Live in Barbados

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:-

1. 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;
2. 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;
3. 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;
4. if applicable, the line-marks to the property are pointed out to the purchaser;
5. 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;
6. 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;
7. 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.

I found an interesting article in The Daily Nation that stated the Barbadian government is seeking amendments to two legislations: Property Transfer Tax and Stamp Duty.  It is thought that by amending the current property transfer tax and stamp duty it will or should make Barbados more attractive to foreign investors.

Ultimately, these amendments would exempt the payment of tax and duty on any transfer of shares to a person who is resident outside of Barbados, whether or not the transferor is resident here, where the assets of the company concerned as well as its income is derived solely from outside sources.

According to the Prime Minister,  in 2007 the previous administration had introduced certain changes to the Income Tax  Act which were designed to create opportunities for Barbados to be used as an attractive jurisdiction for the creation of holding companies, and indicated that these proposed amendments were following in that trend.

He said that with regards to exchange controls, it was imperative that ‘holding companies’ benefit from similar exemptions to those enjoyed by international business companies and regular Barbados companies which conduct ‘international business’ only.

The Income Tax Act states that any individual who is resident but not domiciled in Barbados, is taxable on income derived from local sources and on foreign income that is remitted or deemed remitted to Barbados.

Thompson said Government would amend that act to reduce the effective rate of income tax that such individuals would be required to pay on their foreign income to claim foreign currency earnings credit in respect of income derived outside of Barbados.

He also proposed that dividends derived by Barbadian resident companies, including companies licensed to operate in the international business sector, should be exempt from tax here on dividends derived from a ‘substantial shareholding’ in an overseas company.

Source: The Daily Nation, Tuesday, October 7, 2009, Page 7: Govt to change two tax acts

The credit crunch has had a strange and wonderful effect on Caribbean property markets; it has made them affordable.

According to an article in the Telegraph October 24th demand for Caribbean property has been increasing since the spring, because a number of factors have converged to make Caribbean property more affordable than at any time in the last decade.

Briefly the factors were:

* Caribbean property prices have fallen between 15 and 20% since the peak in 2007.
* Developers are removing non-essential luxuries like moorings and spas to make properties even more affordable.
* And Caribbean property is priced in US Dollars for the most part, giving British buyers a further advantage in that the Pound is currently worth about 30c more than it was at the start of the year.

The rising demand is evident in the fact that you can read such a positive article in the Telegraph. For the last year or so, when there has been very little appetite for overseas property from the British public, there has been very little coverage in the UK press. Now that the appetite is returning we can see positive press coverage of overseas property markets increasing also.

See full article…

I’m not sure how accurate HomesOverseas.co.uk’s data is, but we admire and encourage the positivity about Barbados. Also, Holidaylettings.co.uk cite Bottom Bay as one of their most popular areas, I wonder if that is the same experience for on-island agents? We see some interest in our St. Philip category, but not as much as other areas.

Properties in Barbados, where it is widely claimed that values have never fallen, is the most popular destination with property investors and holidaymakers buying homes and visiting the Caribbean, according to fresh research.

The data comes from the number of Caribbean holiday homes currently advertised on Holidaylettings.co.uk, which has significantly more properties in Barbados compared to the other Caribbean islands, as a consequence of the island’s popularity.

via Property in Barbados remains most popular in Caribbean.

What are your thoughts?

Adding to its existing off-property sales centre in Cave Shepherd, Bridgetown, The Crane has opened a second outlet on the South Coast at which customers can learn about the property’s vacation ownership options; make booking inquiries for the property; or book an “Experience The Crane” day package.  The Crane’s sales director, Kim Goddard, who recently returned to The Crane after stints with Altman Real Estate and Royal Westmoreland, notes “the presence of The Crane on Broad Street has raised awareness of the fantastic product offering on property and we look forward to generating more interest in The Crane from our new location.”

Park Residences Update

With the first phase of outer apartments set to open this Christmas, the new Park Residences at The Crane are really starting to take shape.  All the swimming pools are in, on both the ground floor two bedrooms and the roof terraces of the third floor one bedroom residences.  All interior finishes are pretty well complete, and the landscaping team has been working diligently to install beautiful tropical plants in and around the boulder walls and in the private gardens, both on the ground floor and rooftop residences.  For more information on the Park Residences, contact property@thecrane.com.

An interesting article released today prompted me to think there must be some good deals to be had in St Lawrence Gap, located on the south coast of Barbados.  The article starts with the following (read full article):

The very popular St. Lawrence Gap in Barbados is playing host to some fierce competition for condominium, villa and apartment sales. The popular south coast entertainment strip will soon be home to two new condo developments that include the island’s first 4 star condominium hotel called Ocean Two which is scheduled for a 2010 completion date, meanwhile Sapphire Beach Apartments is slated for an end of 2009 completion date.

Both developments are very large but also have great beaches and facilities.  The location lends itself to great rental opportunities due to the many restaurants & bars, and also its proximity to the airport & Oistins.

This up turn in rental opportunity will allow people looking for a holiday home in the sun to realise a good return on their investment, and will also attract those prioritizing the investment over the home in the sun.

The good news is that with two large developments coming on line in quick succession, the savvy purchaser can use this competition to seek out a good deal, once they get in quick!

I briefly touched on fractional ownership in a previous blog.

Fractional ownership is an interesting form of property ownership that very much suits vacation home ownership.

Here in Barbados, The Crane is our only resort offering fractional ownership.

To learn more on fractional ownership I highly recommend the fractional conference held annually by Ragatz (See here for there homepage). I have attended before, it is pretty intense but very beneficial to anyone thinking of purchasing a fraction or actually doing a fractional development.  Fractional developments can be from one property to multiple within a resort setting, these are also known as “Private Residence Clubs.”

1. Investing in real estate is usually a long term strategy because the property market tends to have its highs and lows and therefore results are not necessarily achieved in the short term.  It is important that you plan your financials prior to investing to ensure you have a steady cash flow for mortgage payments.
2. Before you make any decisions on your property investment, you should speak to a professional in the industry and seek their advice on strategies that will help you manage your investment so that you can maintain repayments within your budget.
3. When choosing a property to invest in, you should always look at what the increased value will be in the future.  It is important for new property investors to choose a property based on its investment attributes rather than on how much they like it.

Interesting article on island real estate opportunities focusing on St Lucia and Barbados!

A recession may seem the worst time to consider snapping up a Caribbean holiday home, but two factors are combining to make property in the region more affordable than for many years.

The first is that prices have fallen on sun-kissed islands just as much as in rainy Britain. “In Barbados, the island with the best access from Britain, prices are 15 per cent down on 2007 levels. On smaller islands with less developed infrastructure, prices are down 20 per cent or more,” says Georgina Richards from Knight Frank, who has been selling homes in the Caribbean for a decade. With sales in the region down by more than 50 per cent and tourism rates down by 30 per cent, estate agents and developers are anxious to keep prices competitive.

See full article.

A very popular guide to Barbados’s real estate scene, now easy to download and have at your fingertips!

Click here!