Barbados Property Guide
HOW TO BUY PROPERTY IN BARBADOS
Any non-Barbadian wishing to purchase property on the island must initially get permission from the Central Bank of Barbados. This is simply a formality. In Barbados, property passes conveyance of title, evidenced by the recording of the deeds and certified survey plans at the registry of title.
A purchaser will require a registered Barbadian attorney to search the register and establish title to the property prior to the completion of sale. The parties sign a binding contract and the vendor’s attorney holds the deposit until completion, at which time the balance of the price is paid.
Purchasers should be aware that once an agreement has been made, and a 10% deposit of the agreed price paid, the deal must proceed or the deposit is forfeited. The title may be taken in an individual’s name or through a corporate vehicle set up to own the property.
It is usual in the case of non-residents of Barbados that they purchase property through a company, which may be incorporated outside Barbados but which must be registered in Barbados.
The Vendor pays a property transfer tax of 2.5% and each party bears their own legal fees, which averages between 1.5% to 2%. The only other cost for the vendor is a sales commission, usually of 5%. From the purchaser’s perspective, transfer costs are usually 2% or less.
All money brought into Barbados must be registered at the Central Bank which, in turn, then guarantees repatriation if the property is sold. The obvious importance of this procedure makes it essential to conduct any transactions through a reputable real estate agent and a local attorney-at-law.
Several well-established real estate agents are listed in these pages. In addition, to providing information about properties, they can also offer guidance regarding legal representation, immigration requirements and settling-in procedures.
In Barbados property passes by conveyance of title, evidenced by the recording of title deeds and certified survey plans at the registry of title. A purchaser will require a registered Barbadian attorney to search the register and establish title to the property prior to the completion of a sale.
Once the purchaser agrees on terms with the vendor, the parties enter into a contract prepared by the vendor’s attorney, which provides for a deposit to be made securing the property.
The vendors’ attorney holds this deposit in escrow until completion, on completion the balance of the purchase price is paid and the title passes to the purchaser by way of the conveyance.
Between the time of executing the contract and the completion of the sale, the legal representative of the purchaser will search the title, and ensure that there are no encumbrances, charges, encroachments, or other impediments to the sale.
The title may be taken in an individual’s name or through a corporate vehicle set up to own the property.
In many cases, non-residents use a company incorporated outside of Barbados in order to make the onward sale of the property simple. However, the company must be registered to carry on business in Barbados.
TOWN AND COUNTRY PLANNING APPROVAL
If the purchaser is buying vacant land, the vendor will require a Certificate of compliance from the Town and Country Planning Office (TCPO), which certifies that the roads and services have been provided in accordance with planning guidelines. It is therefore illegal for a vendor to sell a property without a Certificate of Compliance.
If the purchaser is buying a built property which is to be improved, or intends to build a property on the land, he or she will require planning permission from TCPO. The planning permission is granted in accordance with a set of guidelines established by acts of Parliament and statutory instruments, which govern such things as setbacks from adjoining properties, road, cliff tops, and the high water mark, if the property is on the beach.
The guidelines also cover density and building height. In addition, TCPO would be guided by the zoning of the land and environmental issues, such as the method of effluent disposal, and the capturing of rainwater for irrigation purposes.
In all cases an application is made to the TCPO and permission is usually granted within a period of two to six months.
In 1998 the Government ABOLISHED property transfer tax for non-national purchasers, which was previously set at 10%. Sales commissions and survey costs are borne by the vendor. Each party bears their own legal fees, which are based on a scale of fees ranging between1.5% to 2%. On average, the cost would be approximately 1.5% for the purchaser. This is the only purchase transaction cost other than incidental costs of forming and registering a company if a corporate vehicle is to be used.
When selling a property the vendor would normally incur sales commissions of 5%, transfer tax of 2.5%, stamp duty of 1% and legal fees of approximately 1.5%.
