Estrato: Scale for Buying Property in Medellin
Buying property in Medellin Colombia is possible for expats and foreign buyers when they’re interested in a particular real estate project. Laws of Colombia have provisions for such scenarios where the foreign buyers are also eligible to gain some added benefits whether they purchase a property that may be developed or is under development.
With that said, there are numerous factors that can affect the cost of the property and so, it is ideal to perform beyond some basic research, to understand the state of the real estate market.
One can buy both commercial or residential real estate in various parts of Medellin based on their specific requirements. But, there does exist a factor that plays a significant role in the overall cost of the property. It is called estrato and its value determines the cost of the properties within the particular area of Medellin.
What is Estrato?
The estrato system is prevalent in the country of Colombia but it is unique to the whole world. Established in the mid-’90s, this one of a kind system was implemented by the law which helped the municipality to classify its population into distinct groups or stratum. These groups were created to support the population living in lower strata of the country who would go on to pay lower utility bills and property taxes compared to those living in the higher estratos.
The living condition of a middle-class person in Medellin differs from that of a middle-class US resident and most foreign buyers are only offered properties in higher estratos. This system adequately helps the different classes of people living in all of Colombia.
Estrato Diversification
Buying property in Medellin Colombia inevitably involves the estrato system which is determined by the municipality based on various factors. The material used in the construction of houses and commercial buildings as well as the road condition of the neighborhood along with other factors plays a significant role in determining the estrato(stratum) rank of that property and area.
The estratos in Colombia are diversified into ranks from one to six with the latter being the highest:
- Estrato 1: Lowest class
- Estrato 2: Low-middle class
- Estrato 3: Middle class
- Estrato 4: Upper middle class
- Estrato 5: Upper class
- Estrato 6: Wealthy
Those who are looking to purchase properties in Medellin should first look into the estrato rank of the neighborhood and the property. It is important to understand that the estrato model isn’t based on factors such as the household income, the number of family members, age, disabilities of the residents, or the employment status of the owner or the occupants.
Rates of Services
Based on the estrato rank, the property owner or the tenants are liable to pay the respective cost of the property tax and the cost of utilities. Homes or commercial spaces with higher estrato ranks will pay a higher amount towards taxes and services like water, electricity, and gas.
Rates paid in the estrato rank 4 are average while those with ownership of properties with rank 5 and 6 will pay significantly more, so as to subsidize the income generated from people living in real estate whose estrato rank is equal or below 3.
The renting cost of spaces belonging to higher estrato will also be higher than that of those belonging to the lower rank.
Estrato Occupancy in Medellin
It is possible for some areas in Medellin to have properties with more than one type of estrato rank. Most residential properties within Medellin fall under the first three ranks which comprise nearly 70% of the city’s real estate.
The properties ranked first and second in Medellin collectively stands above a total of 45% wherein the former type of houses are at a mere 12% and above, with the latter occupying the rest of the 33% of the real estate.
Real Estate belonging to the wealthy estrato rank 6, only adds up to nearly 4% of the total properties while the ones with the 5th rank, are a little greater than the double of the highest rank. These properties are difficult to find and can take a long time to develop, especially when the contractors or real estate developers aren’t reliable.
Can Estrato be Changed?
One might not fail but wonder whether it is possible to reevaluate or change the estrato rank of a property and the answer to that is a little complicated.
Buying property in Medellin Colombia although involves following the estrato system, sometimes this system may seem faulty like when you find a new residential space to be ranked lower than your current living premises.
A person or a group can file an estrato reevaluation claim to the Mayor’s office of their respective municipality which makes the government body liable to address it with the rule that the application should be resolved within no more time than in two months.
If the group or person filing the claim is still unsatisfied with the obtained rank then they may proceed to appeal the decision of the municipality to the Comité Permanente de Estratificación who will also have a period of two months to provide a verdict.
Read More: How to Invest in Commercial Real Estate?
Final Words
Suppose you’re a prospective foreign buyer who has employed the services of a real estate agent or agency. In that case, you may then ask them to provide you with proper listings of various properties that lie within the respective estrato rank of your preference. You should also personally check out the neighborhood and the property itself before making a purchase decision or finalizing a deal.
It will also be beneficial for you to hire a local but experienced lawyer who is aware and holds proper knowledge of the Colombian real estate laws. Doing this will help you remain less dependent on the local real estate agents or agencies and you’ll also learn more about the history of the respective neighborhoods.
