Bahrain Property Buying: A Comprehensive Guide

Bahrain has become an attractive investment opportunity for foreigners looking to buy property. While there are some restrictions on foreign ownership, non-residents can invest in properties in specific areas, including Ahmed Al-Fateh, Hoora, Seef, Northern Manama, and Amwaj Islands. Expats must purchase properties valued at 50,000 BD or more, and there are additional requirements for obtaining a residence permit. In terms of the buying process, it is similar to other countries, with the need to sign a reservation agreement, sales agreement, and make a down payment. The sales agreement must be notarized, and the property registered with the Bahrain Survey and Land Registration Bureau.

Foreigners can buy property in Bahrain, but only in certain areas

Bahrain has become an attractive destination for expatriates, even topping InterNations' 2018 list of the best expat countries. The country's real estate market has grown considerably, with a lot of investment opportunities in both businesses and residential developments.

In recent years, Bahrain has relaxed its rules, and now foreigners are allowed to buy property, but only in specific areas and under certain conditions. Here is a comprehensive guide on how foreigners can navigate the process of purchasing property in Bahrain.

Areas where foreigners can buy property

Foreigners can invest in properties in several areas across Bahrain, including:

• Ahmed Al-Fateh
• Hoora
• Bu Ghazal
• Seef
• Northern Manama
• Durrat Al-Bahrain
• Amwaj Islands
• Dannat Hawar
• Juffair
• Riffa Views
• Reef Island
• Durrat Marina
• Diyar Al Muharraq
• Al Areen

These areas offer a range of freehold apartments, villas, and other residential and commercial properties.

Property Requirements

As a foreigner, there are specific requirements to be eligible to purchase property in Bahrain. Here are the key conditions:

• Property Value: Foreigners must buy property valued at 50,000 Bahraini Dinars (BD) or more.
• Property Type: Generally, properties built on reclaimed land or in tourist areas are available for foreign ownership.
• Title Deed: It is recommended to look for properties with a "Title Deed" or those that are "Title Deed ready," meaning the title deed has been issued and can be transferred to the new owner.
• Building Height: If purchasing an apartment, consider buildings with 10 stories or more, as there may be specific visa requirements associated with these properties.

Additional Considerations

• Legal Assistance: It is advised to seek independent legal assistance throughout the purchase process, especially when dealing with overseas investments.
• Taxes and Fees: While Bahrain is a tax-free country, foreign property owners must pay a 10% municipal tax on properties. Additionally, registration fees for transferring title deeds range from 1.5% to 3% of the property's value, with a discounted rate of 1.7% if paid within 60 days.

Residence Permit Advantages

Purchasing property in Bahrain also comes with visa advantages:

• Self-Sponsorship Residence Permit: Foreign property owners in Bahrain are entitled to a Self-Sponsorship Residence Permit, valid for five years and renewable upon request.
• Sponsorship for Dependents: The Residence Permit allows you to sponsor your spouse and children under 18 to live in Bahrain, as long as they do not seek employment.
• Travel Flexibility: With the Residence Permit, you and your dependents are free to enter and leave the country without the need for a return visa.

Key Takeaways

Foreigners can indeed buy property in Bahrain; however, it is restricted to specific areas, primarily those with freehold properties. It is essential to consult with real estate professionals and legal experts to navigate the nuances of the process. Additionally, the associated visa advantages make investing in Bahrain's real estate market even more attractive for expatriates seeking long-term stability in the country.

You need to consult a real estate lawyer or office about where foreign ownership is allowed

As a foreigner, you can buy property in Bahrain, but it's important to understand the nuances of property ownership regulations. Foreigners can only purchase freehold properties in designated zones, and even within these zones, there may be specific areas restricted to Bahraini nationals. Therefore, consulting a real estate lawyer or office is essential to navigate this complex landscape.

Here's why consulting a legal professional is crucial:

• Designated Zones for Foreigners: Foreigners are permitted to own freehold properties in Bahrain, but only in specific designated zones. These zones are typically high-end areas developed for luxury living or commercial activities. A real estate lawyer can advise you on which zones are open to foreign ownership, ensuring you focus your search on the right locations.
• Understanding Restrictions: Even within the designated zones, there might be certain areas that are off-limits to foreigners. Bahraini nationals may have exclusive rights to purchase properties in these restricted areas. A real estate lawyer can help you navigate these restrictions and ensure you are compliant with the latest regulations.
• Approval from Ministry of Housing: In some instances, foreign ownership may require approval from the Ministry of Housing. A real estate lawyer can guide you through this process, ensuring you obtain the necessary approvals and meet any specific requirements.
• Legal Complexities: Buying property in a foreign country can be complex, especially when it comes to understanding local laws and regulations. A local real estate lawyer will be well-versed in Bahrain's property laws and can explain your rights and obligations as a foreign buyer.
• Due Diligence: Conducting due diligence is essential before making any property purchase. A real estate lawyer can assist you in conducting legal checks, property inspections, and title searches to ensure there are no legal disputes or encumbrances on the property you're interested in.
• Paperwork and Documentation: Purchasing property in Bahrain involves a significant amount of paperwork and documentation. A real estate lawyer can help you navigate this process, ensuring you have all the necessary documents, such as a copy of the title deed, property registration card, and proof of address, among others.
• Minimizing Risks: Buying property in Bahrain, especially as a foreigner, comes with certain risks. A real estate lawyer can help you identify and mitigate these risks, such as purchasing property that is part of a larger development with potential tax liabilities or legal disputes.
• Negotiation Assistance: When negotiating with sellers in Bahrain, it's important to understand the cultural nuances and approach the process respectfully. A local real estate lawyer can advise you on effective negotiation strategies, helping you build a positive relationship with the seller and potentially securing a better deal.
• Keeping Up with Changes: Property regulations and legal requirements can change over time. A real estate lawyer will stay abreast of any updates or amendments to Bahrain's property laws, ensuring you receive timely and accurate advice.
• Peace of Mind: Ultimately, consulting a real estate lawyer gives you peace of mind. Buying property is a significant investment, and having a legal professional guide you through the process ensures that your rights are protected and that you are making an informed decision.

