After having long benefited (and even abused) from very lenient regulations, property traders are now subject to new obligations. A law enacted this summer has ended their exemption from registration fees and requires them to carry out property upgrades. This is seen as a boon by real estate agents, who believe it will reduce the number of traders and, in turn, decrease speculation.
At the beginning of July, an important and highly anticipated law was published, marking the end of easy times for property traders—professionals whose activity involves purchasing, renovating, and then selling properties (for profit) on their own account. While they have long enjoyed favorable regulations, Law No. 1560 of July 2, 2024, has now curtailed their privileges and imposed new obligations.
Long-standing Abuses Highlighted
Among property traders, the most honest have contributed to enhancing Monaco’s property market and boosting activity, while others exploited the flexible regulations to maximize profits without paying registration fees or making substantial renovations, sometimes resorting to little more than a fresh coat of paint. This amounted to pure real estate speculation. Some even went so far as to hold onto properties for years, purely for speculative gain. This behavior further strained an already tight property market, where opportunities are scarce. Their business model, based on profit-making, also contributed to rising property prices. With nearly twice as many traders as real estate agencies in Monaco, they also posed unfair competition to the latter.
Read also | New law on property traders in Monaco: what real estate agents think
The Profession Reserved for Monegasques Since 2020
In short, stricter regulations had become necessary to correct these imbalances. The government began addressing the issue in 2020. It determined that the profession was « sufficiently represented » and that no more business licenses would be issued, except to Monegasques. Since then, although no direct causal link can be proven, the number of property traders has declined—from 290 in 2019 to 231 in 2024, according to government figures. This is still a significant number for a territory of just 2 km².
A Reduced and Conditional Exemption
This summer, further steps were taken with the introduction of a more detailed and stringent legislative framework. Regarding registration fees, the full exemption previously enjoyed by property traders has been replaced with a partial 50% exemption. To benefit from this, they now must meet several conditions. First, they must sell the property within three years (instead of four, as was previously allowed), with the possibility of a one-year extension upon request.
Mandatory Renovations
Furthermore, at the time of sale, they must prove that the property complies with current regulations (notably electrical and energy standards). The original bill proposed a mandatory renovation requirement of 5% of the property’s purchase price, but this was removed, as lawmakers deemed it unrealistic given the nature of Monaco’s property market. « It’s more appropriate to mandate that properties be brought up to current standards, » the Commission stated, aligning with Monaco’s environmental preservation goals and ensuring public safety. If the property trader fails to meet these conditions, they will be liable for the registration fees, with interest at the legal rate, along with an additional 5% penalty. However, many real estate agencies argue that scrapping the 5% renovation requirement was a mistake. Increasing it to 10% could have deterred speculative activity and added greater credibility to the profession.
Financial Guarantees and Insurance
Another notable change is that any individual or company wishing to operate as a property trader must now obtain a financial guarantee from a bank or authorized financial institution with a headquarters or branch in Monaco. This guarantee is designed to cover registration fees in case of payment default by the trader. It must be in the form of a first-demand guarantee in favor of the Treasury. Additionally, property traders must now take out insurance covering the financial consequences of their professional liability. This insurance must be obtained through a licensed general insurance agent or broker in Monaco, ensuring clients are protected from any damages that may occur in the course of the trader’s business.
These new provisions have been in effect since September 1, 2024. Property traders already in operation must comply (with the financial guarantee and insurance requirements) within three months from this date. As for the registration fee conditions, they apply to all acquisitions made from September 1 onwards. Administrative and criminal penalties are foreseen for any breaches.
Reconsidering the Ban on New Licenses?
Meanwhile, the president of the National Council, Thomas Brezzo, is calling for a reconsideration of the ban on issuing new licenses, which was implemented in 2020, now that the profession is more regulated. « As I’ve already mentioned to Mr. Chiappori [Minister of Economy and Finance—Ed.], during our working session, it would be appropriate to reconsider this situation, as we can reasonably expect a number of professionals to cease their activity due to their inability to meet the new conditions set by the law, » he stated.
