Country guide

Until recently, all bets were off in Lebanon. Devastating attacks by Israel in 2006 and clashes between government troops and militants removed Lebanon from the investment scene.

However, the real estate market in Lebanon witnessed unprecedented demand in 2005, particularly from Gulf investors, and as stability slowly returns to the country, so do investors

As a result, real estate prices in some of Beirut's neighbourhoods are again rising.

Law No 296 allows foreign ownership of real estate in Lebanon. Foreigners can acquire 3,000sq m of land, after which they must obtain a decree from the Council of Ministers.

Recent figures show that Beirut's rental yields have dropped to 4.3 per cent from the average of 6.2 per cent at the end of 2007.

Smaller apartments still get higher yields up to 5.13 per cent, also lower from the previous year of 7.46 per cent for 150sq m. Yields can go as low as 3.82 per cent for apartments of 350sq m.

Average prices for apartments have doubled, according to semi-official figures, priced at an average of $3,019 (Dh11,079) versus $1,690 per sq m from 2007.

Naturally, prices increase as the apartment size gets larger, so a 600sq m apartment can sell for around $4,123 per sq m.

Taxes: There are three elements to be aware of:

Rental Income – Income tax on rental income is progressive. For small amounts of income the tax is not high, at around two per cent above a threshold of $13,200 per annum. Deductions can amount to 30 per cent of the gross proceeds.

Capital Gains – There are no capital gains taxes.

Inheritance taxes are levied at progressive rates from three per cent to 45 per cent.

Residents – The tax treatment of residents and non-residents is similar.

Buying costs: Buying costs are moderate. Round-trip costs, that is to say the total costs of buying and selling a property, amounts to around 11.57 per cent. This includes the registration fee and transfer tax, each at five per cent. Some fees can be avoided, for instance, if a lawyer is not hired, and/or if the property is registered directly with the Land Registry, without going through a notary public.

A lawyer is not always needed in real estate transactions, except when it is more complicated than usual. If the two parties have agreed on the sale, the sale agreement can be drawn up by a notary public or a qualified facilitator, in place of a lawyer.

Documentation: When registering the property, a seller acquires a Real Estate Certificate from the Land Registry. Other documents that may be produced, but not necessary, are an official cadastral map – a map showing the extent, value and ownership of land – urban plan from the Municipality and Urban Planning Authority, and tax clearance from the Municipality. If the documents are signed in the notary's office, to be presented to the Land Registry, the Notary Tax of 0.1 per cent has to be paid. If they are presented directly to the Land Registry, this cost is not required.

Rental laws: Lebanon's rental legislation is neutral between landlord and tenant. Rents can be freely agreed between landlord and tenant. A tenant who signs a one-year contract has the right to hold on to the property for three consecutive years. Thereafter, the landlord is entitled to end the contract, or to renegotiate.

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