Environment

Rental real estate intended for tourism (ILVT)

The 2010 Vision has drawn up an ambitious program of tourism development in Morocco . The hundred thousand new beds will be either hotel beds or beds in rental residences. In order to urge institutional or individual investors to invest in rental real estate intended for tourism, it is necessary:

• for the legal framework to be clear and to guarantee investment;
• for the tax framework to be attractive;
• for the professional structures to be provided in order to manage/market these products in an efficient manner, with a view to ensuring a satisfactory productivity.

Thus a study has been launched so as to determine a strategy for the development of rental real estate intended for tourism (ILVT) . Such a study has proved that it was agreed to adopt a differentiated approach between the two possible forms of the ILVT in Morocco :

• The Time Share: to be controlled and regulated
• The Real Estate Residences of Tourist Promotion (RIPT): to be supervised and regulated, and more particularly to be encouraged and developed.

The definition of these two types of products is as follows :

a- Tourist Real Estate Residence of Tourist Promotion (RIPT):

The RIPT is a tourism residence whose accommodation units (apartments or villas) belong to several co-owners who undertake to entrust their management, during a period of at least 9 years, to a unique management company which holds a licence of tourism. This company ensures the homogeneity of furnishing and the continuity of the operating system.

b-  Time Share :

A Time Share Residence is a set of furnished apartments or villas, the use of which is split among several holders. Each holder has a preferential right of use at a given date. A Time Share Residence may become affiliated to international trade shares which will allow the holders to exchange their right of use.

1-Quantitative objectives :

The quantitative objectives stemming from the study relating to the ILVT are as follows:

• About 40.000 beds to create in the ILVT by the year 2011 (that is 15% of the total capacity of the country);
• Out of these 40.000 beds, about 28.000 ones would be in the form of the RIPT (that is 70% of the ILVT offer, against 30% for the Time Share);
• Around 80% of the beds in the ILVT will be in seaside areas and stations (Azur Plan and existing seaside destinations);
• Creation of 16.000 jobs.

2- Legal Framework:

The study relating to the development of the ILVT has proposed a legal system per type of the ILVT, and that is all according to some characteristics of their own. Concerning the RIPT, they have been the subject of a law n° 01-07 voted at the parliament in April 2008 and which is in the process of being promulgated.

The Key elements of the government bill relating to the RIPT are summarized as follows:

• Three actors for the development of this product: the promotion company, the purchaser and the management company;
• The promotion company should designate, before putting up for sale the accommodation units located in the RIPT, those coming under the percentage (70% at least) provided for by regulations; and it designates a company in charge of the management of these units for a minimal period of at least 9 years. It remains responsible for the nomination of a new management company in case of inefficiency of the first one during a period of nine years at least, with effect from the date of the sale contract of the first accommodation unit;
• The buyer rents out his accommodation unit to the management company for a contract of lease. This contract lets the latter enjoy the personal use of such a unit, 2 months at the most per year, including a maximum of 15 days in peak season.
• The management company is a moral entity which ensures the hotel management of the accommodation units rent out by the purchasers. In addition, and as a property manager of the co-ownership, it ensures the maintenance, the functioning and the management of the common parts and it deducts the property manager's expenses from the total value of rents.

The furnishing is payable by the management company and that is all with a view to the homogeneity of the units of the RIPT;

• For the sake of the purchasers' protection, the management company should:

  ° Ensure a minimal fixed rent. Moreover, other forms of variable rents are not excluded; ° Hold a licence which must be granted by the State;
  ° Give proof of a financial guarantee.