In summary, consulting a real estate lawyer or office about where foreign ownership is allowed in Bahrain is a crucial step in your property-buying journey. They will help you navigate the complex legal landscape, ensure compliance with regulations, and provide valuable advice and assistance throughout the entire process.

You can only purchase freehold properties

If you're a foreigner looking to buy property in Bahrain, you can only purchase freehold properties. This means you can own the property outright, but you can only buy in certain areas. Legislative Degree 2 for the Year 2001 and Edict No. 43 of 2003 (as amended by Edict No. 67 of 2006) allow for freehold properties for expatriates, resident expatriates and GCC nationals.

The Bahraini government has designated specific locations where foreigners can buy freehold properties. These include Juffair, Seef, Reef Island, Durrat Al Bahrain, and Amwaj Islands. Foreigners can also invest in properties in Ahmed Al-Fateh, Hoora, Bu Ghazal, Northern Manama, and Dannat Hawar.

It's important to consult with a real estate lawyer or office about the areas where foreign property ownership is allowed before making any decisions. The land available for foreign ownership is limited by the government to certain areas and depends on the intended use of the land by the buyer.

When purchasing a freehold property in Bahrain, you will need to follow similar procedures as elsewhere in the world. Once you have decided on a property and agreed on a price, you will sign a reservation agreement and a sales agreement. You will likely need to provide a down payment, and the agreement will detail the payment structure and schedule.

After making full payment, you will receive the title deed. Remember to notarize the agreement at the legislation court, and register the property with the Bahrain Survey and Land Registration Bureau. Registration fees can vary from 1.5% to 3% of the property's value. Additionally, foreign property owners must pay a 10% municipal tax on their properties.

There are residency requirements and benefits for property owners

As a foreigner, you can buy property in Bahrain, but you can only purchase freehold properties in certain areas. These include Ahmed Al-Fateh, Hoora, Bu Ghazal, Seef, Northern Manama, Durrat Al-Bahrain, Amwaj Islands, and Dannat Hawar.

As an owner of a freehold property, you are entitled to a self-sponsorship residence permit. This permit can be for life and is renewable every two to five years. The exact period depends on the case. The residence permit allows you to sponsor a residence permit for your spouse and children under 18, as long as your spouse does not engage in paid employment. Both you and your spouse can enter and leave the country without a return visa.

To obtain a self-sponsorship residence permit, you must own a residential property in your name in Bahrain with a total value of no less than BHD 50,000. The property must be located in a tourist zone, such as Al Juffair, Amwaj, Riffa Views, Busaiteen, Abraj Allulu, or AlAreen.

In addition to the residence permit, there are other benefits to owning property in Bahrain. Property prices are on the rise, especially in freehold areas, so your investment can accrue more value over time. Bahrain's rental market also provides a stable, steady income, and there is no tax on rent or property.

Transaction costs are low in Bahrain

Bahrain boasts a sophisticated and well-developed legal framework for property ownership, which protects buyers once permission to purchase is granted and deeds of ownership are transferred. The transaction costs associated with buying property in Bahrain are relatively low compared to other countries.

The fees for transferring the title deeds from the owner's name to the buyer's name are 2% of the total purchase price. However, if these fees are paid within 60 days of the registration date, a discounted rate of 1.7% is offered. These costs are significantly lower than those found in many other countries, where transfer fees can often exceed 5% or more.

Additionally, Bahrain does not impose a capital gains tax on property sales, which can result in substantial savings for buyers. Foreign property owners, however, are subject to a 10% municipal tax on properties.

Registration fees for property purchases in Bahrain are also relatively low, ranging from 1.5% to 3% depending on the property type and price. These fees are paid to the Bahrain Survey and Land Registration Bureau and are necessary to finalise the purchase process.

While there may be additional costs associated with legal advice and real estate agent fees, these are typically negotiated based on the complexity of the transaction and can be minimised by shopping around for competitive rates.

Overall, the transaction costs associated with buying property in Bahrain are relatively low, especially when compared to other countries with higher taxes, duties, and transfer fees. This makes Bahrain an attractive destination for property investors, particularly those seeking to minimise their upfront costs when purchasing real estate.

Frequently asked questions