BUYING PROPERTIES IN BARBADOSINTRODUCTIONA.N. Kirton Inc. has been helping purchasers identify and acquire the right property for over 17 years. This article is intended as a guide to both residents and non-residents alike. It is not intended to be exhaustive, and purchasers should always consult and attorney.
HOW TO BUY PROPERTY IN BARBADOSA 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 10% and each party bears their own legal fees, which average 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.
LEGAL ISSUESIn Barbados property passes by conveyance of title, evidenced by the recording of title, evidenced by the recording of title deeds and certified survey plans at the registry of title. A purchaser will require registered Barbadian attorney to search the register and establish title to the property prior to the completion of a sale.In Barbados purchaser agrees terms with the vendor and enters into a contract prepared by the vendor's attorney, which provides for a deposit to be made securing the property. The vendors' attorney in escrow holds this deposit until completion, when 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 purchases 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. It is usual in the case of non-residents of Barbados, but which must be registered to do business in Barbados. In many cases, non-residents use such a corporate vehicle in order to make the onward sale of property simple.
TOWN AND COUNTRY PLANNING APPROVALIf 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 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 set backs 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 application is made to the TCPO and permission is usually granted within a period of two to six months.
TRANSACTION COSTIn 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 between 1.5% - 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 10%, stamp duty of 1% and legal fees of approximately 1.5%.
Information for Barbadians and Non-Barbadians Purchasing or Selling Property in BarbadosPURCHASER'S POSITIONThe 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:
VENDOR'S POSITIONThe 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:
OPERATING COSTThe owner of land in Barbados will have to pay an annual land tax effective as at 1st April, 2003 at the following rates:
INSURANCEThe 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 COSTSOther major costs would include metered utilities, and any common assessments applicable to master planned communities.
FINANCINGMost 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 dollar loans are around 10%, and foreign currency loans float at around 3% over LIBOR.
OTHER TAXESProperty owners wishing to rent their property on the short-term rental market must apply 7.5% VAT to rent. The registration for VAT allows the proper to deduct VAT on input costs.The profit derived from the rental activities will be subject to income tax in Barbados, and a remittance of a dividend or interest.
OUR SERVICESThrough 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.
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