ask themselves before they even start the search:
Brokers and developers almost always expect first-time home-buyers to be a little unrealistic. With a budget of $400,000 they might ask a broker to find them a 400 square meter house in Ramlet el Baida or the Sursock district. This is a triumph of optimism over reality, as prices in these areas start at no less than $4,000 to $5,000 per square meter. Prices of apartments on the seafront of Ramlet el Baida, hence with an unobstructed view f the sea, start at a minimum of $8,000 per square meter.
THE RIGHT SIZE, FINISHING, AND BUDGET According to developers, there is simple, average, deluxe, and super deluxe home. A home is considered simple when it is small, and has cheap features; for example, the floor is not paved with ceramic tiles, the doors are not made of expensive wood, there is no heating system, no A/C, and sometimes no elevator, or locally-made lifts are used. These kinds of houses usually come in sizes of between 100 and 130 square meters. The average home has better features: the elevator is of foreign origin, aluminum is used for the balconies and the windows, floors are ceramic, and the paint work has a better finish. Location, of course, also pays a part but it is obvious that expensively- finished houses are not usually constructed according to the neighborhood in which they are located. When developers intend to construct they make an economic assessment of the area. For example, in Kafarhabab, you can easily find big apartments with special features: the heating system and A/C are obligatory, the ceramic is thicker, the doors are made of oak, and the paint is top quality. Areas like Adma, Ramlet el Baida, or Ras Beirut follow a different pattern, with prices set according to the features and amenities. However, in this case, the location is more important. If the apartments do not have a sea view then they are not considered super deluxe and their prices reflect this. When the apartment has a sea view and there is a guarantee that this view will never be blocked, then theses homes have no fixed market price; they are sold according to supply and demand.
LOCATION MAKES ALL THE DEFFERENCE Your first goal is to find a suburb or neighborhood what offers homes that meet your needs, at a price you can afford. A good location is one close to work, good schools, shops, restaurants, and public transportation. Some brokers point out that proximity to place of work and children’s school is more important to some buyers than budget. This is why, they say, home-buyers are ‘invading’ Beirut regardless of their spending limit. On the other hand there are, according to brokers, a significant number of people who take into account social, cultural, partisan, and family consideration. Homes may be found by simply asking around in a chosen area. Parents, friends, and the developers themselves may play a much more important role here.
CHECK FOR HIDDEN DEFECTS If on the first visit the house appears to meet your needs, and feels like it could be home, and then arrange a second visit. This is even more important because it is then that you can begin checking around for details that may not have been obvious at the initial inspection. Given the large size of the financial commitment in buying a house, it is unwise not to have the prospective home professionally inspected before signing any deal. Property defects usually come in two general categories: Obvious and hidden. Anybody can see obvious defects. Hidden defects need an expert to detect. Sometimes brokers may suggest that, if you want to avoid the expense of paying for an expert, you should check with neighbors or investigate the reputation of the developer. As for obvious defects, even an amateur can check the water faucets to see whether they leak. Flipping light switches on and off and flushing the toilets to find out whether they properly are easy, but effective, tests. Has the tiling been done so that it is even and well-finished? There may be cracks on the property’s interior walls, exterior walls, and floors. Here an amateur could easily come to the wrong conclusion. Some cracks are superficial, and easily fixed. Others may indicate serious flaws. For moisture problems look for water stains on the ceiling, walls, and the floors. All doors and windows should open and close easily, yet fit snugly so that wind and rain are kept out. Don’t forget unevenness: floors shouldn’t slope, and walls shouldn’t swell.
JUMPING THROUGH LEGAL HOOPS It is not enough to check the walls and plumbing. There are legal aspects also to be checked before finalizing any deal. First, you should ask an engineer to visit the relevant Real Estate Registry and look for the Real Estate Journal to check for compliance with safety standards in the construction, and if there is any claim or lawsuit regarding the building. The legal term for such a claim is ‘ishara’. The second step is to pay a visit to the Ministry of Finance and to the Registry of Topography. At the Ministry of Finance, you should obtain the rental evaluation (‘qima taajiriya’) of the apartment that you intend to buy, because this document will be requested when you register you house, as taxes are decided based on this evaluation. This document is drawn up after a building is partitioned into apartments; in other words, after the ifraz has been done. The ministry evaluates the taxes payable on an apartment according to its rental assessment for one year. From the Registry of Topography, you should acquire a map for the plot and the plan of the construction (especially to check whether the zoning standards are respected and the plot has no conflicts with adjacent plots). The area of the apartment with respect to the plan is called ‘ifadat kail’. These two documents will show whether the developer has committed any acts that contradict the construction permit. The owner should provide the ownership deed (‘sanad melkieh’). However, one of the most important legal documents is the ‘irtifaq wa takhtit’, which is essential to check whether the government has planned any future project that might affect the building in which you intend to buy your new apartment. This document is obtained at the Federation of Municipalities in each district. A six-lane highway outside the living room window may be the noisiest neighbor ever.
IT’S THE RIGHT TIME TO BUY Developers and brokers agree that now is a good time to buy a home because banks are currently giving home loans with easier terms to those who have a steady income. Interest rates have deceased noticeably over the past few months, and banks are competing over acquiring new housing loans by relaxing their requirements and facilitating and speeding up the application and approval processes. The Public Institution for Housing and the Housing Bank are offering more lenient loans, and the Central Bank is subsidizing a new loan program.
Community Services
Fostering Community Life
In our modern society, tenants’ committees are replacing town halls and village squares where neighbors used to meet and discuss common issues. A tenants’ committee can be a blessing or a curse, depending on the level of organization and the good intentions of its members. Property owners in an apartment building or residential development elect a tenant’s committee to enforce the property’s regulations. The committee collects payments from residents to maintain or upgrade common areas. Grievances and disputes between tenants are also brought up in committee meetings. If things run smoothly, the president and members of a committee may maintain their positive for an unlimited number of years. On the other hand, if tenants are unhappy, their in-fighting occurs and they could end up in court.
WHEN TENANTS GET ORGANIZED: The real estate contract that is signed between a buyer and a seller includes a clause that binds the new resident to the articles of the building’s ownership regulations. The enforcement of these regulations is overseen by a tenants’ committee, which is established according to those same regulations. The main purpose of this body is to bring together the residents of a building to discuss common issues, to organize and fund maintenance, and to resolve any disputes. The committee handles matters such as lighting in the common areas, use of backup generators, gardening, maintenance, and cleaning, for the sake of keeping the building I good condition.
AN ELECTED REPRESENTATIVE BODY: The holder of the biggest number of shares in the block, whose identity is defined in the records of ownership regulations, is entitled to invite the other shareholders to the first general meeting, held for the main purpose of electing a president and members of the committee. Very often, the developer will take the initiative in helping to form the first tenants’ committee. Some articles concerning this process stipulate that the meeting be held on the premises of the project and that notification be sent ten days before the specified date. The identity if the newly formed committee and its president may be registered at the Property Department, which is part of the property Court, to give it legal status. This costs around LL 30,000 per signature per owner, and provides the committee with the right to act on behalf of all the other residents, or take legal action against an individual resident if the need arises. In practice, this step is very often ignored.
A FAIR SHARE OF THE COST: The contribution made by each tenant for the building’s general maintenance expenses normally depends on the nature of the expense and the percentage of shares specified for each unit in the ownership regulations. Sometimes, only one owner benefits from an item expenditure. In such a case, the ownership regulations may specify that other owners need not share the cost. Lower floors may have fewer shares than those at the top and, consequently, may pay a smaller percentage of shared expenses. This is justified, for example, by saying that a ground-floor owner makes little or no use of the elevator. However, this is not necessarily the situation in every case. For the sake of simplifying this process, the trend is increasingly towards dividing shares equally along all owners. The tenants’ committee of one project in Deek El Mehdi uses mathematical formulas to determine communal expenses proportionally. In block C of that project, the total expenses is said to be the equivalent of 1,000 units. Eight apartment owners are each responsible for 111 of those units. The remaining 112 units are held by the owner of a warehouse. In block D, a different set of calculations has been made to apportion responsibility for maintenance and repairs. Here, the same nominal 1,000 units are divided among the tenants. The owner of the top floor assumes responsibility for 153 units, and all apartments in the lower floors are responsible for the rest in equal measures.
EASY MONTHLY PAYMENTS: The president of a tenants’ committee may levy fixed regular payments in advance to cover general or emergency expenses, provided that the ownership regulations permit such measures. This saves him the trouble of perpetually chasing after the owners to ask for payments. The ownership regulation of a building in Antelias states that the head go the committee is entitled to hold only a certain sum of cash – usually specified by the committee. The remaining amount is collected and deposited in a bank account under the committee’s name. The building’s ownership regulation, or the committee itself, will specify the number of signatures needed to withdraw money from the account. The amount each tenant pays per month varies depending on the cost of regular expenses and the number of residents in the building. 12 owners of one project in Jal EL Dib each pay $20 per month to cover the cost of electricity in the corridors, running the elevators, general maintenance, etc. the same services cost each of the ten residents of a Zalka project $50 per month, although they obtain a watchman and a garden as additional services.
AGREEING OVER MONEY MATTERS: Goodwill and neighborly love often fade when financial issues get in the way. Money is one of the basic factors that generate or resolve disputes. In one building, the cost of installing a door for the parking area was set at $1,100. This means that each resident of the 22 units would have to pay $50. For one of the residents, this was too big a burden while, on the other hand, her neighbor asked for a more expensive door with remote control. Yet another resident considered $1,100 too expensive claiming that a door should not cost more than $800. So what happened in the end? First, the remote control suggestion was not even considered. The resident who mentioned the $800 ‘estimate’ failed to follow up and provide evidence of such a price. To date, the question remains in limbo. What is certain is that if there was ever going to be a garage door, no one save the residents themselves would pay for it. In a different example, each of the ten residents of another building in Dhour Zalka agreed without a single murmur of protest to share the $2,000 it cost to landscape a garden around their building. In yet another building, three of the nine residents are asking for a watchman, three more are opposed to the idea, and the remaining three appear not to care because they are not living in their apartments. Every time the first group hires someone, the second group fires him. One member of the third undecided group jokingly remarked that the building seemed to remain intact without a watchman.
TAKING LEGAL ACTION: Sometimes goodwill performs a complete disappearing act when an apparently unsolvable problem arises, such as when one owner categorically refuses to pay his share of the general expenses, for instance. In such a case, pressure can be brought to bear on the recalcitrant party. It is part of the function of the president of the committee to send a first notice to the non-payer. If this does not work and the person still refuses to cooperate, the president can present the case in court and obtain a legal ruling. This procedure can have mixed effects, though. Feeling the heat of impending legal action, one tenant finally paid his dues after receiving three written warnings. In another case, one shareholder’s possessions were forcibly auctioned to collect money for settling his unpaid bills. Fostering Community Life
In our modern society, tenants’ committees are replacing town halls and village squares where neighbors used to meet and discuss common issues. A tenants’ committee can be a blessing or a curse, depending on the level of organization and the good intentions of its members. Property owners in an apartment building or residential development elect a tenant’s committee to enforce the property’s regulations. The committee collects payments from residents to maintain or upgrade common areas. Grievances and disputes between tenants are also brought up in committee meetings. If things run smoothly, the president and members of a committee may maintain their positive for an unlimited number of years. On the other hand, if tenants are unhappy, their in-fighting occurs and they could end up in court.
WHEN TENANTS GET ORGANIZED: The real estate contract that is signed between a buyer and a seller includes a clause that binds the new resident to the articles of the building’s ownership regulations. The enforcement of these regulations is overseen by a tenants’ committee, which is established according to those same regulations. The main purpose of this body is to bring together the residents of a building to discuss common issues, to organize and fund maintenance, and to resolve any disputes. The committee handles matters such as lighting in the common areas, use of backup generators, gardening, maintenance, and cleaning, for the sake of keeping the building I good condition.
