Guide: Costa Rica, Latin Love-In

By on August 1, 2012
golden-sunrise-in-cahuita-costa-rica

The most stable country in Central America, Costa Rica’s cabana charms, and low taxation regime are luring second-home escapees in their droves.

The Costa Rican expression “pure life” or pura vida is not just for visitors. A country that continues to live by its peace-loving philosophy, wherever you go, you’re likely to buy in to the what-will-be blueprint. Modernising fast, the country’s character retains distinct local cultures, from the Afro-Caribbean beach haunts of Cahuita and Puerto Viejo, to the traditional Latino values embodied by the sabaneros (cowboys) of the northern Guanacaste province.

Bordered by Nicaragua and Panama, this tiny republic has side stepped the political and economic turmoil that has characterised much of Latin America, the last rumblings of conflict stamped out in 1948 and replaced by a stable democracy with a strong growth economy. Thanks to a decades-old policy of offering tax incentives and other perks to attract English-speaking retirees, the country has also pioneered a popular economic development tool for emerging Caribbean basin markets like Panama and Belize; the drip-feed of a high-spending empty-nester class looking for a casita under the palms. “Overseas residents number around 300,000,” confirms Richard Bexon of Costa Rican Holiday. “Most are from the States, but UK investor interest has also picked up, many buying ahead of retirement, so they can ease themselves gently into the sunshine lifestyle. Infrastructure and communications in urban areas are excellent and the cost of living is minimal-£600 a month comfortably covering your outgoings.”

Retirees contribute significantly to the £800m a year in direct spending by overseas visitors-the multiplier effect in terms of-salaries in health care, construction, retail and other services bolstering both public and private sector growth. The grey market wave is moreover synergistic: early pensionados having invested in second careers; running start-up businesses and B and B establishments, now attracting more of the same. Resident status is secured in a number of ways-the two most common “entry” channels as a pensionado or a rentista (a foreign property owner): “Neither pay taxes on money earned outside of Costa Rica,” adds Bexon, “although retirees need an income stream of at least £350 a month from a qualified pension scheme or retirement account, £500 in the case of rentistas.”

Not everyone chooses to apply for residency: “It really depends on how much time you plan to spend here,” adds Bexon. “Non-residents can stay for up to three months at a time without a visa, many opting to interval visit during the December-April dry season, although some eke out their holiday weeks across the year.”

Home ownership is also acquiring a more complex demographic, with demand from an increasingly affluent Costa Rican middle class, the North Pacific, South Pacific and Central Valley, (where the majority of the 4m population live), fuelling demand for prestige new build. “Buyers will find huge price discrepancies between the provinces,” explains Willy Driessen of Nicole’s First Realty. “That said, you can still pick up a luxury beachfront apartment for around £100,000.”

Real estate can carry hazards for the unwary buyer-beachfront property, the majority of which is classified as ‘concession property’ subject to strict planning rights, requiring investors to check zoning issues thoroughly before buying. “It’s vital to check title insurance when buying an older property or a plot to build,” stresses Serge Galkine of agents Tropical Felgate. “Off-plan is more straightforward-although you need to ensure that a developer has a finished product to show as well.” Finding an agent through the Association of Residents of Costa Rica (www.arcr.net) is a good starting point. “They’re an expat community group and don’t stand to make any money off you, so they’ll tell it like it is,” adds Driessen. “Buyers can also use the services of a title insurance company. It costs around 1 per cent of the property value, but it’s worth it for peace of mind.”

A region of savannah and sabaneros-the northern Pacific province of Guanacaste has witnessed record real estate growth in the past few years, with a jungle run of coastal developments and big names hotels with the requisite brand-name golf courses, marinas and beach-club trimmings. At the centre of the transformation is the international airport in provincial capital Liberia, with a growing network of European flights. “Tamarindo, Conchal and Playa del Coco are prime areas,” adds Bexon, “but the real bargains lie further north in Brasilito and Playa Junquillal, a luxury villa with pool setting you back £200,000. “Prices here are 30 per cent lower than the Mid Pacific and South Pacific regions,” adds Galkine. “Infrastructure isn’t in place as yet, but local authorities are on the case.”

Popular ‘hang-outs’ with weekending ticos (locals), the lively beach area of Jaco and the national park of Manuel Antonio in neighbouring Puntarenas offer a holistically hip atmosphere-offshore islands and expensive white sand beaches backed by swathes of canopied forest. “Condos in Jaco currently start from £80,000,” adds Bexon, “ocean view homes with pools upwards of £200,000.”

A safe distance from off-the-peg tourism, hippy residents in the region’s Southern Nicoya Peninsula are also enjoying the trickle of ‘new blood’ into their community. “Buyers have plenty to choose from,” confirms local agent Andrea Drost, “from beachfront bungalows to farmhouses and rainforest eco-lodges.”

So what are the downsides? “Potential over-development, particularly in Guanacaste is a concern,” says local resident Yan March, who relocated from London eight years ago. “All in all though, it’s a fantastic and safe place to live: Quality of life isn’t measured by material things-it’s having wildlife come right up to your door and picking fresh-fruit for breakfast every morning. Living takes that bit longer here. But then you’ve got the time to take it all in.”

Buying in Costa Rica

The property system grants foreigners the same rights as citizens.

Many buyers choose to purchase real estate through a limited company Socieded Anonima or S.A, where they own 100 per cent of the shares. The purchase process on future sale tends to be simpler plus associated costs are minimal compared to a transfer of title to an individual.

Registered land can be title searched in the Folio System in the Public Registry Offices in San Jose and is available to search on-line. www.registronacional.go.cr

Transfer costs including registration fees, stamp duty, notary and lawyer fees amount to around 4 per cent of the buying price.

Annual property taxes are 0.25 per cent of the declared value of the property. An owner of a £500,000 property would pay £1,250 per annum in taxes.

There is no CGT (Capital Gains Tax).

Visuals

Montezuma Beach

Pura Vida Villa £435,000

Close to private nature reserve in Southern Nicoya Peninsula www.tropisphere.com

Beso del Viento-located in Parrita near Jaco Beach in Puntarenas-traditional six-bedroom beach home with large pool, BBQ area and separate guest accommodation. £745,000. www.nicolesfirstrealty.com

El Penon del Sol-located in Playa del Coco in the northern Guanacaste province. Two-bedroom loft-style condo with pool, parking and rancho/laundry. £35,000 www.tropical-felgate.com

Photo credit: Armando Maynez / Foter.com / CC BY