Purchasing
Real Estate in the British Virgin Islands
The
Non-Belongers Land Holding License
(See the table below for fee structure)
All overseas investors, including citizens of the United Kingdom,
require a Non-Belonger Land Holding License to purchase property in
the British Virgin Islands. Agreements to purchase property are
therefore made contingent upon such a license being obtained by the
purchaser. A license gives an entitlement to own a specific
property.
Application for a Non-Belonger Land Holding License is made to the
Government of the British Virgin Islands and must be supported by
two character references, a financial reference, and a police
certificate of good standing.
If the application for a license relates to undeveloped or partly
developed land the applicant will be required to make a commitment
to the Government of the British Virgin Islands to expend a
specified sum on development within a period which will normally be
less than three years. The development commitment required will
rarely be less than $250,000 and will generally be proportionately
more according to acreage. Environmental and other planning
considerations will determine the appropriate level of development.
Subdivision of land is not encouraged except as part of a
comprehensive development scheme.
A property cannot be resold until such a development commitment has
been fulfilled. The objective of the licensing regulations is to
prevent speculation on undeveloped property. The Minister of
Natural Resources and Labour is responsible for approval of license
applications. Those in respect of sites that extend to more than
three acres must be approved by the Executive Council.
There is a license-filing fee for individuals of $200.00 for each
person or $500.00 for a company named on the application.
Typically, approval may take between three and nine months to
obtain. The fee for the grant of the license is $600.00 for each
person or $1000.00 for the company named in the license. If an
extension of time to register the license is required there is a
fee of $100.00 for an individual and $300.00 for a company. The
penalty for late registration of the license is $200.00.
There are no restrictions on an overseas investor reselling a
developed property. An overseas investor is free to let a property
on a long-term or short-term holiday basis upon approval of a Trade
License application: excellent management services are available in
the British Virgin Islands. Caribbean Realty Limited manages
long-term rentals only but will gladly refer qualified management
agencies to any prospective owners interested in short-term
rentals.
Procedure
for Purchasing Property
(top)
Earnest
Deposit
It is standard practice
for a prospective purchaser to pay a 10% earnest deposit to the
vendor's agent to be held in escrow before signing of a Sale and
Purchase Agreement. Although payment of a deposit does not bind the
vendor or their agent legally, it is taken as a clear indication
that a purchaser intends to sign a Sale and Purchase Agreement
forthwith. Caribbean Realty Limited will only submit an offer when
a 10% deposit and a Letter of Intent to Purchase the property has
been signed by the purchaser.
Sale
and Purchase Agreement(top)
Once agreement has been
reached between the purchaser and the vendor a legally binding Sale
and Purchase Agreement, which attorneys for each party have
approved, is then signed. This will normally contain a condition
that completion of the purchase is contingent upon the purchaser
obtaining a Non-Belonger Land Holding
License.
Application
for a Non-Belonger Land Holding License
Four advertisements
from a local newspaper stating the property description and price
must accompany the application for the Non-Belonger Land Holding
License. Financial and personal references, a Police Certificate
verifying no criminal records, the proposed use of development of
the property are also requirements of a Non-Belonger Land Holding
License. A buyer should begin processing this application as soon
as possible after signing of the Sale and Purchase Agreement in
order to adhere to the time limitations.
Completion
of the Sale and Transfer of Title(top)
Completion will
normally take place within 30 days of receipt of a Non-Belonger
Land Holding License. Payment of the balance of the purchase price
is due at this stage.
Neither purchaser nor vendor need be present in the British Virgin
Islands at any stage of the transaction.
Attorneys
and the Legal System
The legal system in
the British Virgin Islands is based on the English Common Law and
locally enacted Legislation.
It is essential that the purchaser
appoint an attorney in the British Virgin Islands to act in the
purchase transaction. An attorney's responsibilities will normally
include submitting the application for a Non-Belonger Land Holding
License. In general, sale conveyance fees are 2% of the first
$100,000 and 1% of the remaining consideration, but not less than
$150.00. There is an additional fee of $300.00 for preparing the
Land Holding License application. Caribbean Realty Limited strongly
advises all purchasers to employ a BVI Solicitor to oversee and
monitor the Sale and Purchase Agreement
transactions.
Tenure
and Registration of Title
(top)
The majority of land
in the British Virgin Islands is owned in fee simple. A purchaser
will normally acquire absolute title, which is registered in the
Government of the British Virgin Islands Land Registry. Registered
titles relate to a detailed Cadastral Survey that defines legal
boundaries. No transfer of land can take place unless boundaries of
the property have been determined to the satisfaction of the
Registrar of Lands.
Property in the British Virgin Islands may also be held on a long
lease from the Crown or private individuals. Most often, the
duration of such leases is 99 years. Remaining years of
pre-existing leases are transferred to each vendor until the
original lease expires, upon which time extensions are
renegotiated.
For practical purposes, a purchaser of such a leasehold interest
will enjoy all the benefits of an absolute title for the duration
of the lease. At the end of the lease, the property reverts to the
Lessor.
Financing
a Purchase
The following banks
in the British Virgin Islands offer worldwide banking services:
Mortgage finance of up to seventy five percent of the
appraised value of a property or the purchase price, whichever is
less, will usually be available to overseas investors subject to
status. Construction financing is also available. Mortgages are
granted for terms of up to twenty years. Interest rates are
generally one and a half to two percent above New York Prime Rate.