AN ELECTED REPRESENTATIVE BODY: The holder of the biggest number of shares in the block, whose identity is defined in the records of ownership regulations, is entitled to invite the other shareholders to the first general meeting, held for the main purpose of electing a president and members of the committee. Very often, the developer will take the initiative in helping to form the first tenants’ committee. Some articles concerning this process stipulate that the meeting be held on the premises of the project and that notification be sent ten days before the specified date. The identity if the newly formed committee and its president may be registered at the Property Department, which is part of the property Court, to give it legal status. This costs around LL 30,000 per signature per owner, and provides the committee with the right to act on behalf of all the other residents, or take legal action against an individual resident if the need arises. In practice, this step is very often ignored.
A FAIR SHARE OF THE COST: The contribution made by each tenant for the building’s general maintenance expenses normally depends on the nature of the expense and the percentage of shares specified for each unit in the ownership regulations. Sometimes, only one owner benefits from an item expenditure. In such a case, the ownership regulations may specify that other owners need not share the cost. Lower floors may have fewer shares than those at the top and, consequently, may pay a smaller percentage of shared expenses. This is justified, for example, by saying that a ground-floor owner makes little or no use of the elevator. However, this is not necessarily the situation in every case. For the sake of simplifying this process, the trend is increasingly towards dividing shares equally along all owners. The tenants’ committee of one project in Deek El Mehdi uses mathematical formulas to determine communal expenses proportionally. In block C of that project, the total expenses is said to be the equivalent of 1,000 units. Eight apartment owners are each responsible for 111 of those units. The remaining 112 units are held by the owner of a warehouse. In block D, a different set of calculations has been made to apportion responsibility for maintenance and repairs. Here, the same nominal 1,000 units are divided among the tenants. The owner of the top floor assumes responsibility for 153 units, and all apartments in the lower floors are responsible for the rest in equal measures.
EASY MONTHLY PAYMENTS: The president of a tenants’ committee may levy fixed regular payments in advance to cover general or emergency expenses, provided that the ownership regulations permit such measures. This saves him the trouble of perpetually chasing after the owners to ask for payments. The ownership regulation of a building in Antelias states that the head go the committee is entitled to hold only a certain sum of cash – usually specified by the committee. The remaining amount is collected and deposited in a bank account under the committee’s name. The building’s ownership regulation, or the committee itself, will specify the number of signatures needed to withdraw money from the account. The amount each tenant pays per month varies depending on the cost of regular expenses and the number of residents in the building. 12 owners of one project in Jal EL Dib each pay $20 per month to cover the cost of electricity in the corridors, running the elevators, general maintenance, etc. the same services cost each of the ten residents of a Zalka project $50 per month, although they obtain a watchman and a garden as additional services.
AGREEING OVER MONEY MATTERS: Goodwill and neighborly love often fade when financial issues get in the way. Money is one of the basic factors that generate or resolve disputes. In one building, the cost of installing a door for the parking area was set at $1,100. This means that each resident of the 22 units would have to pay $50. For one of the residents, this was too big a burden while, on the other hand, her neighbor asked for a more expensive door with remote control. Yet another resident considered $1,100 too expensive claiming that a door should not cost more than $800. So what happened in the end? First, the remote control suggestion was not even considered. The resident who mentioned the $800 ‘estimate’ failed to follow up and provide evidence of such a price. To date, the question remains in limbo. What is certain is that if there was ever going to be a garage door, no one save the residents themselves would pay for it. In a different example, each of the ten residents of another building in Dhour Zalka agreed without a single murmur of protest to share the $2,000 it cost to landscape a garden around their building. In yet another building, three of the nine residents are asking for a watchman, three more are opposed to the idea, and the remaining three appear not to care because they are not living in their apartments. Every time the first group hires someone, the second group fires him. One member of the third undecided group jokingly remarked that the building seemed to remain intact without a watchman.
TAKING LEGAL ACTION: Sometimes goodwill performs a complete disappearing act when an apparently unsolvable problem arises, such as when one owner categorically refuses to pay his share of the general expenses, for instance. In such a case, pressure can be brought to bear on the recalcitrant party. It is part of the function of the president of the committee to send a first notice to the non-payer. If this does not work and the person still refuses to cooperate, the president can present the case in court and obtain a legal ruling. This procedure can have mixed effects, though. Feeling the heat of impending legal action, one tenant finally paid his dues after receiving three written warnings. In another case, one shareholder’s possessions were forcibly auctioned to collect money for settling his unpaid bills. The Quest For Parking Spaces
You hear the same refrain everywhere: finding a parking space in Beirut is a homeowner’s worst nightmare. The capital’s narrow streets are already saturated, but new developments keep springing up, and residents are rapidly running out of breathing space. By law, new buildings are required to include at least one parking space for every 100 square meters of residential surface area. But most old buildings have limited or zero parking spaces available. The fact that some households own more than one car does not help the situation either. High demand has driven the price of parking spaces through the roof and added a new burden for homebuyers.
PARKING LAWS: By law, a developer cannot obtain a construction permit unless a parking lot is shown on the building’s ma. Apartments that range between 180 and 219 square meters are entitled to one parking space. If the apartment’s size goes up to 260 square meters, owners are entitled to two parking spots. The apartment plans that are given to homeowners specify the number of parking spaces that are attached to the apartment, and to which the homeowners are entitled.
ADDITIONAL SPACE AT ANY PRICE: While the municipality caps the price of any parking spot at LL 5 million (approximately $ 3,300) the law is not blinding, which means that purchasing additional parking takes the form of an old-fashioned negotiation between buyer and seller. As a general rule, the price per square meter of parking space is calculated 20 percent of the current market price per square meter of apartment. If an apartment costs $2,000 per square meter, then the corresponding parking space should be sold for $400 per square meter. Parking spaces normally measure four meters by five meters. Thus, in the example above, a 20-square-meter parking spot should cost around $8,000. However, with the increasing scarcity of parking spaces in Beirut and large cities, this rule is rarely applied as is, and the price of a parking spaces square meter can go as high as 50 percent of the related apartment’s price per square meter, depending on how skilled each negotiator is, and on how desperate the buyer is.
THOU SHALT COVET THY NEIGHBOR’S SPACE: A home-buyer, who needs an additional parking space beside his legal allocated number of spaces, may be able to purchase one from another tenant in the building. There are no specific laws and regulations that govern this procedure. The deal is concluded between the two tenants and it is considered a side agreement. To legalize the document, an amendment need to be made to the number of parking spaces mentioned on the map of the building. The agreement is then acknowledged before a notary public. The transaction can be also taken to the ministry of Finance or the concerned municipality for authentication by paying the regular stamp duty tax of three per thousand due on any real estate sales contract. If the tenant who has sold his parking space decides to sell his apartment afterwards, then the new buyer should know beforehand what the plans of the building have been amended. Building plans are registered with the Real Estate registry and state the number of parking spaces that belong to an apartment. Legally, there will be one less parking space for the new homebuyer. If he wishes to recuperate the parking space, he has to negotiate with the tenant who already purchased the parking space.
PRICES VARY WITH LOCATION: The final price of a parking space depends on the small details: whether it is located in front of a building or in the back; whether it is on the ground floor or underground; or whether a homeowner needs one parking space or more. For those who can afford to avoid negotiating parking space prices, spending $8,000 or more per square meter for an apartment in a high-rise tower in Raouche, Ramlet el Baydah, or Saifi Village brings with it as many as four parking spaces, with a driver’s room and a storage room thrown into the bargain. The Quest For Parking Spaces
You hear the same refrain everywhere: finding a parking space in Beirut is a homeowner’s worst nightmare. The capital’s narrow streets are already saturated, but new developments keep springing up, and residents are rapidly running out of breathing space. By law, new buildings are required to include at least one parking space for every 100 square meters of residential surface area. But most old buildings have limited or zero parking spaces available. The fact that some households own more than one car does not help the situation either. High demand has driven the price of parking spaces through the roof and added a new burden for homebuyers.
PARKING LAWS: By law, a developer cannot obtain a construction permit unless a parking lot is shown on the building’s ma. Apartments that range between 180 and 219 square meters are entitled to one parking space. If the apartment’s size goes up to 260 square meters, owners are entitled to two parking spots. The apartment plans that are given to homeowners specify the number of parking spaces that are attached to the apartment, and to which the homeowners are entitled.
ADDITIONAL SPACE AT ANY PRICE: While the municipality caps the price of any parking spot at LL 5 million (approximately $ 3,300) the law is not blinding, which means that purchasing additional parking takes the form of an old-fashioned negotiation between buyer and seller. As a general rule, the price per square meter of parking space is calculated 20 percent of the current market price per square meter of apartment. If an apartment costs $2,000 per square meter, then the corresponding parking space should be sold for $400 per square meter. Parking spaces normally measure four meters by five meters. Thus, in the example above, a 20-square-meter parking spot should cost around $8,000. However, with the increasing scarcity of parking spaces in Beirut and large cities, this rule is rarely applied as is, and the price of a parking spaces square meter can go as high as 50 percent of the related apartment’s price per square meter, depending on how skilled each negotiator is, and on how desperate the buyer is.
THOU SHALT COVET THY NEIGHBOR’S SPACE: A home-buyer, who needs an additional parking space beside his legal allocated number of spaces, may be able to purchase one from another tenant in the building. There are no specific laws and regulations that govern this procedure. The deal is concluded between the two tenants and it is considered a side agreement. To legalize the document, an amendment need to be made to the number of parking spaces mentioned on the map of the building. The agreement is then acknowledged before a notary public. The transaction can be also taken to the ministry of Finance or the concerned municipality for authentication by paying the regular stamp duty tax of three per thousand due on any real estate sales contract. If the tenant who has sold his parking space decides to sell his apartment afterwards, then the new buyer should know beforehand what the plans of the building have been amended. Building plans are registered with the Real Estate registry and state the number of parking spaces that belong to an apartment. Legally, there will be one less parking space for the new homebuyer. If he wishes to recuperate the parking space, he has to negotiate with the tenant who already purchased the parking space.
PRICES VARY WITH LOCATION: The final price of a parking space depends on the small details: whether it is located in front of a building or in the back; whether it is on the ground floor or underground; or whether a homeowner needs one parking space or more. For those who can afford to avoid negotiating parking space prices, spending $8,000 or more per square meter for an apartment in a high-rise tower in Raouche, Ramlet el Baydah, or Saifi Village brings with it as many as four parking spaces, with a driver’s room and a storage room thrown into the bargain.
Housing Loans
How to get a home loan
It is vital to do your homework before taking out a home loan. The market is full of lucrative financing offers. Not all housing loans charge the same interest rate. It pays to read the fine print. The Central Bank has introduced subsidized loans while many banks have lowered interest rates, eliminating certain fees. Most people buying a home will need a loan and for many it is often the largest financial commitment they will ever make. It is important to find a home loan that is right for you.
THE DOWN PAYMENT Banks do not finance the entire purchase price of a home. The required down payment varies from bank to bank. Some will finance up to 85 percent, others only 50 percent. With respect to other types of loans such as subsidized loans introduced by the Central Bank or loans in collaboration with Public Corporation for Housing, banks may finance a percentage of the house’s value with a down payment to be paid to the bank or to the developer. In all cases, the loan is based on a professional valuation of the property, which may differ from the asking price. If the appraisal values an apartment at $130, 000 and the purchase price is $150, 000 (or even the other way round), the loan is based on a percentage of the lower of the two figures. Even agreement on valuation may not solve all problems. If the developer requires 30 percent and the maximum bank loan is 60 percent, the difference must be found elsewhere before the deal can be completed.
