Guadalajara -
By an easy majority this afternoon, Mexico's lower legislative chamber, the Cámara de Diputados, approved a bill which would entirely eliminate restrictions on the foreign ownership of land close to the country's international borders, or along its vast coastlines.
The roll call was 356 in favor and 119 against, with two abstentions.
The significance of today's historic vote cannot be overstated. The direct foreign ownership of real estate has been anathema to generations of Mexicans and their political representatives in congress, and is outlawed in coastal and border areas by article 24 of the country's constitution. That provision was in large part a reaction to centuries of intervention by world powers, including hundreds of years of Spanish domination followed by endless French and American meddling in the the 19th century.
The prohibition on foreign land ownership is limited to real estate located within 50 kilometers of the sea, or 100 kilometers of an international boundary. Mexico has about 5,800 miles of coastline on the Pacific, the Gulf of Mexico and the Caribbean. One of the fears underlying the restrictions was that foreigners situated in such strategic areas might be enemy agents, or preparing to assist invaders.
Historical antecedents apart, the constitutional prohibitions were and remain onerous - and expensive - for many expatriates. Currently, foreigners who purchase residential property near seaside resorts must do so through an intermediary, generally a bank, via a trust deed called a fideicomiso. The bank holds legal title while the purchaser holds equitable title. Fideicomisos involve annual fees and service charges to the real party in interest, thereby adding to the acquisition cost. Moreover, they never end. Although the land is freely transferable at any time to a new purchaser, a new fideiocomiso must be established each time the real estate trades hands. The buyer pays all associated costs and fees.
Article 24 generates not insignificant profits for Mexican banks. In Mérida, Progreso, and many other Yucatán coastal areas, almost all foreign owned residential property is held through the fideicomiso.
Yucatán PAN deputy Raúl Paz Alonzo strongly supported the bill to modify the Mexican constitution, arguing that it was not intended to economically benefit foreigners, but rather to stimulate an anemic real estate market in many regions of the country. The text of the proposed amendment states that the acquisition of border or coastal lands by non-citizens must be "without commercial ends."
Leftist deputies of the the Democratic Revolution Party (PRD), Movimiento Ciudadano and the Labor Party were generally opposed to the controversial measure, arguing that there are "strong historical reasons" to prohibit foreigners from owning such properties.
Today's action by the Cámara does not mean the law on foreign real estate ownership has changed. A proposed constitutional modification has been approved by the lower house, and the matter now passes to Mexico's senate for further debate and an eventual vote. But many expatriate land owners will hope that archaic article 24 is about to go the way of the sailing ship and horse drawn cannon.
Apr. 9 - Yucatán tourism remained flat in first quarter of 2013
© MGRR 2013. All rights reserved. This article may be cited or briefly quoted with proper attribution or a hyperlink, but not reproduced without permission.
I'm sure the banks must be very upset, since they are basically the only ones who benefited from the fideicomisos. One report I read today said that there have been 60,000 fideicomisos created in the last 12 years. At US$500 per, which I suspect is a conservative figure, that is US$30 million the banks have taken in. No benefit to the country and no benefit to the property owner. But a huge money spinner for the banks.
ReplyDeleteYou left out the part about approval from a majority of state legislatures. Yes, it will take longer than your siesta.
ReplyDeleteARTICULO 135. LA PRESENTE CONSTITUCION PUEDE SER ADICIONADA O REFORMADA. PARA QUE LAS ADICIONES O REFORMAS LLEGUEN A SER PARTE DE LA MISMA, SE REQUIERE QUE EL CONGRESO DE LA UNION, POR EL VOTO DE LAS DOS TERCERAS PARTES DE LOS INDIVIDUOS PRESENTES, ACUERDE LAS REFORMAS O ADICIONES, Y QUE ESTAS SEAN APROBADAS POR LA MAYORIA DE LAS LEGISLATURAS DE LOS ESTADOS.
(REFORMADO MEDIANTE DECRETO PUBLICADO EN EL DIARIO OFICIAL DE LA FEDERACION EL 21 DE OCTUBRE DE 1966. MODIFICADO POR LA REIMPRESION DE LA CONSTITUCION, PUBLICADA EN EL DIARIO OFICIAL DE LA FEDERACION EL 6 DE OCTUBRE DE 1986)
EL CONGRESO DE LA UNION O LA COMISION PERMANENTE EN SU CASO, HARAN EL COMPUTO DE LOS VOTOS DE LAS LEGISLATURAS Y LA DECLARACION DE HABER SIDO APROBADAS LAS ADICIONES O REFORMAS.
(REFORMADO MEDIANTE DECRETO PUBLICADO EN EL DIARIO OFICIAL DE LA FEDERACION EL 21 DE OCTUBRE DE 1966)
All constitutional amendments in Mexico, just as in the United States, require approval of both houses of congress, followed by approval in the legislatures of all the states. But on those few amendments I've followed, the process here seems to go much faster than north of the border. A year, two years at the most, for an up or down vote.
