This article was kindly provided to BPL by Vidisha K. Hathiramani, Attorney-at-Law at Lex Caribbean Law Offices and seeks to provide general information on acquiring real property in Barbados.
We hope that this helps those of you who have had questions on investing in property in Barbados…
Owning Real Estate in Barbados
In Barbados, there are different types of real estate, for example, “stand-alone” properties, townhouses, condominiums and properties that use the co-operative structure (having a right to use real estate through the acquisition of shares in a company) or the “co-operative/condominium” structure. Properties can be purchased “off-plan” or completed. Condominiums are governed by the Condominium Act of the Laws of Barbados. There is no legislation governing the co-operative structure or the “co-operative/condominium” structure. The contents of this article are based on the purchase of a completely constructed freehold property, that is, “stand-alone” properties, townhouses or condominiums.
There is no restriction on who can own real property in Barbados. Land can be acquired by residents and non-residents with very little difference in the process, apart from issues arising under the local exchange control régime. They are set out in more detail below.
Real property in Barbados is mostly freehold. At present, Barbados operates largely under the unregistered system of title, although there are some areas which have become registration districts. Consequently, it is advisable to use a local attorney-at-law when purchasing real estate in Barbados, so that the title can be properly investigated and other requirements, such as those relating to the recording of deeds, can be appropriately dealt with.
The Process of Purchasing
Very briefly, the steps associated with purchasing real property in the island are as follows:-
- the Sale and Purchase Agreement is prepared by the vendor’s lawyer and agreed between the parties. A 10% deposit is paid by the purchaser to the vendor’s lawyer on the signing of the Agreement;
- an investigation of title is carried out by the purchaser’s attorney-at-law, to whom copies of the prior title deeds are to be provided;
- if applicable, the approval of the Exchange Control Authority of the Central Bank of Barbados is applied for before completion of the sale and purchase;
- if applicable, the line-marks to the property are pointed out to the purchaser;
- the conveyance is prepared by the vendor’s lawyer and is perused by the purchaser’s lawyer. Once approved, the vendor’s attorney-at-law has the conveyance signed by his or client;
- at closing, the original conveyance and prior title deeds and plan, along with other necessary documents, are provided to the purchaser’s lawyer in exchange for the balance of the purchase price;
- the purchaser’s lawyer has the conveyance recorded at the Land Registry of Barbados.
The specifics of these steps may be varied depending on the requirements of the parties and the preferred course of action of the attorneys.
Taxes
Property Transfer Tax (“PTT”) and Stamp Duty are payable by the vendor on the transfer of property. Stamp Duty is assessed at the rate of 1% of the consideration in the conveyance, while the rate of Property Transfer Tax is 2.5% of the value of the property (with an exemption on the first BDS$150,000.00 where there is a building on the land). PTT and Stamp Duty are also payable on a sale of shares of a local company at the same rates. PTT on a sale of shares is based on the net value of the company.
Land tax is payable on an annual basis. Land tax bills are issued in October of every year. If the land tax is paid within thirty days of the date of the land tax bill, a 10% discount will be applicable. If the land tax is paid within sixty days of the date of the land tax bills, a 5% discount will be applicable. Land tax which is not paid by March 31 of the financial year for which it is due is subject to a 5% penalty plus 1% simple interest on the tax for each month during which any tax and penalty remains unpaid. The penalty is not payable until the expiry of sixty days after the date of the land tax bill.
The Exchange Control Régime
Non-residents of Barbados must obtain the permission of the Exchange Control Authority (“ECA”) of the Central Bank of Barbados in order to purchase property. Before granting permission, the ECA will require the entire purchase price to be brought into Barbados and registered with it. On a re-sale of the property, an application can be made to have the sale proceeds remitted out of Barbados, and the application will be granted only if the initial purchase price was registered with the ECA.
Methods of Ownership
There are various methods of owning real estate in Barbados. It can be owned in the name of an individual or individuals, by a company incorporated in Barbados (there are no requirements for the shareholders or directors of a local company to be Barbadian), or it can be held through a company incorporated in another jurisdiction and registered as an external company in Barbados. Local companies and external companies are considered to be resident for the purposes of acquiring real estate on the island, and therefore do not require the permission of the ECA to buy land. Funds brought into Barbados by external companies should be registered with the ECA. Permission is required for a non-resident to hold shares in a company incorporated in Barbados.
It is recommended that an offshore purchaser obtain tax advice from his or her home jurisdiction before finalizing the method by which the land will be purchased.
Financing
Local purchasers can obtain financing from local lending institutions to acquire property. Offshore purchasers are generally required to obtain financing from external sources, or to apply for a loan in United States currency. The approval of the ECA is required for overseas purchasers to obtain local financing in United States dollars. There are specific exchange control regulations relating to loans. For example, a local company that is controlled by non-residents will require the permission of the ECA in order to obtain local financing.
Construction and Renovations
There is no legal requirement for a structural survey to be done before completion of the sale and purchase. It is suggested that a site visit be conducted to ensure that the land being purchased is suitable for its purposes. In order to build on land, and to have certain renovations done, an application and plans will need to be submitted to the Town & Country Planning Office requesting the approval of the Chief Town Planner for the construction of the building, or for the renovations depending on the nature of what is intended to be done. An architect can assist with this process.
Disposition of the Property
There are no restrictions on the transfer by sale or otherwise of property by an individual or a company. The laws of Barbados allow real estate to be disposed of by will or on administration in case of intestacy. Transfer of the property to the beneficiaries of the deceased will not attract any property transfer taxes.
By: Vidisha K. Hathiramani, Attorney-at-Law
Lex Caribbean Law Offices
Disclaimer
This article provides general information only, and should be not taken as comprehensive or specific legal advice. The contents of this article have been prepared in accordance with the laws of Barbados at the date on which the article was written.
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