THE REPAYMENT PERIOD Repayments may be spread over 30 years and it is in the bank’s interest as much as it is in that of the homebuyer to agree on a package that the purchaser can afford. But most banks will not extend the term of the loan beyond the age of 65. The amount borrowed is usually fixed so that repayments do not constitute more than one-third of the borrower’s salary. Charges other than interest vary from bank to bank, although what is saved in one area may be lost in another (see table).
INTEREST RATE UPS AND DOWNS Interest constitutes by far the largest portion of the cost of a home loan. The rates fluctuate according to the yield of Treasury Bills, LIBOR (London Inter-Bank Offered Rate), or the US Prime Rate with an added fixed percentage. Other types of rates may be utilized by banks, such as the Beirut Reference rate and the Cost of Banks’ Fund. With both marker rates very low, the figures quoted in Lebanon are usually stated not only as a certain percentage above one or the other but also as a minimum. Rates are usually reviewed yearly (such as in the case with the new loans subsidized by the Central Bank or loans that are based on LIBOR) or every two years (in the case of loans taken out with the Public Corporation for Housing or the Housing Bank, which are based n lira-denominated one/two/three-year Treasury bills). Home-owners should therefore ask about the current rates of LIBOR or the local T-bill in order to know what their running interest rate is both at the time of application and subsequently on the outstanding balance. Some banks adopt a promotional rate for a specified period at the beginning of the loan period when buyers’ expenses are high. Home-owners should keep in mind that even though international rates might be decreasing to unprecedented low levels, the minimum rates in the local market have currently fell to an all-time low of nearly four percent. This is the result of the introduction of the new Central-Bank-subsidized loan. The Housing bank and Public Corporation for Housing loans have also reduced their rates in an attempt to remain competitive.
FILE AND STAMP FEES Some banks impose a fixed filing fee in the range of $100-$250, while others charge 0.25 percent to one percent of the amount of the loan, with a minimum of $100 depending in the size of the loan. Banks usually ask for filing fees to be paid before the loan is granted. Loans that are subsidized by the Central Bank and the Public Corporation for Housing are usually exempted from filing fees, unlike other housing loan products that are customized and programmed by banks. Payments through fixed schedules incur no stamp fees. When repayment occurs through note, 0.15 percent of the amount of each not is charged (i.e., the stamp cost on a $1,000 note is $1.50).
COST OF APPRAISAL A property valuation expert puts a price on the home so that the bank has an independent idea of what it is worth. Although this entails yet another fee for home-owners, it enables the buyer and the lender to know whether the price of the property is a fair one. These flat fees fall in the $100 to $500 range. This charge is paid before the loan is finalized.
HOME OWNERS’ INSURANCE Both life and property insurance are required. Coverage is either the value of the house or exceeds the loan by a factor determined by the bank policy, sometimes up to 130 percent. All banks insist on insurance against fire and some require insurance against natural disasters and a few against war. Third-party liability insurance, covering visitors who are injured in incidents connected with the home, for example, is also demanded by some lenders. All banks demand coverage against death or total permanent disability. Borrowers pay all premiums. Even when the level of house insurance is based on the amount of the loan, the coverage does not decrease as the loan is paid off. The possibility of total destruction of a property necessitates full coverage all the time. How to get a home loan
It is vital to do your homework before taking out a home loan. The market is full of lucrative financing offers. Not all housing loans charge the same interest rate. It pays to read the fine print. The Central Bank has introduced subsidized loans while many banks have lowered interest rates, eliminating certain fees. Most people buying a home will need a loan and for many it is often the largest financial commitment they will ever make. It is important to find a home loan that is right for you.
THE DOWN PAYMENT Banks do not finance the entire purchase price of a home. The required down payment varies from bank to bank. Some will finance up to 85 percent, others only 50 percent. With respect to other types of loans such as subsidized loans introduced by the Central Bank or loans in collaboration with Public Corporation for Housing, banks may finance a percentage of the house’s value with a down payment to be paid to the bank or to the developer. In all cases, the loan is based on a professional valuation of the property, which may differ from the asking price. If the appraisal values an apartment at $130, 000 and the purchase price is $150, 000 (or even the other way round), the loan is based on a percentage of the lower of the two figures. Even agreement on valuation may not solve all problems. If the developer requires 30 percent and the maximum bank loan is 60 percent, the difference must be found elsewhere before the deal can be completed.
THE REPAYMENT PERIOD Repayments may be spread over 30 years and it is in the bank’s interest as much as it is in that of the homebuyer to agree on a package that the purchaser can afford. But most banks will not extend the term of the loan beyond the age of 65. The amount borrowed is usually fixed so that repayments do not constitute more than one-third of the borrower’s salary. Charges other than interest vary from bank to bank, although what is saved in one area may be lost in another (see table).
INTEREST RATE UPS AND DOWNS Interest constitutes by far the largest portion of the cost of a home loan. The rates fluctuate according to the yield of Treasury Bills, LIBOR (London Inter-Bank Offered Rate), or the US Prime Rate with an added fixed percentage. Other types of rates may be utilized by banks, such as the Beirut Reference rate and the Cost of Banks’ Fund. With both marker rates very low, the figures quoted in Lebanon are usually stated not only as a certain percentage above one or the other but also as a minimum. Rates are usually reviewed yearly (such as in the case with the new loans subsidized by the Central Bank or loans that are based on LIBOR) or every two years (in the case of loans taken out with the Public Corporation for Housing or the Housing Bank, which are based n lira-denominated one/two/three-year Treasury bills). Home-owners should therefore ask about the current rates of LIBOR or the local T-bill in order to know what their running interest rate is both at the time of application and subsequently on the outstanding balance. Some banks adopt a promotional rate for a specified period at the beginning of the loan period when buyers’ expenses are high. Home-owners should keep in mind that even though international rates might be decreasing to unprecedented low levels, the minimum rates in the local market have currently fell to an all-time low of nearly four percent. This is the result of the introduction of the new Central-Bank-subsidized loan. The Housing bank and Public Corporation for Housing loans have also reduced their rates in an attempt to remain competitive.
FILE AND STAMP FEES Some banks impose a fixed filing fee in the range of $100-$250, while others charge 0.25 percent to one percent of the amount of the loan, with a minimum of $100 depending in the size of the loan. Banks usually ask for filing fees to be paid before the loan is granted. Loans that are subsidized by the Central Bank and the Public Corporation for Housing are usually exempted from filing fees, unlike other housing loan products that are customized and programmed by banks. Payments through fixed schedules incur no stamp fees. When repayment occurs through note, 0.15 percent of the amount of each not is charged (i.e., the stamp cost on a $1,000 note is $1.50).
COST OF APPRAISAL A property valuation expert puts a price on the home so that the bank has an independent idea of what it is worth. Although this entails yet another fee for home-owners, it enables the buyer and the lender to know whether the price of the property is a fair one. These flat fees fall in the $100 to $500 range. This charge is paid before the loan is finalized.
HOME OWNERS’ INSURANCE Both life and property insurance are required. Coverage is either the value of the house or exceeds the loan by a factor determined by the bank policy, sometimes up to 130 percent. All banks insist on insurance against fire and some require insurance against natural disasters and a few against war. Third-party liability insurance, covering visitors who are injured in incidents connected with the home, for example, is also demanded by some lenders. All banks demand coverage against death or total permanent disability. Borrowers pay all premiums. Even when the level of house insurance is based on the amount of the loan, the coverage does not decrease as the loan is paid off. The possibility of total destruction of a property necessitates full coverage all the time. Frequently asked questions
First time home buyers can find it a daunting task to fully understand the terms, conditions, rules, and restrictions imposed by specialized banks, commercial banks, and the Central Bank, on the issuance of subsidized and non-subsidized housing loans. Finding the best housing loan to fit specific needs can be a challenge. Knowing what to expect when taking out a loan to purchase a home, what a home owner’s rights and obligations are, is crucial. Several questions arise when shopping around for a housing loan: what pre-conditions need to be met before a loan applicant would be deemed eligible? Can parents apply for subsidized loans on behalf their children? What are the advantages of each type of loan? What happens when one pays off a housing loan early? Properties has asked these and many more questions that home buyers frequently ask and we have found the answers and set them out in a simple and easy to understand format. Q: If I buy an apartment through a housing loan, can I lease or sell the apartment before the end of the loan repayment period? A: For loans that are subsidized by the Central Bank or Public Corporation for Housing (PCH), the apartment purchased cannot be let out before the end of the loan repayment period. The rationale behind this is that for both BDL and PCH housing loans, the property should constitute a primary residence, based on that the buyer benefits from reduced interest rates on the loan. For PCH subsidized loans, the buyer benefits from exemptions on registration and mortgage fees. The home buyer is also expected not to sell the property before seven years from the issuance of the loan. Otherwise, the home buyer has to pay a penalty amounting to two percent of the outstanding loan amount. These conditions are set to discourage speculators from posing as legitimate home buyers and using subsidized housing loans for investment purposes. For loans that are not subsidized, i.e. when a loan given by the bank from its own funds, selling the property before the end of the repayment period is subject to the bank’s approval and is negotiated on a case by case basis. However, in such cases the home buyer still has to pay a penalty to the bank. Q: All banks commit to a certain rate of interest for the first three years at most, what happens afterwards? A: The interest rate charged by banks for housing loans is not a fixed rate by definition as it is pegged to different indices and varies with the fluctuation of these indices. But banks usually commit to a fixed rate of interest for a maximum of three years. After that period the interest charged varies with the index it is pegged to. For subsidized housing loans, the formula is set by BDL and depends on the type of housing loan issued:
For non-subsidized housing loans the interest rate formula is set by the bank and is usually a function of either LIBOR or BRR (Beirut Reference Rate), a composite index issued by the Association of Banks in Lebanon (ABL) each month, and differs from one bank to another.
Q: Is it true, as stated by some banks in their ads, that the interest rate could be zero percent? Where’s the catch?
A: In reality a bank can charge zero percent interest rate on a housing loan for up to the first year of disbursement, but offering a housing loan with zero percent interest rate for the whole duration of the loan is impossible. For banks which offer a first year zero percent interest rate there is an increased risk of abuse. Customers could get the loan and decide to pay it off in full in the second year which would result in losses to the bank. For this type of housing loan offer the loan product is structured in such way that the penalty the customer will have to pay should he decide to pay off the loan before full maturity will be calculated so as to compensate the bank for the interest amount for the first year. Some banks offer options whereby customers may put up cash collateral against their loan and benefit from a reduced interest rate. The amount of the required collateral and reduction in interest charged varies from bank to bank and is negotiated on a case by case basis between the customer and the bank. The amount of monthly installments should exceed one third of the customer’s monthly income, but is this calculated based on the whole income or after deducting other financial commitments? For bank loans, the income is defined as the household income after other loan installments are deducted based on BDL’s credit information department (‘Centrale des risques’). Other household fixed expenses are generally not deducted from the income when calculating the loan ceiling and the monthly installments amount.
Q: Could I pay off part of the loan in advance, what’s the benefit? A: Usually, when one tries to settle parts of the loan early (before the loan’s fully maturity), a penalty is imposed on the debtor varying from one to two percent of the total outstanding loan amount. If the borrower calculates that the amount of interest he would save in monthly installments is greater than the penalty he will have to pay, then settling the loan or parts of it early could be beneficial.
Q: Could I get a loan to buy a house in the name of any of my children, while being responsible for the monthly payments? A: Yes it is possible There are two options:
Q: When banks evaluate income for the purpose of issuing a loan and deciding what the monthly payments should be, does this include the income of the household (husband, wife, and children of working age), and what happens in the event of a divorce? A: They consider the income of the household: husband, wife, and possibly children (if they want to be included). Concerning possible family problems, as long as the installments are paid on time the divorce on its own does not concern the bank. However, when one of the partners does not want to remain liable for the loan and wants to sell his/her share of the property (1,200 shares or half) to the other then the spouse buying those shares becomes solely responsible for making the monthly payments. In this case the bank has to reevaluate the financial situation to assess if that person is capable of shouldering responsibility for the loan alone. The contract is transferred to the name of the spouse if that person is found financially fit. Otherwise, the property could be offered for sale in public auction.