DeleteThis is an amendment I think will not have much trouble being adopted. In 2013 there's no good reason to restrict coastal or border land ownership to citizens. Few Canadians or Americans will be out on the beach at night, trying to signal French men-of-war just off Veracruz or Tampico that "the coast is clear."
The above comment should read, "followed by approval of the legislatures of 2/3 of the states" (once again, mirroring the U.S. constitutional amendment process). My answer was misleading on that point.
DeletePredictably perhaps, the poorly informed in the country are already out in full force on the social networks, lamenting 'Peña Nieto giving away federal lands to the foreigners' and invoking every jingoistic fear they can to claim they are 'against' this proposed change in the law. Also predictably, they are mainly the poorer, left leaning, easily influenced population, and supporters of AMLO. As expected, they are totally ignoring the facts of the story, the reality, and the reasoning behind the proposed change. After all, why let the facts get in the way of attacking EPN?
ReplyDeleteFollowing, if you care to publish it, is my exchange with a member of 'the uninformed'...
Stewart M: Roger you should check exactly what the current law says, what is the current reality, and what the new law will mean, before posting. Do you know anything about the fideicomisos that the foreigners must use now? Do you know that this affects not only the beaches, but places within 50km from the coast, for example Merida? Do you know how much profit the banks and notarias make from fideicomisos? We are talking about hundreds of millions of dollars. Do you know which is the main bank holding the fideicomisos? (It is not a Mexican bank, therefore the money leaves Mexico). Do you realize that not one single peso of that profit benefits Mexico and the Mexican people? Do you realize that the new proposed law means that NOTHING will change except that foreigners will be able to hold the title of their house directly, instead of using a fideicomiso? Do you realize that this means that instead of paying hundreds or thousands of dollars a year to the bank for the fideicomiso (which becomes profit for the bank), the house owner will be able to spend that money on something in Mexico instead, which will benefit the Mexican economy? It would really be nice if you, and all the other people who think that this is a bad thing learn the facts, and support what will be a benefit to Mexico. Oh, and by the way, the main supporter of this new change to the law is a diputado from PAN.... not EPN!!! And finally, did you know that if you want to buy a house on the beach in the USA, you are free to do it? In Canada? You are free to do it. In the United Kingdom? You are free to do it. Wouldn't it be nice if foreigners could do the same in Mexico?
54 minutes ago
Roger M: Interesting I didn't know this, however, I don't approve the government "sell" federal spaces to anyone, it is not just foreign or nationals, it is sad to pay to go to the beach or to mountain. I'll be surfing on internet to look for more information about this. Thanks Stewart
38 minutes ago
Stewart M: That is the problem, people do not know what they are talking about. No one is talking about selling federal land, ejidos, etc. All they are talking about is allowing foreigners to hold the title to the house or the condo that they already 'own' using a fideicomiso, and already occupy, or to buy a house or a condo in the future, without using a fideicomiso. For example my house in Merida...
36 minutes ago
I suspect there is a lot of misinformation circulating about this proposal to change Mexico's constitution. A website in your area posted an article about it today - three days after the House of Deputies vote - and, whether intentionally or not, made it sound like the focus of the proposed amendment was "beach property." While the amendment certainly would apply to and include beach land, by no means was that the primary purpose of it.
DeleteThe real motivation behind the proposed legislation - and why I believe it will ultimately become law - is to stimulate the rather weak real estate market in Mexico. The change would free up tens of thousands of acres of land within 50 kilometers of the sea along the country's almost 6,000 miles of shore, plus land within 100 kilometers of international borders. By "free up" I mean anyone would be able to purchase the property outright, without using a fideicomiso, provided the acquisition was noncommercial in nature.
That just makes sense, in my opinion. And it's unfortunate that some are suggesting, by accident or design, that Mexicans are going to lose beachfront lands. That's simply not going to happen.
It is true, many of the articles published on line and in print (and mainly in Spanish) have referred to 'land on the beach' which does rather distort the picture. And talking of pictures, most of the articles have been accompanied by an 'idylic' photo of a palm tree on the beach...
ReplyDeleteThe proposed legislation DOES make sense, and DOES NOT mean that Mexicans will lose access to the beach, and thankfully it seems that the majority of lawmakers understand that, and that it will, in due course, have successful passage.
I'm going to stick my neck out and make a prediction. By the end of 2015 - more likely by the the beginning of 2015 - this will be a done deal and the restrictions of article 27 will be a footnote in the history books.
DeleteThat's pretty fast for a constitutional amendment, I know, but the very lopsided vote in the House (356-119) suggests to to me that the proposed changes enjoy widespread support across party lines (excepting PRD, of course). I have no doubt that EPN will support the measure.
As the saying goes, nothing is so powerful as an idea whose time has come, and this is an idea whose time seems to have arrived. Foreign owners of residential realty near the ocean will be able to forget fideicomiso fees less than 36 months from now.
Hope I'm right on that . . .
We are crossing our fingers, too
Delete