Banks will also consider financing the purchase of the land without
structures or improvements.
Real
Estate Taxes(top)
On the transfer of
title to a property Stamp Duty, at the rate of 12% of the
contracted price or the appraised value, whichever is higher, is
payable by any Non-Belonger Purchaser. Belongers are required to
pay a 4% Stamp Duty.
Annually, Land Tax is levied at the rate of
$50.00 for the first half acre or less, $150.00 on more than half
but not exceeding one acre and $50.00 on each acre thereafter, or
part thereof. House Tax is levied at the rate of one and a half
percent (1.5%) of the assessed annual rental value. In practice,
this means that for an average two or three bedroom house the
annual house and land taxes will be less than $500.00. If a
purchaser intends to rent out the property for investment purposes,
income taxes are also required and these rates vary according to
use. A Trade License is required of each owner and the annual fee
for such is $400.00 to a Non-Belonger.
|
CATEGORY |
FEE
($) |
|
Application for license
by a company |
500.00 |
|
Issue of
license to a company |
1,000.00 |
|
Application for license
to an individual |
200.00 |
|
Issue of
license to an individual |
600.00 |
|
Application by a
company for an extension of time to register
license |
300.00 |
|
Application by an
individual for extension of time to register
license |
100.00 |
|
Penalty
for late registration of license |
200.00 |
|
Transfer
on sale |
12% of consideration or
the market value of the property, whichever is
higher. |
| Transfer of any other
kind |
5% of market value of
the property |
Income Tax (top)
There is no income tax in the British Virgin Islands, per se but there is a "Payroll Tax", which amounts to the same thing with a different name. For further misleading information please refer to the British Virgin Islands Government website if you can find it.
Building a House
Building costs vary between $150 and $250 per square foot for quality construction and finishes. An average sized swimming pool may cost in the range of $25,000 to $45,000 to construct. Several first class architects and contractors are based in the British Virgin Islands and good skilled labourers are available. Architects fees will vary according to their level of involvement, responsibility and the complexity of the work. Fees for design and supervision will generally be about 10%.
Most building materials are imported through local merchants. Materials may be imported directly and will be liable to import duty levied at rates between 5% and 20%. From the planning stage, a house may take 9 to 18 months to complete. There are no restrictions against an owner building a house using his own labourers providing the proper labour codes have been observed.
Planning and Building Control (top)
Development in the British Virgin Islands is governed by planning guidelines that determine general policy. Currently there are no zoning laws in the British Virgin Islands but it is being planned for the near future.
Development proposals must be approved by the Land Development Control Authority who is concerned with government planning and by the Building Authority who is responsible for ensuring that buildings are of structurally sound design. It is preferred that the working drawings be prepared and submitted to these Authorities by architects based in the British Virgin Islands.
Import Duty on Possessions and Furnishings
Within six months of first arrival in the British Virgin Islands each adult immigrant or person staying for more than six months is permitted to import up to $1,000.00 worth of "used" possessions and furnishings without incurring liability to import duty. After six months, such items are subject to duty at rates that vary between 5% and 20%. Import duty on vehicles is 20%.
New possessions and furnishings, whether imported before or after the expiration of six months, are liable to duty charges.
Utilities and Services (top)
Electricity: A reliable 110v, 60-cycle mains supply is available on Tortola, Beef Island, Virgin Gorda, Great Camanoe, Jost Van Dyke and Anegada.
Water: Although a main supply of purified water is widely available in Road Town and several outlying parts of Tortola, most household water is economically provided by roof catchment of rainwater. This water is stored in cisterns integrated with the foundation design of each building.
Fresh bottled drinking water is for sale in most grocery stores.
Sewerage: In Road Town there is a main sewerage system. Elsewhere private septic tanks are the standard.
Gas: Propane gas, supplied in cylinders of one hundred pounds (100 lbs), is commonly used for cooking. Deliveries are made upon request from either SOL or O'Neal Gases.
Telephone: A modern telephone network, Cable & Wireless (BVI) Ltd, with international direct dialing extends to most parts of the populated islands. ATT calling cards, telex, facsimile and cellular telephone services are available.
Internet Service: Cable & Wireless (BVI) Ltd., is also the Internet Service Provider with a number of different services available including ADSL (bradband) and dial-up accounts.
Cable Television: BVI Cable TV is able to provide approximately fifty various channels, including HBO, to the majority of residential areas in Tortola. These services extend to Virgin Gorda.
Postal Services: Postal delivery is provided by a system of Post Office boxes on a yearly rental or via general delivery at the Post Office branches situated at: Road Town; East End; West End; and Virgin Gorda. Express and general mailing services are available via: Rush It Inc., Federal Express, DHL Worldwide Express, and Inland Messenger Service.
Work Permits and Trade Licenses (top)
A Work Permit is required by Non-Belongers who wish to engage in temporary or permanent employment in the British Virgin Islands. Permits will only be granted where it is demonstrated that the position cannot be filled from local labour force.
A Trade License is required to operate a business in the British Virgin Islands. A Work Permit will also be required in conjunction with the Trade License if the business operator is self-employed.
Full details of these regulations can be obtained from the Ministry of Natural Resources and Labour, and the Chief Minister's Office.
Immigration (top)
Purchase of a property in the British Virgin Islands does not in itself establish resident status. Any person who intends to reside permanently in the British Virgin Islands may apply for a Certificate of Residence entitling the holder to land or embark in the Territory for an indefinite period.