Q: What are the advantages of purchasing a house through the PCH? A: The PCH subsidized loans benefit from the following:
Q: What are the conditions of eligibility for PCH subsidized loan? A: The conditions are: Nationality: the applicant must have held Lebanese citizenship for at least the last ten years. Age: the applicant must be at least 21 years old and should be able to pay off at least 75 percent of the total loan amount before he reaches retirement age (64 years old) Income: income must not exceed ten times the minimum wage. Today the minimum wage is LL. 675, 000 so the total monthly household income must not exceed LL6.75 million. The household income is considered to be the income of the wife and husband combined. It is possible to include the salaries of children of working age. However, such would deny them the possibility of applying for a PCH housing loan when buying a home themselves. Eligible persons may benefit only once from its subsidized loans. Size of Unit: the maximum surface area of a residential unit excluding common areas, terraces, and balconies is determined by the PCH based on household income as per the following table:
The house purchased by the applicant must not be the property of a direct relative (parent or sibling). The loan applicant, the spouse, and children (if included in the household income estimation) should not own any other residential unit within a 23 kilometer radius of their place of employment. The residential unit to be purchased must constitute the applicant’s primary residence and may not be let out, mortgaged, or used as collateral for any other financial commitments. The applicant shall also vacate any leased primary residence during the whole loan repayment period.
Q: What are the advantages of purchasing a house through the Banque de l’Habitat? A: Loans through the Banque de l’Habitat have the following advantages:
Q: What are the conditions of eligibility for Banque de l’Habitat housing loan? A: Nationality: The applicant should hold Lebanese citizenship, and have held it for at least the past ten years. Income: Applicant must have a minimum salary of LL2 million. Age: The applicant should repay the entire loan amount before reaching retirement age (64 years old).
Q: Before and after the purchase, what are all the administrative steps that a buyer need to take and what will it cost in time and money?
A: See table
Q: Is the rental valuation (Al Qima al ta’jiriya) made before buying and registering a property, an accurate indication of what the registration fees will be? A: The rental valuation is not accurate indication of what the registration fees will be after purchasing the property. Such valuation is provided by the Department of Built Properties at the Ministry of Finance based on predetermined charts that fix rental value per area and region. Up until September this year, rental valuations of the Cadastral Register had the right to reassess the valuation and raise it if he considered the rental valuation or the declared amount of the sale to be too low. However on September 14, 2011 the Ministry of Finance issued a decision stipulating the following:
However, it appears that this decision is not being fully implemented in practice yet. (For details of registration fee calculation, refer to the table).
Q: Does the concerned Department evaluate the annual taxes to be paid on built properties based on personal or subjective criteria or is it based on objective parameters? A: Estimating annual tax due on property starts with an evaluation of the rental value of the property, i.e. how much the property can generate in rent for its owner is it was leased. This valuation should be done by the concerned directorate at the Ministry of Finance based on principles defined by law:
The tax on built property is calculated as a percentage of the net rental value as follows:
Q: Can one postpone registering a property after buying it? Is it risky? A: One can postpone registering a newly purchased property but as long as the property is not registered at the Ministry of Finance, in the eyes of the law, the old landlord is the legal owner and can still sell it to a third party. However, one could perform a protective procedure known as ‘Tasjil lhtiyati’ or provisional registration, by which a mark is placed on the property deed at the Cadastral Register upon payment of a stamp fee that is less than the full registration fee. This stamp fee will be deducted from the full registration fee when the official registration procedure is completed. But this temporary registration lasts only ten days (tolerated for up to one month) and should be renewed. Another drawback of postponing registration is that the registration fee increases year after year, as it is calculated based on the value of the property on the date of the registration, and not the date of the initial sale contract.
Q: Where can one find information about a developer or landlord to make sure they are honest and fairly professional? A: Information about a developer can be found through two main sources:
These two sources give the buyer an idea of the quality of the developer’s work. But information about the developer in the market would be more useful. Also useful would be the confidential information which one could get through their bank from BDL’s credit information department (Centrale des Risques), and from companies that specialize in providing consumer and business credit information.
Q: What are the risks when buying off-plan? How does one minimize these risks? A: Buying off plan buyers some flexibility in deciding on the layout of their apartment and sometimes they benefit from discounts offered by the developer. The risk of buying off plan is that the developer could come up with an altered (i.e. undesirable) architectural design, or run out of financing and stop the project midstream, or run away with the money. As long as the property is not legally parceled (Mofrazah) the buyer cannot put a hold (Ishara) on his property to safeguard his right.
Q: Can a homeowner legally install glass and aluminum windows, shutters, and partitions to close off an apartment’s balconies and terraces? A: The property owner can use the common sections of a building according to their needs provided this does not impede other owners from using these sections. A property owner may not make any changes to common areas at all even in the case of renovation. In the non-common areas of an apartment a property owner is not allowed to make any changes that would affect the homogeneity of the building, such as modifications to the building’s entrance, windows, balconies, or terraces unless at least 75 percent of the building committee members agree on these changes. However, five years ago the Ministry of Interior and Municipalities issued a decision amending the above stipulation to make allowances for the “tough economic conditions of Lebanese families.” The ministry allowed home owners to expand the living space in their homes at minimum cost. The decision allowed them to close off terraces and balconies with glass and/or aluminum partitions. Frequently asked questions
First time home buyers can find it a daunting task to fully understand the terms, conditions, rules, and restrictions imposed by specialized banks, commercial banks, and the Central Bank, on the issuance of subsidized and non-subsidized housing loans. Finding the best housing loan to fit specific needs can be a challenge. Knowing what to expect when taking out a loan to purchase a home, what a home owner’s rights and obligations are, is crucial. Several questions arise when shopping around for a housing loan: what pre-conditions need to be met before a loan applicant would be deemed eligible? Can parents apply for subsidized loans on behalf their children? What are the advantages of each type of loan? What happens when one pays off a housing loan early? Properties has asked these and many more questions that home buyers frequently ask and we have found the answers and set them out in a simple and easy to understand format. Q: If I buy an apartment through a housing loan, can I lease or sell the apartment before the end of the loan repayment period? A: For loans that are subsidized by the Central Bank or Public Corporation for Housing (PCH), the apartment purchased cannot be let out before the end of the loan repayment period. The rationale behind this is that for both BDL and PCH housing loans, the property should constitute a primary residence, based on that the buyer benefits from reduced interest rates on the loan. For PCH subsidized loans, the buyer benefits from exemptions on registration and mortgage fees. The home buyer is also expected not to sell the property before seven years from the issuance of the loan. Otherwise, the home buyer has to pay a penalty amounting to two percent of the outstanding loan amount. These conditions are set to discourage speculators from posing as legitimate home buyers and using subsidized housing loans for investment purposes. For loans that are not subsidized, i.e. when a loan given by the bank from its own funds, selling the property before the end of the repayment period is subject to the bank’s approval and is negotiated on a case by case basis. However, in such cases the home buyer still has to pay a penalty to the bank. Q: All banks commit to a certain rate of interest for the first three years at most, what happens afterwards? A: The interest rate charged by banks for housing loans is not a fixed rate by definition as it is pegged to different indices and varies with the fluctuation of these indices. But banks usually commit to a fixed rate of interest for a maximum of three years. After that period the interest charged varies with the index it is pegged to. For subsidized housing loans, the formula is set by BDL and depends on the type of housing loan issued:
For non-subsidized housing loans the interest rate formula is set by the bank and is usually a function of either LIBOR or BRR (Beirut Reference Rate), a composite index issued by the Association of Banks in Lebanon (ABL) each month, and differs from one bank to another.
Q: Is it true, as stated by some banks in their ads, that the interest rate could be zero percent? Where’s the catch?
A: In reality a bank can charge zero percent interest rate on a housing loan for up to the first year of disbursement, but offering a housing loan with zero percent interest rate for the whole duration of the loan is impossible. For banks which offer a first year zero percent interest rate there is an increased risk of abuse. Customers could get the loan and decide to pay it off in full in the second year which would result in losses to the bank. For this type of housing loan offer the loan product is structured in such way that the penalty the customer will have to pay should he decide to pay off the loan before full maturity will be calculated so as to compensate the bank for the interest amount for the first year. Some banks offer options whereby customers may put up cash collateral against their loan and benefit from a reduced interest rate. The amount of the required collateral and reduction in interest charged varies from bank to bank and is negotiated on a case by case basis between the customer and the bank. The amount of monthly installments should exceed one third of the customer’s monthly income, but is this calculated based on the whole income or after deducting other financial commitments? For bank loans, the income is defined as the household income after other loan installments are deducted based on BDL’s credit information department (‘Centrale des risques’). Other household fixed expenses are generally not deducted from the income when calculating the loan ceiling and the monthly installments amount.
Q: Could I pay off part of the loan in advance, what’s the benefit? A: Usually, when one tries to settle parts of the loan early (before the loan’s fully maturity), a penalty is imposed on the debtor varying from one to two percent of the total outstanding loan amount. If the borrower calculates that the amount of interest he would save in monthly installments is greater than the penalty he will have to pay, then settling the loan or parts of it early could be beneficial.
Q: Could I get a loan to buy a house in the name of any of my children, while being responsible for the monthly payments? A: Yes it is possible There are two options:
Q: When banks evaluate income for the purpose of issuing a loan and deciding what the monthly payments should be, does this include the income of the household (husband, wife, and children of working age), and what happens in the event of a divorce? A: They consider the income of the household: husband, wife, and possibly children (if they want to be included). Concerning possible family problems, as long as the installments are paid on time the divorce on its own does not concern the bank. However, when one of the partners does not want to remain liable for the loan and wants to sell his/her share of the property (1,200 shares or half) to the other then the spouse buying those shares becomes solely responsible for making the monthly payments. In this case the bank has to reevaluate the financial situation to assess if that person is capable of shouldering responsibility for the loan alone. The contract is transferred to the name of the spouse if that person is found financially fit. Otherwise, the property could be offered for sale in public auction.
Q: What are the advantages of purchasing a house through the PCH? A: The PCH subsidized loans benefit from the following:
Q: What are the conditions of eligibility for PCH subsidized loan? A: The conditions are: Nationality: the applicant must have held Lebanese citizenship for at least the last ten years. Age: the applicant must be at least 21 years old and should be able to pay off at least 75 percent of the total loan amount before he reaches retirement age (64 years old) Income: income must not exceed ten times the minimum wage. Today the minimum wage is LL. 675, 000 so the total monthly household income must not exceed LL6.75 million. The household income is considered to be the income of the wife and husband combined. It is possible to include the salaries of children of working age. However, such would deny them the possibility of applying for a PCH housing loan when buying a home themselves. Eligible persons may benefit only once from its subsidized loans. Size of Unit: the maximum surface area of a residential unit excluding common areas, terraces, and balconies is determined by the PCH based on household income as per the following table:
The house purchased by the applicant must not be the property of a direct relative (parent or sibling). The loan applicant, the spouse, and children (if included in the household income estimation) should not own any other residential unit within a 23 kilometer radius of their place of employment. The residential unit to be purchased must constitute the applicant’s primary residence and may not be let out, mortgaged, or used as collateral for any other financial commitments. The applicant shall also vacate any leased primary residence during the whole loan repayment period.
