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Housing Market in Lima

Since the economic slowdown and crises in 2014 and 2015, house price rises have been noticeably weaker over the years. The real estate sector has been one of the hardest hit by the slowdown. This reduces housing costs for foreign buyers, since investment in Peruvian property does not require government approval, except if such property is close to Perú's frontiers.

Despite this, house prices in Lima are expected to rise by around 7% according to the Peruvian Chamber of Construction's (Capeco), as a result of reactivation of demand in middle segment districts such as Jesús María, Pueblo Libre, Lince and Magdalena.

Where to Buy a House in Lima

The National Association of Real Estate Companies of Perú (ASEI) and the Association of Real State Developers of Perú (ADI Peru) reveal the most expensive homes in Lima are in:

• San Isidro - the economic city center, with an average value of $241 per square foot. This is followed closely by the exclusive Barrancos and Miraflores districts.
• Ancón - In the north end of the city, there are cheaper properties for as low as $50 per square foot.
• Callao - Northwest coast of the city, offers prices in the middle.
• Ate - Easternmost end of the city, offers prices in the middle.
• Jesus María - Traditional area in central Lima which includes the National Stadium with plentiful real estate.
• San Martin de Porres - Limited real estate and low prices.
• Puente Salvador - Limited real estate and low prices.
• Villa El Salvador Limited real estate and low prices.

How to Search for Real Estate in Perú

Online Listing

Most of the properties in Lima are found online. The best websites for starting a search are:

• Mercadolibre.com.pe
• Lamudi.com.pe
• Housinganywhere.com
• Laencontre.com.pe/
• Lima.olx.com.pe/
• Adondevivir.com/

Newspapers

Printed versions of local and national newspapers are a good source for searching property ads and real estate, both in small cities and the country capital, Lima. The following ones are Perú and Lima main publications:

• El Comercio
• La República
• Correo Peru
• Trome
• El Popular
• El Peruano
• Publimetro
• Exitosa
• Expreso
• La Razon
• Diario Uno

Estate Agents in Lima

When looking for a rental property, hiring a real estate agent will save you a lot of time and worry. The agent will consult you on your search, accompany you to visit each of the properties you are interested in, help with drawing up the documents for signing the contract legally and, if necessary, also consult on options for receiving a loan. The rental agent's services price may vary from agent to agent; therefore, it is necessary to discuss it beforehand and sign a contract. The agent is paid only when the contract with the landlord has been signed.

Keep in mind: If the real estate agent is hired by the landlord in whose property you are interested in, the costs of the agent should be covered by the landlord.

In this case, the price for the real estate agent's service is negotiated between the landlord and the agent and it is paid once the deal has been closed and the payment of the property has been completed. Also notice that, the more expensive the property, the smaller percentage goes to the real estate agent.

Buying and Owning Property in Perú
When buying a house in Perú is important to work closely with your solicitor and to keep him/her informed of any new changes or decisions you may take.

When looking for a property to buy you should follow the steps described below:

• Find out what you can afford: Property websites, auctioneers and estate agents are the main ways of finding property for sale. Sometimes individual sellers advertise their property themselves. Newspapers may also have property supplements or publish advertisements for properties on sale. Check "How to Search for Real Estate in Perú" section to find out where to look for a rental/buying property.

Nevertheless, it is important to evaluate all costs involved in buying a property, for example, mortgage costs, legal fees, registration of deeds and stamp duty, etc. You should calculate the amount of money that you can get as a mortgage loan. If after that you can afford to buy a property, then you are ready to buy.

• Get a solicitor: Conveyancing is the legal work involved in buying or selling property and its charges can vary between solicitors. A solicitor will also help you gathering all information regarding the property legal title; the Public Registry called SUNARP (Superintendencia Nacional de los Registros Publicos).
• Get a survey: A seller is under no obligation to disclose defects in a property. You should get a survey of the property to find out if there are any defects before finalising the purchase. Solicitors will help you getting the survey and ensuring that everything is under legal requirement.
• Get mortgage approval: When getting the mortgage approval, you will truly know how much you are able to spend on your future house.
• Sign the contract for sale: The contract for salebinds the parties to the completion of the sale.
• Requisitions on Title and Deed of Conveyance: After signing the contract and before the completion sale date, your solicitor may raise some general queries about the property with the seller's solicitor. Requisitions on Titleare a standard set of questions relating to the sale of a property that deal with such things as whether fixtures and fittings are included in the sale.

Your solicitor should also conduct a search to find out where the property title is held to ensure that there is nothing adverse attaching the property, for example, an outstanding mortgage. Once the seller's solicitor approves the Deed of Conveyance, your solicitor will contact your mortgage provider to request the issue of the approved loan cheque.

Once a sale is completed, your deeds, showing the new ownership details and mortgage details, if relevant, must be registered with either the Registry of Deeds or the Land Registry.

Property Auctions in Perú

Property auctions are regulated by the "Directiva N° 001-2016/SBN: "Procedimientos para la venta mediante subasta pública de predios de dominio privado del Estado de libre disponibilidad" (Law 29151: "Ley General del Sistema Nacional de Bienes Estatales").

There are two kinds of property auctions:

Private Treaty Sale

A private treaty sale is where the property is not put into an auction. You can contact the seller or the seller's agent, usually an estate agent, to agree a purchase price.

If there is an estate agent involved, once you have agreed to buy the property you may be required to pay a booking deposit to the estate agent. The legal process to buy the property may only start when the estate agent receives your booking deposit. This deposit is refundable up to the signing of the contract for sale.

Public Auction

Public auctions announcement are published once in the official newspaper "El Peruano" and another newspaper of greater circulation in the region where the auctioned property is located. Additionally, it is published on the entity's website around 20 days before the event.

The seller or the auctioneer set a reserve figure for the property before the auction. This amount is the value that the property must achieve; if it is below this, the property will be withdrawn from the market.

However, the vendor (seller) can withdraw the property, even if it has achieved the reserve figure, anytime during the auction. The vendor can also reserve the right to sell the property before the auction.

Before the auction takes place, your solicitor should check the property contract for sale (issued by the seller's solicitor) and all title documents that are referred to in that contract.

"The committee", a Public Notary and a representative of the Institutional Control Body – OCI, as the observer of the process, always direct the Public Auction.

Once the seller and the buyer agree on price during the public auction, the successful bidder immediately pays a deposit and signs the contract for sale.

Find out more about Public Auctions and its complete regulation on "Subasta púlica de predios Nº 001-2015-MPI" (in Spanish).