Guide to Buying Property in Chile

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Property guide to buying in Chile

Chile boasts the strongest economy in South America, as well as a wide range of stunning landscapes and coastlines that stretch from the southern border of Peru all the way down to the Antarctic.  But property costs remain low compared to those of the United States and Europe because of the weakening of the Chilean peso over the past few years (see the latest exchange rate).  For these reasons and more, Chile has become a very attractive option for foreign home buyers and property investors.

Who can buy property?

Any individual or corporate body may purchase and hold real estate in Chile, whether you live there or not.  The only restrictions on foreigners owning property apply to border areas, which are not particularly desirable locations for out-of-towners anyway.  Foreigners possess the exact same property rights as Chileans, and these rights are clearly defined and fully protected.  However, it is quite difficult for foreigners to obtain a mortgage in Chile, so most international buyers pay in cash. 

Where should you look?

Northern Chile is best known for its mineral resources and the spectacular moonlike scenery of the Atacama Desert, which is the driest place in the world.  The south is much chillier but also full of natural beauty, such as vast glaciers, thousand-year-old forests, fjords, and serene lakes.  It includes part of Patagonia (the rest of this region belongs to Argentina), a mecca for outdoor enthusiasts. 

Most of Chile’s population resides in its temperate central region, which claims the sophisticated capital city of Santiago and the main international airport.  Central Chile is also well known for its gorgeous beaches, which draw the country’s elite every summer, and its impressive winemaking.   While foreign property buyers are unusual in Santiago, they account for the vast majority of real estate sales in wine country, which includes the historic Maipo Valley (with grape plantings dating from the 16th century) and the prestigious Colchagua Valley (about 100 miles south of Santiago).  Most of these buyers are based in the US, Brazil, or Argentina.

chilean property

What’s the housing market like?

Chile’s housing market experienced a slump in recent years due to slow economic growth, and low- to mid-priced homes were most affected.  Last year, sales of homes across the country dropped by over one-third to about 53,000 units.  New construction also decreased, partly because of a 19% VAT (Value Added Tax) imposed on “habitual sellers” like real estate developers that took effect in January 2016.  However, the housing market started to show signs of recovery in the first quarter of 2017.

How does buying property in Chile work?

Determining a Property’s Value

Buyers should beware of a few issues when it comes to valuing property in Chile, especially in more rural areas:

  • Two intrinsically equal properties can be valued quite differently, either because of seller inexperience or misperceptions surrounding the neighborhood's social status.  Once you find a desirable location or specific property, send in an appraiser for a more realistic figure.
  • Sometimes simply having a structure on a piece of land, regardless of its quality, grossly inflates the price of the property, so be sure to separate the raw land cost from the cost of the structure.  Note that it is often cheaper to build something yourself in Chile than to buy a preexisting structure.
  • What Chileans value most, such as being close to tourist attractions, can differ from what foreigners prefer.  So a seller's idea of a fair price may vary greatly from yours.
  • Many properties in Chile will not meet the national building code.  Codes tend to be enforced in larger towns and cities, but not necessarily in smaller municipalities that have more limited budgets.  Be sure to rely on an engineer to inspect the structure and determine the costs of fixing any problems.  For houses built to American or European standards (e.g., by a larger Chilean construction company), expect to pay a premium.

Getting Help from Professionals

Real estate agents in Chile are unregulated, so it’s important to find one with a good reputation and proven track record.  For greater peace of mind, you might consider engaging a third-party real estate consultant who can help you through each step of the process and reduce stress and uncertainty.  This type of support is especially useful if you don’t speak Spanish fluently or have a trusted Chilean contact.  You will also most likely need to hire a lawyer to investigate the property’s legal history and ensure that its free of debts and liens.

Registering the Sale

After the buyer and seller settle on a price and the property’s title is confirmed, the entire purchase price gets held in escrow until the transfer is approved by the Chilean property registration agency, the Conservador de Bienes Raices.  This process takes about 20 to 40 days.  Note that all sale contracts must be notarized prior to registration or else they’re not valid.

Paying Closing Costs

Closing costs in Chile tend to be low.  Buyers can expect to pay between 4 and 8 percent of the purchase price, depending on the fees of the professionals involved.  Real estate agents typically charge about 2 percent to the buyer and the same amount to the seller, and legal fees hover around 1 percent.  Notaries, who handle the bulk of the transaction details, charge about .1 percent, and the registration fee ranges from $350 to $800 USD.  You can also expect a stamp duty of up to .3 percent, which is a tax levied on documents.

Transferring Money Internationally

Traditional banks tend to be the most expensive method for transferring money internationally because of their high fees and foreign exchange rate markups.  When paying for your new property and the expenses associated with it, such as renovations, regular maintenance, and property taxes, consider relying on a modern online money transfer provider instead.  There are a variety of providers that make cross-border payments cheaper and easier.  They can even help you set up recurring payments like monthly mortgage payments.  Use our money transfer comparison tool to find the best provider for your needs.  

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