Q: What are the advantages of purchasing a house through the Banque de l’Habitat? A: Loans through the Banque de l’Habitat have the following advantages:
Q: What are the conditions of eligibility for Banque de l’Habitat housing loan? A: Nationality: The applicant should hold Lebanese citizenship, and have held it for at least the past ten years. Income: Applicant must have a minimum salary of LL2 million. Age: The applicant should repay the entire loan amount before reaching retirement age (64 years old).
Q: Before and after the purchase, what are all the administrative steps that a buyer need to take and what will it cost in time and money?
A: See table
Q: Is the rental valuation (Al Qima al ta’jiriya) made before buying and registering a property, an accurate indication of what the registration fees will be? A: The rental valuation is not accurate indication of what the registration fees will be after purchasing the property. Such valuation is provided by the Department of Built Properties at the Ministry of Finance based on predetermined charts that fix rental value per area and region. Up until September this year, rental valuations of the Cadastral Register had the right to reassess the valuation and raise it if he considered the rental valuation or the declared amount of the sale to be too low. However on September 14, 2011 the Ministry of Finance issued a decision stipulating the following:
However, it appears that this decision is not being fully implemented in practice yet. (For details of registration fee calculation, refer to the table).
Q: Does the concerned Department evaluate the annual taxes to be paid on built properties based on personal or subjective criteria or is it based on objective parameters? A: Estimating annual tax due on property starts with an evaluation of the rental value of the property, i.e. how much the property can generate in rent for its owner is it was leased. This valuation should be done by the concerned directorate at the Ministry of Finance based on principles defined by law:
The tax on built property is calculated as a percentage of the net rental value as follows:
Q: Can one postpone registering a property after buying it? Is it risky? A: One can postpone registering a newly purchased property but as long as the property is not registered at the Ministry of Finance, in the eyes of the law, the old landlord is the legal owner and can still sell it to a third party. However, one could perform a protective procedure known as ‘Tasjil lhtiyati’ or provisional registration, by which a mark is placed on the property deed at the Cadastral Register upon payment of a stamp fee that is less than the full registration fee. This stamp fee will be deducted from the full registration fee when the official registration procedure is completed. But this temporary registration lasts only ten days (tolerated for up to one month) and should be renewed. Another drawback of postponing registration is that the registration fee increases year after year, as it is calculated based on the value of the property on the date of the registration, and not the date of the initial sale contract.
Q: Where can one find information about a developer or landlord to make sure they are honest and fairly professional? A: Information about a developer can be found through two main sources:
These two sources give the buyer an idea of the quality of the developer’s work. But information about the developer in the market would be more useful. Also useful would be the confidential information which one could get through their bank from BDL’s credit information department (Centrale des Risques), and from companies that specialize in providing consumer and business credit information.
Q: What are the risks when buying off-plan? How does one minimize these risks? A: Buying off plan buyers some flexibility in deciding on the layout of their apartment and sometimes they benefit from discounts offered by the developer. The risk of buying off plan is that the developer could come up with an altered (i.e. undesirable) architectural design, or run out of financing and stop the project midstream, or run away with the money. As long as the property is not legally parceled (Mofrazah) the buyer cannot put a hold (Ishara) on his property to safeguard his right.
Q: Can a homeowner legally install glass and aluminum windows, shutters, and partitions to close off an apartment’s balconies and terraces? A: The property owner can use the common sections of a building according to their needs provided this does not impede other owners from using these sections. A property owner may not make any changes to common areas at all even in the case of renovation. In the non-common areas of an apartment a property owner is not allowed to make any changes that would affect the homogeneity of the building, such as modifications to the building’s entrance, windows, balconies, or terraces unless at least 75 percent of the building committee members agree on these changes. However, five years ago the Ministry of Interior and Municipalities issued a decision amending the above stipulation to make allowances for the “tough economic conditions of Lebanese families.” The ministry allowed home owners to expand the living space in their homes at minimum cost. The decision allowed them to close off terraces and balconies with glass and/or aluminum partitions.
Landlord's Checklist
Landlord's Checklist
Step 1: Set the right rental price: The first stage to leasing your property is to arrange for a valuation with a consultant. Choose a consultant who has comprehensive knowledge of local rental prices and has a strong reputation.
Step 2: Upgrade: Make enhancements to your property and showcase it in the best possible light before you rent it out.
Step 3: Maintain: Ensure your property is managed and maintained throughout. Solid maintenance is the key to a satisfied tenant.
Step 4: Make your property stand out: First impressions count, so enhance your property's curb appeal to attract tenants.
Step 5: Be flexible with viewing: Ensure flexibility of viewing timings to increase the speed of the leasing process. Landlord's Checklist
Step 1: Set the right rental price: The first stage to leasing your property is to arrange for a valuation with a consultant. Choose a consultant who has comprehensive knowledge of local rental prices and has a strong reputation.
Step 2: Upgrade: Make enhancements to your property and showcase it in the best possible light before you rent it out.
Step 3: Maintain: Ensure your property is managed and maintained throughout. Solid maintenance is the key to a satisfied tenant.
Step 4: Make your property stand out: First impressions count, so enhance your property's curb appeal to attract tenants.
Step 5: Be flexible with viewing: Ensure flexibility of viewing timings to increase the speed of the leasing process.
Property Insurance
The Ins and Outs Of Home Insurance
Because buying a house is a major financial investment for the majority of people, it makes sense to protect this investment from risks such as damage, theft, and destruction. Home-owners’ insurance, or property insurance, combines coverage for loss of possessions and damage to the home, with liability insurance which covers accidents that might occur within the property covered by the policy. While some may consider it an additional financial burden, property insurance can be a safeguard against more serious losses. In some cases it is mandatory for new homebuyers.
WHY INSURE YOU HOUSE? Generally, when a house is mortgaged, the lender insists that it be insured, to guarantee that the payments will continue even if the house is destroyed. In cases where the apartment or building is not subject to a mortgage, the owner usually pays the insurance, at least for the house. However, if the apartment is rented, the tenant is sometimes required to bear part of the cost, which may be included indirectly in the rent. Home insurance is mandatory when financing the purchase of a home through a bank loan.
DIFFERENT TYPES OF COVERAGE: There is a clear separation between insurance for a building and coverage for the contents of that building. With regard to furniture, fixtures and fittings, and personal belongings, tenants need to arrange a separate insurance policy. While the building or apartment is a recognizable major investment, the cumulative value osf personal belongings acquired over years can easily be underestimated. It is therefore worthwhile to increase contents cover from time to time to keep pace with new acquisitions. However, reality is the key here, since at tempts at over-insurance are a waste of money. No insurance company will pay out, on theft for example, for expensive items that are clearly out of the range of the insured (and therefore probably don’t exist). What is applicable to tenants with regard to possessions is, of course, equally relevant to homeowners. Coverage can also be expanded to cover neighboring liabilities, such as damage sustained by a neighboring property that might result from a fire that spreads from your home. It is similar to third-party liability automobile insurance.
THE APPLICANT PROCESS: The property application from is one of the longest in terms of detail. In addition to the name of the applicant (whether tenant or owner), the companies require the full address of the property, the plot number, the type of property (residential or office, retail or industrial), the floor to be insured, and the period of insurance. Other sections in the application concern the sum to be insured, broken down into building, contents, neighbor’s recourse, and other risks. Particulars of the building, the furniture, and the machinery or equipment are also required, as well as the fire protection measures available. A detailed description of the neighborhood is also required, and there is a complete section to be filled in with regard to theft insurance, if that is taken as part of the policy. This section details the particulars of the main entrance and other doors and windows, and would inquire about the security measures, such as locks and alarm systems. The insurance company will usually study each case by itself and assess it accordingly. Sketches and/or photos of the property should also be provided.
BUYING INSURANCE: There is no fixed range for property premiums, especially since so many details are involved in their calculation. The type of property, its structure (cement, reinforced concrete, wood), its location, the date of its construction, and the number of floors all play a role in determining the risk rate. Risk is also measured for the content, furniture, equipment, safes, as well as the electricity, heating and air-cooling, water systems, stocks of gas, and oil supply for domestic use, and generators. The fire protection available, such as fire extinguishers, sprinklers, fire alarm, detection systems, and fire hoses can diminish the risk rate. Other security measures are also important, such as easy access for the fire brigade and civil defense, the presence of security guards, surveillance systems, video cameras, and “no smoking signs”, etc. the availability and frequency of maintenance is also significant and is taken into consideration. Previous losses can increase the risk rate of your property, but concealing previous claims – perhaps from a different company – will not eliminate this problem; it will merely invalidate your insurance. Which floor of a building you live on can also affect the rates for content coverage, with ground floor flats being considered at greater risk. Some companies may insist on bars covering the windows. Average rates are usually assigned to each type of risk- fire, natural disaster, theft and neighboring liabilities, depending on the type of property. Those rates are taken as a starting point and will vary after the study of each case. The rates are usually given as per thousand of the sum insured for each type of coverage.
INSURANCE PAYS OFF: Although both the house and the contents may be insured on a replacement value basis, there is always an upper limit to the amount you can claim. As a rule, you must notify the insurance company within a maximum of three days of knowing about any damage done to your property. You will usually have around two weeks to provide a written declaration of the incident, which should include a detailed description of the damaged belonging and their estimated value. When the insurance company is notified, an expert will be sent to the property, to make an inspection and to estimate the value of the damage. His report to the company is very important in its decision on whether to pay and how much to pay. Your declaration should also mention whether all or some of the items for which you are claiming coverage are also insured with other companies. Any faulty declaration or concealment of information, even if unintentional, will at best result in the insurance policy becoming void, and at worst in a criminal prosecution for attempted fraud. After the claim has been assessed and processed, you will be reimbursed depending on the sum insured for each type of loss, whether resulting from burglary, fire, or other risks, such as water damage or earthquakes.
COMMON EXCLUSIONS: Like all insurance policies, property insurance also has exclusions, which in some respects are even more critical because more details are involved in property insurance. The most common exclusions are:
Exclusions are detailed in the policy and come can be waived, subject to the payment of an additional premium.
FIRE PROTECTION: The basis of property insurance is against the risk of fire and most other circumstances become add-ons to the policy. While the meaning of the term fire seems simple, insurance companies have their own, legalistic interpretation. Something is defined as on fire if in normal circumstances it ought not to be on fire or undergoing the applicant of heat. This would mean, for example, that a cake burning in the oven is not considered as fire. Flames leaping out of the sofa are different story!
THEFT AND BURGLARY The theft coverage is usually restricted to items taken after a forcible entry of your home. So theft by a maid or guests may not be covered. Nor is theft during or after fire – more properly called looting – usually covered under the theft clauses of a home insurance policy. Again – as in all insurance – careful reading of what is and what is not covered is required. Specific items of high value, such as jewelry, may be subject to special conditions, such as the provision as a safe. And frequently, insurance companies seek a detailed list of such items, perhaps with independent valuations and photographs.
NATURAL DISASTERS: Although “natural disaster” is most often taken by people outside the insurance business to mean an earthquake, in fact the term can cover many other circumstances as well. It may provide protection against wind damage, storms, floods, landslides, torrential rain, or other non-human inspired events. However, a building that collapses after heavy rain has undermined the foundations may not be covered if there has been negligence in the construction. Coverage against natural disasters can be applied to the homes themselves, personal belongings, or the land on which the property lies, or any combination of the three. There is an extra charge for insurance against natural disasters and clearly this is higher if the property is located in an area known to be prone to earthquakes.