Information for Barbadians and Non-Barbadians Purchasing or Selling Property in Barbados
The expenses incurred by a Barbadian or Non-Barbadian Purchaser (i.e. a purchaser who is not a Citizen or Permanent Resident of Barbados) will be as follows:
- Property Transfer tax – 0% of the Purchase Price
- Legal Fees – Approximately 1.5% of the Purchase Price
- Proportionate part of land tax – This amount will vary depending on the value of the property time of the transaction.
- Exchange Control fee – BDS $200.00 (Approximately)
- Out-of-Pocket Expenses – BDS $200.00 (Approximately)
17.5% VAT is payable on legal fees
It is necessary for a foreign purchaser to remit the purchase price to Barbados in foreign currency, after which it will be converted into Barbados currency and registered in order to facilitate with the subsequent repatriation. Exchange Control Authority permission is also necessary for the purchase itself. This is usually readily obtained once the purchaser monies have been registered.
The expenses incurred by a Barbadian or Non-Barbadian Vendor (i.e. a vendor who is not a Citizen or Permanent Resident of Barbados) will be as follows:
- Property Transfer Tax – 2.5% of the Purchase Price
- Legal Fees – Approximately 1.5% of the Purchase Price
- Stamp Duty – 1% of the Purchase Price
- Land Tax – This amount will vary depending on the value of the property and the time of the transaction
- Land Surveyor’s Fee – Approximately BDS $1,500.00
- Exchange Control Fee – Normally 5% of the Purchase Price
- Out of Pocket Expenses – BDS $200.00 (Approximately)
17.5% VAT is payable on legal fees
Exchange Control Authority permission is necessary for the sale. This is normally readily obtainable. The net proceeds can usually be repatriated once there is evidence that monies were brought into Barbados to purchase the property that is being sold.
The owner of land in Barbados will have to pay an annual land tax effective as at 1st April, 2003 at the following rates:
|(i) Residential Properties||(Improved Value)||Rate|
|First $150,000||–||Zero rated|
|$151,000 – $400,000||–||0.10%|
|$401,000 – $1,000,000||–||0.45%|
|Excess over $1,000,000||–||0.75%|
|(ii) Non Residential Properties||Improved Value||–||0.65%|
|(iii) Hotel Rates||Improved Value||–||0.65%
*Rebate of 50% on production of Certificate from the Barbados Tourism Authority
|(iv) Villa Rates||Improved Value||–||0.65%
*Rebate of 25% on production of a Certificate from the Barbados Tourism Authority.
|(v) Agricultural Rates||(a) Site Value||–||0.60%
*Rebate of 0.5% on production of a Certificate of approved agricultural use. Applicable only where the Site Value exceeds $25,000
|(b) Improved Value||–||0.65%
*Rebate of 0.5% on production of a Certificate of approved agricultural use. Applicable only where the Improved Value exceed $75,000.
|(vi) Unimproved Land||Site Value||–||0.60%|
|(vii) Pensioner Rebate||Improved Value||–||Pensioners who occupy their own homes will pay at the approved residential rates but the amount payable shall be calculated on 50% of the amount exceeding $125,000.|
The main other operating costs would include insurance, which ranges form 0.4% for residences; 0.6% for commercial buildings; 0.9% for hotels, and in all cases would depend on characteristics of the building and the site.
Other major costs would include metered utilities, and any common assessments applicable to master planned communities.
Most properties in Barbados are bought with a combination of owners’ investment and borrowing. Twenty to thirty year mortgages are available for residents of Barbados, and in the case of non-residents US dollar loans are available through Barclays bank and CIBC for up to 60% of the value of the investment, over a term of up to fifteen years.
Interest rates for Barbados dolla
r loans are around 10%, and foreign currency loans float at around 3% over LIBOR.
Property owners wishing to rent their property on the short-term rental market must apply 17.5% VAT to rent. The registration for VAT allows the property owner to deduct VAT on input costs.
The profit derived from the rental activities will be subject to income tax in Barbados. Remittance of dividends or interest may be subject to withholding tax.
Through our various departments we provide the services of letting agents, house management, development consultancy, sales, reservations and marketing, and payroll and government returns services. A N Kirton Inc. goal is to make the purchase of a home, and the ongoing operation of the home for the owner as worry free as possible.