A non-refundable contribution against buying property

Most citizenship and residence programmes offer two routes: a donation or contribution, which is smaller and gone, or a property purchase, which is larger and retained. The property option is chosen far more often than the arithmetic supports.

The comparison people run

"The contribution is money spent; the property is an asset I keep." That framing decides it, and it is incomplete in three ways.

The three omissions

• The premium. Property sold into a programme carries a price set by the threshold rather than by the market. Buyers regularly pay well above what a local buyer would, and that difference is spent, not retained.
• The holding period and the exit. You cannot sell during the required term, and at the end of it you sell into a market whose buyers are largely other programme applicants under whatever rules apply then. If the programme has closed, that pool is gone.
• The carrying costs. Service charge, maintenance, management and taxes for the whole holding period, against a rental income that in most of these developments is well below what the brochure projected.

The honest arithmetic

Take the property price, subtract the price a local buyer would pay for the same unit, add the carrying costs over the holding period, subtract realistic net rent, and add the cost of an exit at a realistic price. Compare that number with the contribution.

Done this way, the contribution wins in a large majority of cases, and the property wins where two conditions hold: the property is one you would buy anyway on its own merits, and the market has depth beyond programme buyers.

The other differences

• Speed. Contributions process faster; property adds a conveyancing timeline.
• Diligence. A contribution has none of the title risk a property carries.
• Use. A property can be used by the family, which is a real benefit and should be valued rather than assumed away.

The rule

Choose property only where you would buy the specific property without the programme. Otherwise the contribution is the cheaper way to buy the same status, and it is cheaper by more than it appears.