DEDUCTIBLES: Deductibles often apply to this kind f coverage to prevent endless claims for replacing a few tiles being hurled from the roof by a high wind. When natural disasters are added to the property insurance policy, one percent of the value of the content and the construction is applied as a deductible. This means that in case of an earthquake, for example, the insured will have to pay that amount of the replacement value of the property’s construction and content, and the insurance company will bear the rest. A higher deductible, ten percent of the value of the claim, is usually applied for water damage, such as from bursts or flooding and natural perils. Deductibles are imposed to reduce the premiums for property that otherwise, relative to other insurance policies, are very high, and as noted above, to eliminate small claims. The Ins and Outs Of Home Insurance
Because buying a house is a major financial investment for the majority of people, it makes sense to protect this investment from risks such as damage, theft, and destruction. Home-owners’ insurance, or property insurance, combines coverage for loss of possessions and damage to the home, with liability insurance which covers accidents that might occur within the property covered by the policy. While some may consider it an additional financial burden, property insurance can be a safeguard against more serious losses. In some cases it is mandatory for new homebuyers.
WHY INSURE YOU HOUSE? Generally, when a house is mortgaged, the lender insists that it be insured, to guarantee that the payments will continue even if the house is destroyed. In cases where the apartment or building is not subject to a mortgage, the owner usually pays the insurance, at least for the house. However, if the apartment is rented, the tenant is sometimes required to bear part of the cost, which may be included indirectly in the rent. Home insurance is mandatory when financing the purchase of a home through a bank loan.
DIFFERENT TYPES OF COVERAGE: There is a clear separation between insurance for a building and coverage for the contents of that building. With regard to furniture, fixtures and fittings, and personal belongings, tenants need to arrange a separate insurance policy. While the building or apartment is a recognizable major investment, the cumulative value osf personal belongings acquired over years can easily be underestimated. It is therefore worthwhile to increase contents cover from time to time to keep pace with new acquisitions. However, reality is the key here, since at tempts at over-insurance are a waste of money. No insurance company will pay out, on theft for example, for expensive items that are clearly out of the range of the insured (and therefore probably don’t exist). What is applicable to tenants with regard to possessions is, of course, equally relevant to homeowners. Coverage can also be expanded to cover neighboring liabilities, such as damage sustained by a neighboring property that might result from a fire that spreads from your home. It is similar to third-party liability automobile insurance.
THE APPLICANT PROCESS: The property application from is one of the longest in terms of detail. In addition to the name of the applicant (whether tenant or owner), the companies require the full address of the property, the plot number, the type of property (residential or office, retail or industrial), the floor to be insured, and the period of insurance. Other sections in the application concern the sum to be insured, broken down into building, contents, neighbor’s recourse, and other risks. Particulars of the building, the furniture, and the machinery or equipment are also required, as well as the fire protection measures available. A detailed description of the neighborhood is also required, and there is a complete section to be filled in with regard to theft insurance, if that is taken as part of the policy. This section details the particulars of the main entrance and other doors and windows, and would inquire about the security measures, such as locks and alarm systems. The insurance company will usually study each case by itself and assess it accordingly. Sketches and/or photos of the property should also be provided.
BUYING INSURANCE: There is no fixed range for property premiums, especially since so many details are involved in their calculation. The type of property, its structure (cement, reinforced concrete, wood), its location, the date of its construction, and the number of floors all play a role in determining the risk rate. Risk is also measured for the content, furniture, equipment, safes, as well as the electricity, heating and air-cooling, water systems, stocks of gas, and oil supply for domestic use, and generators. The fire protection available, such as fire extinguishers, sprinklers, fire alarm, detection systems, and fire hoses can diminish the risk rate. Other security measures are also important, such as easy access for the fire brigade and civil defense, the presence of security guards, surveillance systems, video cameras, and “no smoking signs”, etc. the availability and frequency of maintenance is also significant and is taken into consideration. Previous losses can increase the risk rate of your property, but concealing previous claims – perhaps from a different company – will not eliminate this problem; it will merely invalidate your insurance. Which floor of a building you live on can also affect the rates for content coverage, with ground floor flats being considered at greater risk. Some companies may insist on bars covering the windows. Average rates are usually assigned to each type of risk- fire, natural disaster, theft and neighboring liabilities, depending on the type of property. Those rates are taken as a starting point and will vary after the study of each case. The rates are usually given as per thousand of the sum insured for each type of coverage.
INSURANCE PAYS OFF: Although both the house and the contents may be insured on a replacement value basis, there is always an upper limit to the amount you can claim. As a rule, you must notify the insurance company within a maximum of three days of knowing about any damage done to your property. You will usually have around two weeks to provide a written declaration of the incident, which should include a detailed description of the damaged belonging and their estimated value. When the insurance company is notified, an expert will be sent to the property, to make an inspection and to estimate the value of the damage. His report to the company is very important in its decision on whether to pay and how much to pay. Your declaration should also mention whether all or some of the items for which you are claiming coverage are also insured with other companies. Any faulty declaration or concealment of information, even if unintentional, will at best result in the insurance policy becoming void, and at worst in a criminal prosecution for attempted fraud. After the claim has been assessed and processed, you will be reimbursed depending on the sum insured for each type of loss, whether resulting from burglary, fire, or other risks, such as water damage or earthquakes.
COMMON EXCLUSIONS: Like all insurance policies, property insurance also has exclusions, which in some respects are even more critical because more details are involved in property insurance. The most common exclusions are:
Exclusions are detailed in the policy and come can be waived, subject to the payment of an additional premium.
FIRE PROTECTION: The basis of property insurance is against the risk of fire and most other circumstances become add-ons to the policy. While the meaning of the term fire seems simple, insurance companies have their own, legalistic interpretation. Something is defined as on fire if in normal circumstances it ought not to be on fire or undergoing the applicant of heat. This would mean, for example, that a cake burning in the oven is not considered as fire. Flames leaping out of the sofa are different story!
THEFT AND BURGLARY The theft coverage is usually restricted to items taken after a forcible entry of your home. So theft by a maid or guests may not be covered. Nor is theft during or after fire – more properly called looting – usually covered under the theft clauses of a home insurance policy. Again – as in all insurance – careful reading of what is and what is not covered is required. Specific items of high value, such as jewelry, may be subject to special conditions, such as the provision as a safe. And frequently, insurance companies seek a detailed list of such items, perhaps with independent valuations and photographs.
NATURAL DISASTERS: Although “natural disaster” is most often taken by people outside the insurance business to mean an earthquake, in fact the term can cover many other circumstances as well. It may provide protection against wind damage, storms, floods, landslides, torrential rain, or other non-human inspired events. However, a building that collapses after heavy rain has undermined the foundations may not be covered if there has been negligence in the construction. Coverage against natural disasters can be applied to the homes themselves, personal belongings, or the land on which the property lies, or any combination of the three. There is an extra charge for insurance against natural disasters and clearly this is higher if the property is located in an area known to be prone to earthquakes.
DEDUCTIBLES: Deductibles often apply to this kind f coverage to prevent endless claims for replacing a few tiles being hurled from the roof by a high wind. When natural disasters are added to the property insurance policy, one percent of the value of the content and the construction is applied as a deductible. This means that in case of an earthquake, for example, the insured will have to pay that amount of the replacement value of the property’s construction and content, and the insurance company will bear the rest. A higher deductible, ten percent of the value of the claim, is usually applied for water damage, such as from bursts or flooding and natural perils. Deductibles are imposed to reduce the premiums for property that otherwise, relative to other insurance policies, are very high, and as noted above, to eliminate small claims.
Property Registration
How to register your new home
To register a new home a lot of official procedures need to be followed. It is important to register a new home with the Ministry of Finance to make it official. The ministry maintains records of real estate transactions including ownership information, past transactions on properties, and information on any legal disputes on properties. This information is accessible to the general public for a nominal fee.
A RECORD OF WHO OWNS WHAT The Directorate of Land Registration and Cadastre, based in Tabaris, keeps a record of land and property throughout the country: who owns it, the specifications of the plot, buildings and facilities, and any outstanding disputes. All purchases, sales, leases and inheritance of land or real estate, as well as insurance applications, must be registered with one of the Directorate’s office. The Directorate was established in 1926 and is under the authority of the Ministry of Finance. In addition to the head office in Tabaris, there are branches in Riad al Solh Square, Baabda, Jounieh, Zalka, Sidon, The Bekaa, and two Branches in Tripoli. Each branch has the responsibility for a particular area of the country. Although there are records for most of the country, there are still areas that the government has yet to survey.
PUBLIC ACCESS As well as registering properties, these offices can answer queries concerning the ownership of property. Anybody can make an inquiry about any piece of real estate and apply for a copy of ownership deeds. All the Directorate needs is the location of the property. The application costs LL1, 000 for processing and LL9, 000 for the copy of the deed. The deed details the exact location, number, and size of the plot, who is the registered owner, whether there are any disputes over ownership or pending legal cases. Importantly, the deed also indicates whether there is compulsory government order on the property or, for example, whether any roads are planned through the area. Although an agent or lawyer is usually asked to take care of the application process, anyone can do it. Computerization has made the application process much faster, encouraging many more people to apply directly. Ownership queries can also be applied for through LibanPost, which will render the service for LL15, 000 (broken down into LL9, 000 for the copy of the deed, LL 1,000 for processing, LL 4, 545 for LibanPost, and LL455 VAT)
REGISTERING A SALE After agreeing to purchase a piece of property, a buyer has two options concerning registration. The buyer and seller can both go to the notary public and sign a sales contract, which gives the buyer a period of ten years to officially register the property. The second option allows the buyer to go directly to the local office of the directorate and register the sale immediately, after presenting a series of documents and paying a fee. Two essential documents required to register a property are the municipal and financial ‘quittance’. These indicate that all municipal taxes on the property have been paid, and that there is no outstanding mortgage. Registering a property can take up to three days, and is usually carried out by an agent. The agent will charge a fee of around $200, although in some cases it can be as high as $1,000. The difference usually depends on the complexity of the registration and the time taken by the agent. Some developers and engineers save buyer’s cash by offering to process the registration for them. This will cost both parties less, as applications can be processed in bulk, thus saving time and agent’s fees.
IT IS ALL IN THE DEED A deed of ownership is a personal document. The document contains information defining the size of the property and its exact location, with a duplicate of the information held in the national land survey office. The information includes the location of the plot with its allocated number, its total area, boundaries, and details of items on it, such as construction, trees, terraces, and whether it contains, for instance, a water source. The deed also contains the full name of the owner. The official name of the deed changes according to the location of the plot and its legal status. If a plot is measured, defined as private property, and its boundaries designated, the owner has the right to a deed of ownership or ‘sanad tamlik’. In some areas, the measurements of plots are mentioned, and under these circumstances the landowner obtains a registration certification or ‘shahada kaid mulkiah’. For areas where the borders of the plots are designated but await a final ruling from a real estate judge, the owner will obtain a real estate certificate or ‘ifada ikariah’. However, there are areas in Lebanon that have not been surveyed, where plots have no official defined boundaries. Such areas cover 2, 000 quare kilometers, making up about 20 percent of the country. In this case, property ownership can be proven through documents held by the mukhtars of these areas. Landowners receive a ‘notification’ from the mukhtar of the area indicating that they own a plot. This notification is as legitimate as any other deed of the ownership, except that it does not figure in any real estate department records-it exists only with the mukhtar. Any acquisition of property in these areas will remain registered in the mukhtar’s records unti the area is fully surveyed.
GETTING THE DEED The procedure for obtaining a deed is easy, provided that the applicant provides a purchase contract. According to the Ministry of Finance, paying property taxes and fees is the only guarantee to the purchaser that the property is finally his or hers. The Ministry views property taxes as a form of registration fee, and the registration of the property safeguards the rights of the owner. The fees for obtaining the deed vary between 5.5 and 6 percent of the value of the deal for both Lebanese citizens and foreigners. These fees include flat taxes that amount to around 80, 000L.L (includes 10, 000 title deed stamp, 7, 500 L.L title deed fee, 7, 500 journal entry fee, 7, 500 contract fee and 50, 000 new title deed fee) and a five percent transfer tax on the declared sales price or the valuation, whichever is higher. There are also municipality fees, which amount to five percent of previous fees, a 0.3 fiscal stamp fee, and a 0.1 percent lawyers’ fee. The valuation for new buildings is calculated by multiplying the total rental value by 12.5. For inherited properties, the taxes vary from three percent to 13 percent depending on the value of the property.
