The monegasque real estate market, known for its exclusivity and high prices, sees its game rules changing profoundly. Indeed, since September 1, 2024, the property dealer profession is subject to a more strict regulation, with the goal of reinforcing transparency and buyer protection. This new law, passed in July 2024, comes shaking the established practices and imposes new constraints to professionals of the sector.
Ending of total exemption of the registration fees
One of the main measures of this reform reside in the revision of the tax regime applicable to property dealers. Up until now, these professionals used to benefit from total exemption of the registration fees when acquiring a property destined to be resold. This measure, which was initially intended to encourage real estate investment and renovation, has sometimes been misused for speculative purposes.
Which is why, from September 1, 2024, the exemption of registration fees is now capped at 50%. This cut in half aims to limit the operations of quick purchase-resale and to favor a better rotation of properties on the market. To benefit from partial exoneration, property dealers will have to respect strict conditions, including :
- A clearly defined resale period: The acquired properties must be resold before a deadline, in order to prevent the property dealers from keeping the properties as assets for long periods of time. This deadline will specify the minimum and maximum periods within which the resale must take place.
- Compliance with current standards: The acquired properties must be compliant to the construction, security and empowerment norms in Monaco. This disposition aims to guarantee the quality of homes for sale and protect buyers.
Reinforcement of professional obligations
The profession of property dealer in Monaco is subject to a closer supervision, translated by new rigorous professional obligations.
As of today, the property dealers are bound to subscribe a financial guarantee at a licensed financial institution. This guarantee, that takes the form of a bank guarantee or an insurance, has the goal of securing the real estate transactions and indemnifying potential buyers in the event of the professional's default.
Moreover, professional liability insurance becomes mandatory for all property dealers. This device aims to cover the damages that clients could endure as a result of professional negligence on the part of the real estate agent, whether in the form of a valuation error, inappropriate advice or an omission in the information provided.
Finally, the new regulation imposes the property dealers to justify an effective residence in Monaco. This condition aims to reinforce the link between the real estate professionals and the Principality, and to guarantee a better understanding of the local market.
The aim of all these measures is to further professionalize Monaco's real estate sector, strengthen the legal security of transactions and protect the interests of purchasers.
Deadline for compliance
The property dealers that practiced their activity before the new law comes into force have a three month deadline, until the 27th of October 2024, to comply with the new provisions.
By default, they expose themselves to sanctions that can go up to revocation or suspension of their right to exercise their profession, and even criminal proceedings.
This ambitious reform has multiple objectives :
- Reinforce real estate market transparency: By imposing new obligations to property dealers, the monegasque authorities aim to fight against opaque practices and guarantee complete information to buyers.
- Protect buyers: The new measures reinforced the legal security of transactions and limit the risks of litigation.
- Regulate real estate market: By limiting speculation, this reform contributes to stabilizing the real estate market and making access to the property market more equitable.
The consequences of this new regulation on the monegasque real estate market are multiple and complex. Although it is still too soon to precisely measure the impact, multiple scenarios are to be considered.
Evolution of prices ?
Some observers are afraid of an increase in prices regarding real estate concerning the new constraints over property dealers. Indeed, the height of the costs linked to the financial guarantees, the professional liability insurance and any necessary compliance work could encourage professionals to pass on these additional costs in their selling prices. However, some think that this increase could be limited by a big competition between the different actors of the market.
A slowdown of transactions ?
The reinforcement of regulatory obligations could also bring a slowdown of real estate transactions, especially due to a more complex buying procedure and additional costs for buyers. Moreover, the reduction of the exemption of the registration fees could dissuade some investors. But, in the near future, this regulation could contribute to stabilize the market and limit the speculation phenomenon.
Improved quality of service ?
On the other hand, this new regulation could have a positive impact on the quality of the services offered by property dealers. Indeed, by reinforcing professional obligations and by encouraging professionals to conform to higher norms, this reform should contribute to better transparency, reliability and quality of advice for buyers. Moreover, the necessity to justify an effective residence in Monaco could favor the emergence of a real estate offer that is more adapted to the needs of the local clientele.
Changes in the real estate landscape ?
More globally, this reform could bring a profound change in the monegasque real estate landscape. Small structures may be led to regroup or disappear, while the strongest and most organized actors should reinforce their position. New forms of collaboration between different real estate professionals could also emerge.
The implementation of this new regulation marks a decisive turn for the monegasque real estate market. By implementing a more strict legal frame and by reinforcing the professional obligations of the property dealers, the authorities of the Principality show their desire to promote a healthy, transparent and attractive real estate market.
This reform is part of a global approach wanting to consolidate Monaco's reputation as a leading financial and real estate center.By offering buyers a bigger legal security and by fighting against fraudulent practices, this regulation contributes to reinforce the trust in the Monegasque real estate sector and bring new investors.
In time, this reform should bring a better quality in terms of services offered by real estate professionals, a better protection of users and better market stability.
As a conclusion, this new regulation constitutes an essential step to perpetuate Monaco’s activity as a privileged destination for real estate investment.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
.svg)