This is an article written by a dear friend, Santiago de Tezanos, an architect in Montevideo.
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Unbiased tips are alway important. Therefore, I should first say the following suggestions are biased toward an investment view point, considering the pros and cons of different scenarios and possibilities. Some of the suggestions are simple, but many times these steps are missed.
There are two scenarios below with tips in each.
Housing for Personal Use
Inspections are always important, but if you are coming here from another country, an inspection by a competent professional (engineer or architect) is critical. This person will see all those things that you don’t see because of being in love with the property. Remember that in Uruguay, 95% of construction is done in reinforced concrete structure and masonry walls or some point in between, but almost no wood framing. Therefore, many things are complicated/expensive to fix. This is particularly important for the people of North America as they most often know wood frame construction.
Your Escribano (notary) is required to get the necessary legal certificates for the property. Make sure he creates a list of the certificates he searches for at the beginning of the process so you understand what is needed, the taxes to be paid and his/her fees.
Basic issues to consider:
If you have a flat roof, was the ceiling painted recently? Is it hiding roof leaks?
In thatched roofs (very common on the coast), how long ago was it replaced? 10 years is their lifespan for working properly.
If there are roof tiles, is this a wooden structure with roof tiles (techo liviano) or is it a concrete roof where tiles are just for decoration? If there are leaks, the cost and difficulty of repairs will be very different.
Is the plumbing working properly? Is there enough water pressure? What is the sewage system? Is there “saneamiento” (plumbing mains) or will you need to install septic tank? If there is an existing septic tank, is it working properly?
These questions are important because problems with existing pipes not on your property, or the need for new piping, away from your property, may be things you will pay for in Uruguay. In North America, water and sewer service is provided to your property line, or to your unit, at the expense of the utility or the developer. This is not always so in Uruguay.
What’s happening in the joints of the windows and the walls?
Always remember: WATER WILL FIND ITS WAY, and in Uruguay, it rains sideways and upwards due to heavy winds, especially on the coast.
On the legal front:
Is the property “REGULARIZADA”? i.e. the latest legalized plans (and this means that they are registered AND ACCEPTED by the Intendencia) show everything that is actually built on the plot? Or do the plans show just a small construction while you are buying a beautiful 3,000 sq. ft. house by the sea?
Non regularized properties might hide other problems and that’s why the regularization process guarantees many other things such as:
1. The property complies with all regulations, within the allowed setbacks, allowed heights, etc.
2. All taxes and labour obligations (BPS) were paid accordingly
While the regularization process can be easy, some complications always appear in the process.
Our recommendation: DO NOT BUY property which is not “regularizada”. There is enough property around and there is no need to get into such trouble.
If you buy a property “as is”, you will be accepting its legal situations and you become responsible for it. If you must have a property which is not regularizada, require the current owner that completes the regularization process before paying the total price tag (i.e. keep a 30% apart, and put a time schedule for it - at least 6 months).
Future thinking:
What are the expansion/renovation possibilities? Consider both structural and legal issues.
Can you expand the footprint of the house? Can you use more ground that is currently used?
About taxes:
Once you own the property, you start paying various taxes which might not be a burden, but you have to bear in mind what they are.
Contribución inmobiliaria, this is property tax. It’s calculated based on the “Catastro”, which is the national land registry and done by the state. The “Valor Catastral” determines the property tax you will pay. Traditionally, the market place is somewhere near double the “Valor catastral”, but there might be cases when this is not the case (valor catastral nearing the market value) so the property tax to be paid will be higher than it “looks like”.
Impuesto de Primaria (education tax) is imposed on property to provide funds for public education. It’s not relevant when compared to the Contribución Inmobiliaria.
Buying Residential Rental Property
First consider all the issues mentioned in buying property for personal use. Additionally consider these:
Who will be your tenants?
Will the property be easy to rent? If so, why?
What do prospective renters want? (Don’t guess.)
Property on the coast relies on the “la temporada” (the high season). A 2 bedroom flat, or 3 bedroom house in Punta del Este or Piriápolis, given that the season is successful (i.e. enough Argentineans come to visit) should be easy to rent for much of January. The rent you receive should be enough to pay for the annual “contribución inmobiliaria”, do yearly maintenance and earn a few dollars. The best of this scenario is that you’ll typically rent it for most of the high season (January), and all of super high season (first fortnight in January). This will pay many of your costs and you have the rest of the year to enjoy the property at little expense. This assumes you pay all cash for the property. If you have much of a loan, it will be difficult to recover all expenses and pay interest as well.
While not as common, flats/houses can rent year round on the coast. It’s not so common to be able to put a house for rent for the whole year. The ideas below apply to flats. Many aspects will guarantee the success in getting tenants for your property for rent; here are a few:
1. Location, location location!
2. How well furnished the property is. No one will require “luxury” but you should have all the common appliances up to a microwave oven. A building with a pool is excellent! With the Argentine renters, flats with amenities, pool, courts, game rooms, internet room, and of course central maid service go first.
Many of these things may seem simple, but if you have not bought property a time or two in Uruguay, there are unique problems one may have to face.
Santiago de Tezanos
Tezanos Architects
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