PROPERTY TAX A sales tax, paid by the buyer, is applied on buildings and apartments, as well as on land. Mortgage fees, which are one percent stamp plus three percent stamp duties, are the responsibility of the bank handling the transaction. These two types of taxes account for approximately three-quarters of the total tax collected. The mortgagee is accountable for the so-called mortgage release fees- again one percent – as well as partitioning fees of five percent. These apply to property with multiple ownership deeds, and which upon completion will be divided handles the exchange fee of six percent, paid in one installment. These taxes and fees apply to all property throughout Lebanon.
BUILT-UP PROPERTY TAX Taxes on built-up property are incrementally variable from four to 13 percent. For example, taxes in Beirut and Mount Lebanon contribute 80 percent of the revenue for the treasury, although these regions represent only 20 percent of the total area of Lebanon How to register your new home
To register a new home a lot of official procedures need to be followed. It is important to register a new home with the Ministry of Finance to make it official. The ministry maintains records of real estate transactions including ownership information, past transactions on properties, and information on any legal disputes on properties. This information is accessible to the general public for a nominal fee.
A RECORD OF WHO OWNS WHAT The Directorate of Land Registration and Cadastre, based in Tabaris, keeps a record of land and property throughout the country: who owns it, the specifications of the plot, buildings and facilities, and any outstanding disputes. All purchases, sales, leases and inheritance of land or real estate, as well as insurance applications, must be registered with one of the Directorate’s office. The Directorate was established in 1926 and is under the authority of the Ministry of Finance. In addition to the head office in Tabaris, there are branches in Riad al Solh Square, Baabda, Jounieh, Zalka, Sidon, The Bekaa, and two Branches in Tripoli. Each branch has the responsibility for a particular area of the country. Although there are records for most of the country, there are still areas that the government has yet to survey.
PUBLIC ACCESS As well as registering properties, these offices can answer queries concerning the ownership of property. Anybody can make an inquiry about any piece of real estate and apply for a copy of ownership deeds. All the Directorate needs is the location of the property. The application costs LL1, 000 for processing and LL9, 000 for the copy of the deed. The deed details the exact location, number, and size of the plot, who is the registered owner, whether there are any disputes over ownership or pending legal cases. Importantly, the deed also indicates whether there is compulsory government order on the property or, for example, whether any roads are planned through the area. Although an agent or lawyer is usually asked to take care of the application process, anyone can do it. Computerization has made the application process much faster, encouraging many more people to apply directly. Ownership queries can also be applied for through LibanPost, which will render the service for LL15, 000 (broken down into LL9, 000 for the copy of the deed, LL 1,000 for processing, LL 4, 545 for LibanPost, and LL455 VAT)
REGISTERING A SALE After agreeing to purchase a piece of property, a buyer has two options concerning registration. The buyer and seller can both go to the notary public and sign a sales contract, which gives the buyer a period of ten years to officially register the property. The second option allows the buyer to go directly to the local office of the directorate and register the sale immediately, after presenting a series of documents and paying a fee. Two essential documents required to register a property are the municipal and financial ‘quittance’. These indicate that all municipal taxes on the property have been paid, and that there is no outstanding mortgage. Registering a property can take up to three days, and is usually carried out by an agent. The agent will charge a fee of around $200, although in some cases it can be as high as $1,000. The difference usually depends on the complexity of the registration and the time taken by the agent. Some developers and engineers save buyer’s cash by offering to process the registration for them. This will cost both parties less, as applications can be processed in bulk, thus saving time and agent’s fees.
IT IS ALL IN THE DEED A deed of ownership is a personal document. The document contains information defining the size of the property and its exact location, with a duplicate of the information held in the national land survey office. The information includes the location of the plot with its allocated number, its total area, boundaries, and details of items on it, such as construction, trees, terraces, and whether it contains, for instance, a water source. The deed also contains the full name of the owner. The official name of the deed changes according to the location of the plot and its legal status. If a plot is measured, defined as private property, and its boundaries designated, the owner has the right to a deed of ownership or ‘sanad tamlik’. In some areas, the measurements of plots are mentioned, and under these circumstances the landowner obtains a registration certification or ‘shahada kaid mulkiah’. For areas where the borders of the plots are designated but await a final ruling from a real estate judge, the owner will obtain a real estate certificate or ‘ifada ikariah’. However, there are areas in Lebanon that have not been surveyed, where plots have no official defined boundaries. Such areas cover 2, 000 quare kilometers, making up about 20 percent of the country. In this case, property ownership can be proven through documents held by the mukhtars of these areas. Landowners receive a ‘notification’ from the mukhtar of the area indicating that they own a plot. This notification is as legitimate as any other deed of the ownership, except that it does not figure in any real estate department records-it exists only with the mukhtar. Any acquisition of property in these areas will remain registered in the mukhtar’s records unti the area is fully surveyed.
GETTING THE DEED The procedure for obtaining a deed is easy, provided that the applicant provides a purchase contract. According to the Ministry of Finance, paying property taxes and fees is the only guarantee to the purchaser that the property is finally his or hers. The Ministry views property taxes as a form of registration fee, and the registration of the property safeguards the rights of the owner. The fees for obtaining the deed vary between 5.5 and 6 percent of the value of the deal for both Lebanese citizens and foreigners. These fees include flat taxes that amount to around 80, 000L.L (includes 10, 000 title deed stamp, 7, 500 L.L title deed fee, 7, 500 journal entry fee, 7, 500 contract fee and 50, 000 new title deed fee) and a five percent transfer tax on the declared sales price or the valuation, whichever is higher. There are also municipality fees, which amount to five percent of previous fees, a 0.3 fiscal stamp fee, and a 0.1 percent lawyers’ fee. The valuation for new buildings is calculated by multiplying the total rental value by 12.5. For inherited properties, the taxes vary from three percent to 13 percent depending on the value of the property.
PROPERTY TAX A sales tax, paid by the buyer, is applied on buildings and apartments, as well as on land. Mortgage fees, which are one percent stamp plus three percent stamp duties, are the responsibility of the bank handling the transaction. These two types of taxes account for approximately three-quarters of the total tax collected. The mortgagee is accountable for the so-called mortgage release fees- again one percent – as well as partitioning fees of five percent. These apply to property with multiple ownership deeds, and which upon completion will be divided handles the exchange fee of six percent, paid in one installment. These taxes and fees apply to all property throughout Lebanon.
BUILT-UP PROPERTY TAX Taxes on built-up property are incrementally variable from four to 13 percent. For example, taxes in Beirut and Mount Lebanon contribute 80 percent of the revenue for the treasury, although these regions represent only 20 percent of the total area of Lebanon
Seller's Checklist
Commercial Seller's Checklist
Step 1: Determine your objective: Decide what your objectives are - whether they are to move quickly or achieve the best price. This will then reflect how much time and money you may need to spend in preparing your property for sale.
Step 2: Get your commercial space in perfect condition: Make all necessary repairs before putting your property on the market. Most buyers want to buy commercial property that’s in 'red ribbon deal' condition without having to arrange for fix-up work.
Step 3: Be aware of the time frame: The entire selling process could take anything from a couple of weeks to a year or longer. Step 4: Market your property: Find a buyer and prevent void periods by marketing your property across a wide range of media avenues. Get access to the best tools to market your property. Take photographs, measure the property, decide what is to be included in the sale and identify the key features. Focus on the positive aspects of the property, i.e. excellent location, air conditioning, useable space and parking.
Step 5: Understand your price: Understand at what price properties similar to yours are selling for. Remember that prices advertised and prices sold at are different. Set realistic prices to avoid delays on generated interest.
Step 6: Be flexible with viewings: Ensure flexibility of viewing timings to increase the speed of the selling process.
Step 7: Evaluate your potential buyer: It is worthwhile establishing from the purchaser the following so that you are aware if there maybe anything that is likely to hold the sale. For e.g. are they a cash purchase or are they getting a mortgage? If a mortgage, what deposit are they putting down?
Step 8: Organize your paperwork: Check with your consultant for all the necessary documentation.
Step 9: Pay off your mortgage (in case it’s mortgaged): Produce a liability letter from the bank that you have the mortgage on your property with. Once you do, the buyer's bank will then arrange to pay off your mortgage. You may be asked to sign a few documents pertaining to authorizing your bank to accept the settlement of the loan and instructing the bank to release the property documents once this is settled. The buyer's bank will pay off the mortgage while your bank issues the clearance documentation.
Step 10: If the buyer's bank issues a guarantee letter, you will receive the cheque for any additional payment a week later. The buyer's contribution will be paid to you through a manager's cheque. Commercial Seller's Checklist
Step 1: Determine your objective: Decide what your objectives are - whether they are to move quickly or achieve the best price. This will then reflect how much time and money you may need to spend in preparing your property for sale.
Step 2: Get your commercial space in perfect condition: Make all necessary repairs before putting your property on the market. Most buyers want to buy commercial property that’s in 'red ribbon deal' condition without having to arrange for fix-up work.
Step 3: Be aware of the time frame: The entire selling process could take anything from a couple of weeks to a year or longer. Step 4: Market your property: Find a buyer and prevent void periods by marketing your property across a wide range of media avenues. Get access to the best tools to market your property. Take photographs, measure the property, decide what is to be included in the sale and identify the key features. Focus on the positive aspects of the property, i.e. excellent location, air conditioning, useable space and parking.
Step 5: Understand your price: Understand at what price properties similar to yours are selling for. Remember that prices advertised and prices sold at are different. Set realistic prices to avoid delays on generated interest.
Step 6: Be flexible with viewings: Ensure flexibility of viewing timings to increase the speed of the selling process.
Step 7: Evaluate your potential buyer: It is worthwhile establishing from the purchaser the following so that you are aware if there maybe anything that is likely to hold the sale. For e.g. are they a cash purchase or are they getting a mortgage? If a mortgage, what deposit are they putting down?
Step 8: Organize your paperwork: Check with your consultant for all the necessary documentation.
Step 9: Pay off your mortgage (in case it’s mortgaged): Produce a liability letter from the bank that you have the mortgage on your property with. Once you do, the buyer's bank will then arrange to pay off your mortgage. You may be asked to sign a few documents pertaining to authorizing your bank to accept the settlement of the loan and instructing the bank to release the property documents once this is settled. The buyer's bank will pay off the mortgage while your bank issues the clearance documentation.
Step 10: If the buyer's bank issues a guarantee letter, you will receive the cheque for any additional payment a week later. The buyer's contribution will be paid to you through a manager's cheque. Residential Seller's Checklist
Step 1: Be aware of the time frame: The entire selling process will take at up to 3 month, once you have an agreed buyer.
Step 2: Market your property: Find a buyer and prevent void periods by marketing your property across a wide range of media avenues.
Step 3: Make your property stand out: First impressions count, so showcase your property in the best possible light to attract buyers.
Step 4: Understand your price: Understand at what price properties similar to yours are selling for. Remember that prices advertised and prices sold at are different. Set realistic prices to avoid delays on generated interest.
Step 5: Be flexible with viewings: Ensure flexibility of viewing timings to increase the speed of the selling process.
Step 6: Organize your paperwork: Prepare the necessary documentation. This includes the Sales & Purchase Agreement (SPA), the title deed, floor plans and a location map.
Step 7: Pay off your mortgage (in case it’s mortgaged): Produce a liability letter from the bank that you have the mortgage on your property with. Once you do, the buyer's bank will then arrange to pay off your mortgage. You may be asked to sign a few documents pertaining to authorizing your bank to accept the settlement of the loan and instructing the bank to release the property documents once the mortgage is settled. The buyer's bank will pay off the mortgage while your bank issues the clearance documentation.
