Buying costs are high in the British Virgin Islands
December 08, 2016
How high are realtors’ and lawyers’ fees in British Virgin Islands? What about other property purchase costs?
|Stamp Duty||4.00% - 12%||buyer|
|Non-Belonger Land Holding License||US$600||buyer|
|Legal Fees||1.00% - 2.00%||buyer|
|Real Estate Agent´s Commission||6.0% - 8.0%||seller|
|Costs paid by buyer||5.00% - 14.00%|
|Costs paid by seller||6.00% - 8.00%|
|ROUNDTRIP TRANSACTION COSTS||11.00% - 22.00%|
| See Footnotes
Source: Global Property Guide
How difficult is the property purchase process in British Virgin Islands?
Unless you or your parents were born in the BVI, you will need a “Non-Belonger Land Holding License” (NBLHL) in order to buy property. A NBLHL is only granted in order for you to take title to a specific property. A NBLHL takes 12 to 24 months to obtain. A 10% deposit is paid on a Sale & Purchase Agreement and goes on to a CD until closing. Interest to the seller is customary. If buying an empty lot, you must agree to build within 2 to 3 years with a minimum expenditure of approximately US$250,000.
If you wish to rent your house, you must request the right to rent on your NBLH License Application. It may or may not be granted. If the home had a previous rental license from the Department of Trade then chances are you may get permission to rent. Since 1998, most NBLH Licenses have had a restrictive clause saying something to the effect: this home may not be rented without permission of the Governor in Council, which will not be reasonably withheld.
Once agreement in principle has been reached, a legally binding purchase and sale agreement is drawn up by the vendor’s attorney, and signed by the parties. This normally contains a condition that completion is contingent upon the purchaser obtaining a NBLHL. A prospective purchaser normally pays a 10% earnest deposit to the vendor´s agent, to be held in escrow. A purchaser will normally acquire absolute title which is registered in the BVI Government Land Registry.
Applications for a License must be accompanied by two personal financial references, one bank reference, two character references, police record, application fee of US$200 (individual) or US$500 (company), and, once approved, issuance of license fee of US$600 (individual) or US$1,000 (company). Licenses carry a 2 or 3-year commitment to develop unimproved land. The objective of the licensing regulations is to prevent speculation on undeveloped property.
If the application for a License relates to undeveloped or partly developed land, the applicant will be required to commit to spend a specific sum on development, normally not less than US$250,000, within a specified period, normally three years. Undeveloped land cannot be resold until such a development commitment has been fulfilled, or a penalty paid, normally 25% of the sale price.
However, the purchase of developed property for residential purposes will generally not incur a development commitment. An overseas investor is free to let a property on a long term or short term (holiday let) basis subject to approval to rent the property by the Executive Council as part of the License application and the granting of a Trade License. Such approval by the Executive Council will be stated on the License and will automatically grant approval of the relevant Trade License. The annual fee for the required Trade License of a Non-Belonger is US$400.
Footnotes to Transaction Costs Table
Stamp duty on property transfers depend on the status of the buyer; whether he is considered to be a belonger (national) or non-belonger (foreigner). The tax base is either the sales price or the market value of the property, whichever is higher.
STAMP DUTY ON PROPERTY TRANSFERS
|Status of the Buyer||rate|
|Belonger or National||4%|
|Non-belonger or Foreigner||12%|
Non-Belonger Land Holding License:
All foreigners, including British Citizens, require a Non-Belonger Land Holding License (NBLHL) to buy a property in the BVI. Agreements for property purchases are made conditional to the acquisition of an NBLHL. Applications must be supported by two character references, financial references and police certificate of good standing.
The filing fee is US$200 for individuals and US$500 for companies. Approval may take around three to nine months. The fee for the grant of the license is US$600 for an individual and US$1,000 for companies.
Legal fees are imposed on the property value at 2% for the first US$100,000 and at 1% for the remaining amount. Legal fee is US$150 at the minimum. There is an additional charge of US300 for the preparation and filing of the NBLHL.
|PROPERTY VALUE , (US$)||RATE|
|Up to US$100,000||2% (minimum of US$150)|