Step 8: If the buyer's bank issues a guarantee letter, you will receive the cheque for any additional payment a week later. The buyer's contribution will be paid to you through a manager's cheque. Residential Seller's Checklist
Step 1: Be aware of the time frame: The entire selling process will take at up to 3 month, once you have an agreed buyer.
Step 2: Market your property: Find a buyer and prevent void periods by marketing your property across a wide range of media avenues.
Step 3: Make your property stand out: First impressions count, so showcase your property in the best possible light to attract buyers.
Step 4: Understand your price: Understand at what price properties similar to yours are selling for. Remember that prices advertised and prices sold at are different. Set realistic prices to avoid delays on generated interest.
Step 5: Be flexible with viewings: Ensure flexibility of viewing timings to increase the speed of the selling process.
Step 6: Organize your paperwork: Prepare the necessary documentation. This includes the Sales & Purchase Agreement (SPA), the title deed, floor plans and a location map.
Step 7: Pay off your mortgage (in case it’s mortgaged): Produce a liability letter from the bank that you have the mortgage on your property with. Once you do, the buyer's bank will then arrange to pay off your mortgage. You may be asked to sign a few documents pertaining to authorizing your bank to accept the settlement of the loan and instructing the bank to release the property documents once the mortgage is settled. The buyer's bank will pay off the mortgage while your bank issues the clearance documentation.
Step 8: If the buyer's bank issues a guarantee letter, you will receive the cheque for any additional payment a week later. The buyer's contribution will be paid to you through a manager's cheque.
Tenant's Checklist
Commercial Tenant's Checklist
Step 1: Draw up a list of requirements: Location, infrastructure and size are key.
Step 2: Determine the type of property you wish to rent: Most of commercial office and retail spaces come standard as ‘shell & core’ which means that you will receive only the unit shell without any fixtures or fittings.
Step 3: Work out your finances: When renting commercial property either annually or monthly, the rent will depend mostly on what you can afford. Make sure you add in the costs of electricity, water, satellite and internet packages along with and other extra charges.
Step 4: Find out who is responsible for internal and external maintenance and repair: Check if you are responsible only for maintaining the premises in its current condition, else you may be liable for damage or wear and tear that occurred before you occupied it.
Step 5: Make an offer: After viewing all the commercial properties with your consultant you may want to make an offer on a certain price; negotiate for flexible payment plans and rent reductions on full payments in advance for the year with the landlord.
Step 6: Payment: Once your offer is accepted, a rental agreement will be drawn up. Once the agreement is finalized, your deposit will be passed to the landlord. Commercial Tenant's Checklist
Step 1: Draw up a list of requirements: Location, infrastructure and size are key.
Step 2: Determine the type of property you wish to rent: Most of commercial office and retail spaces come standard as ‘shell & core’ which means that you will receive only the unit shell without any fixtures or fittings.
Step 3: Work out your finances: When renting commercial property either annually or monthly, the rent will depend mostly on what you can afford. Make sure you add in the costs of electricity, water, satellite and internet packages along with and other extra charges.
Step 4: Find out who is responsible for internal and external maintenance and repair: Check if you are responsible only for maintaining the premises in its current condition, else you may be liable for damage or wear and tear that occurred before you occupied it.
Step 5: Make an offer: After viewing all the commercial properties with your consultant you may want to make an offer on a certain price; negotiate for flexible payment plans and rent reductions on full payments in advance for the year with the landlord.
Step 6: Payment: Once your offer is accepted, a rental agreement will be drawn up. Once the agreement is finalized, your deposit will be passed to the landlord. Residential Tenant's Checklist
Step 1: Research prior to renting: Knowing the ideal area/neighborhood you would like to live in will help you understand what you can get for your budget.
Step 2: Schools, conveniences and commuting: Consider the location of your home relative to your life requirements: Schools, transport, amenities. Commuting is also a critical factor – a long journey can detract from your quality of life.
Step 3: Budget: Include rent advances, brokerage fees, immediate relocation expenses, other loan payments, transportation expenses, food and any activity that you do on a regular basis that costs money.
Step 4: Make a list of what property features are important for you: It’s rare to find perfection, so keep to your list and don’t lose focus of what’s important. Bring a notepad to each viewing and take photos for reference. Make a snag list to ensure all issues are addressed by the landlord.
Step 5: Size: Consider the size of the property if you are moving existing furniture across. Be organized – take dimensions of existing furniture and use a measuring tape to check if it.
Step 6: Be ready: Some landlords require one cheque as an upfront annual payment while others accept up to 4 cheques. Payments are usually made through post-dated cheques. Ensure that payment terms are clearly stated in the contract upon signing. Residential Tenant's Checklist
Step 1: Research prior to renting: Knowing the ideal area/neighborhood you would like to live in will help you understand what you can get for your budget.
Step 2: Schools, conveniences and commuting: Consider the location of your home relative to your life requirements: Schools, transport, amenities. Commuting is also a critical factor – a long journey can detract from your quality of life.
Step 3: Budget: Include rent advances, brokerage fees, immediate relocation expenses, other loan payments, transportation expenses, food and any activity that you do on a regular basis that costs money.
Step 4: Make a list of what property features are important for you: It’s rare to find perfection, so keep to your list and don’t lose focus of what’s important. Bring a notepad to each viewing and take photos for reference. Make a snag list to ensure all issues are addressed by the landlord.
Step 5: Size: Consider the size of the property if you are moving existing furniture across. Be organized – take dimensions of existing furniture and use a measuring tape to check if it.
Step 6: Be ready: Some landlords require one cheque as an upfront annual payment while others accept up to 4 cheques. Payments are usually made through post-dated cheques. Ensure that payment terms are clearly stated in the contract upon signing.
Why you need a Broker
Need a Broker
Most people do. Taking the advice of an expert is best as it could save you from making a bad property deal. Brokers know their areas well and they know the market. Choosing to go it alone you may save on brokers’ commission fees, but the price you could end up paying may be very high indeed. A brokers’ experience and expertise could save your time and help you avoid the pitfalls of the market. His advice could be invaluable.
CHOOSING THE RIGHT BROKER Friends, parents, or business associates can give you brokers’ name. But don’t just ask for names. Find out why people are recommending a particular broker. Professionals in related fields such as finance, tax, and law can also be good broker referral sources. Even with a referral from a trusted source, you should make your own inquiries. Ask for a list of every property the brokerage has sold n recent months. That way you will be able to see how many properties it has sold and listed in your target neighborhood. Eliminate brokers who are focused outside areas and those who have geographical focus. Check for the property type (simple, deluxe, super deluxe, etc.) that has been sold. This will tell whether the broker works on your type of property. See if the broker handles property in your price range. A broker who deals in much more or less expensive property than you expect to buy may not be the right broker for you. Anyone who declines to show such information may be trying to hide either lack of sales or unhappy clients. One common mistake is thinking that working with more than one broker will be much better. Things don’t work that way in the real world. You will probably get confused with so many suggestions and it will end up being more difficult to find your dream house. A broker may neglect to focus on your particular case if it is apparent that you are dealing with another one at the same time.
THE BROKERS’ CUT Broker’s compensation is normally a commission that is paid when a property is purchased. Commission is calculated as a percentage of the sale price. In Lebanon, it is usually five percent, with the seller and the buyer paying 2.5 percent each. The commission covers the cost of ads and employees. It does not cover registration expenses – although brokerage firms provide all the help the buyer needs while registering the new house. The commission is not usually negotiable if you are dealing with a well known firm.
WITHOUT A BROKER One can deal directly with home buyers and developers. In such cases, neither the developer not the buyer pays commission. While some home-buyers have successfully purchased their homes without a broker, others have made big blunders. Using a broker may make a lot of sense for beginners. Beyond the actual job of finding the property, the perform additional tasks such as negotiating, estimating the market value, checking the legal aspects, and helping coordinate property inspections, facilitating registration procedures, etc. all these tasks need to be done whether there is a broker or not. The money paid in commission is not guarantee that nothing will go wrong, but the services of a professional broker make it much less likely. Using a newspaper ad to buy a refrigerator that doesn’t work is a nuisance. Buying a home without the help of a broker could be a disaster.
REPRESENTING THE SECTOR A newly formed organization, the Real Estate Association of Lebanon (R.E.A.L) is a representative body for brokers an consultants, with the purpose of regulation, education, and providing, a set of standards and code of ethics for real estate industry. R.E.A.L will also act as a mediator between brokers and their clients if disputes arise. Given these goals and targets, R.E.A.L has the potential to transform the brokerage business in Lebanon into a professional industry, and that will create trust between brokers and clients, which in turn will give a boost to an already buoyant real estate market. It is one of the sources to check with regarding the reputation of a broker.
Need a Broker
Most people do. Taking the advice of an expert is best as it could save you from making a bad property deal. Brokers know their areas well and they know the market. Choosing to go it alone you may save on brokers’ commission fees, but the price you could end up paying may be very high indeed. A brokers’ experience and expertise could save your time and help you avoid the pitfalls of the market. His advice could be invaluable.
CHOOSING THE RIGHT BROKER Friends, parents, or business associates can give you brokers’ name. But don’t just ask for names. Find out why people are recommending a particular broker. Professionals in related fields such as finance, tax, and law can also be good broker referral sources. Even with a referral from a trusted source, you should make your own inquiries. Ask for a list of every property the brokerage has sold n recent months. That way you will be able to see how many properties it has sold and listed in your target neighborhood. Eliminate brokers who are focused outside areas and those who have geographical focus. Check for the property type (simple, deluxe, super deluxe, etc.) that has been sold. This will tell whether the broker works on your type of property. See if the broker handles property in your price range. A broker who deals in much more or less expensive property than you expect to buy may not be the right broker for you. Anyone who declines to show such information may be trying to hide either lack of sales or unhappy clients. One common mistake is thinking that working with more than one broker will be much better. Things don’t work that way in the real world. You will probably get confused with so many suggestions and it will end up being more difficult to find your dream house. A broker may neglect to focus on your particular case if it is apparent that you are dealing with another one at the same time.
THE BROKERS’ CUT Broker’s compensation is normally a commission that is paid when a property is purchased. Commission is calculated as a percentage of the sale price. In Lebanon, it is usually five percent, with the seller and the buyer paying 2.5 percent each. The commission covers the cost of ads and employees. It does not cover registration expenses – although brokerage firms provide all the help the buyer needs while registering the new house. The commission is not usually negotiable if you are dealing with a well known firm.
WITHOUT A BROKER One can deal directly with home buyers and developers. In such cases, neither the developer not the buyer pays commission. While some home-buyers have successfully purchased their homes without a broker, others have made big blunders. Using a broker may make a lot of sense for beginners. Beyond the actual job of finding the property, the perform additional tasks such as negotiating, estimating the market value, checking the legal aspects, and helping coordinate property inspections, facilitating registration procedures, etc. all these tasks need to be done whether there is a broker or not. The money paid in commission is not guarantee that nothing will go wrong, but the services of a professional broker make it much less likely. Using a newspaper ad to buy a refrigerator that doesn’t work is a nuisance. Buying a home without the help of a broker could be a disaster.
REPRESENTING THE SECTOR A newly formed organization, the Real Estate Association of Lebanon (R.E.A.L) is a representative body for brokers an consultants, with the purpose of regulation, education, and providing, a set of standards and code of ethics for real estate industry. R.E.A.L will also act as a mediator between brokers and their clients if disputes arise. Given these goals and targets, R.E.A.L has the potential to transform the brokerage business in Lebanon into a professional industry, and that will create trust between brokers and clients, which in turn will give a boost to an already buoyant real estate market. It is one of the sources to check with regarding the reputation of a broker.
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