Everything You Need To Know About BVI Property Purchase
- January 21st, 2015
- in PROPERTY
For an introduction to this forum, please see Dec 14/Jan 15 issue of Virgin Islands Property and Yacht or CLICK HERE. Any queries, please contact [email protected] or the editor directly [email protected]
Can I buy property in the BVI?
The short and the long answer is ‘Yes.’ There are additional restrictions and requirements that off islanders must meet versus Belonger/Resident buyers, but land, resale homes and even custom building your own home are possible here.
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How do I buy property in the BVI?
- The first step is to find the property, land, or a resale home you wish to purchase. Submit an earnest deposit, normally 10% of purchase price, along with a sales offer or Letter of Intent to Purchase to the vendor for an acceptable price and terms.
- The property must be advertised in both the local papers and online advertising media for four consecutive weeks in order to allow BVI Belonger/Residents an opportunity to match the offer and takeover the property purchase. If this does occur, your earnest deposit will be returned in full.
- Purchaser and vendor then agree upon a legally binding Sale and Purchase Agreement. The purchaser must prepare and file for an Alien or Non-Belonger Land Holding License (NBLHL), which includes providing proof of good character, financial resources, a recent valuation of the property along with some miscellaneous items.
- If you are building a new house, you must specify the number of bedrooms, bathrooms, and pools. No detailed building plans are required at this point although it is wise to get an architect/builder involved to see what could be constructed on the land before filing. The license will only be good for the property you are purchasing and is not a general license to own property in the BVI.
How Long Does It Take to Purchase Property in the BVI?
- The overall period varies from six to eight months at the writing of this article.
- A due diligence period of usually two to three months is normally required for getting property appraisals, structural surveys, plumbing or electrical inspections, etc. completed in addition to running the four weeks of paper and online ads for BVI Belonger/Residents as well as possibly organising bank financing here.
- The Alien/ Non-Belonger Land Holder License application must also be put together in this timeframe. It is highly recommended using a reputable local attorney’s assistance to prepare the NBLHL application as well as help verify property title, etc.
- Government approval time for the NBLHL varies, but currently have been averaging two to three months from the submission of application. The BVI Governor must also sign off on the purchase which can take another one to two months.
- Once you receive your NBLHL approval, you would normally close the purchase within approximately 30 days.
General costs of buying and purchasing a property in the BVI
- Stamp duties and transfer fees-freehold – 12% of the purchase price or appraised value of the property being acquired
- Stamp duties for leasehold or leased land – 1.5% of purchase price plus first 20 years rent
- Attorney Fees vary – 1-2% of the purchase price for the property is the norm
- Property Valuations or Appraisals – vary but are generally US $700-$1000
- Structural Surveys – evaluate the integrity of the property’s structure. Usually run between US $1500-US$2000. Inspections can also be ordered for electrical, plumbing, and roof inspections on a negotiated rate
- Bank Financing – Scotiabank, Banco Popular, First Bank, CIBC First Caribbean International, VP Bank, National Bank of the Virgin Islands. Arranging fees vary widely but generally run 0.5%-1% of the loan cost and lawyer fees normally 0.5%. Rates vary but run between 5%-6% annual interest on the loans with construction loans up to 8%. The percentage of the property value a bank will cover will depend upon your financials but can range from 75%-90% of the purchase price, with the norm being around 80% currently
- Annual Land Taxes – US $50 up to 0.50 acres; US $150 0.50 – 1.0 acres; +1.0 acres and above US $50 per additional acre
- Annual House Taxes
- – 5% of assessed annual rental value of the Property. Norm runs $300-$500 but usually no more than $1000 annually
- House Insurance – Numerous agencies provide good property insurance, which normally covers all perils such as hurricane, earthquake and floods with low deductibles usually in the 2% of total coverage range. Rates vary but usually average US $1000 annual insurance fee per $100,000 of coverage provided
How many properties can I buy as an off-islander?
- A Non-Belonger can only own one property in the BVI, but even children can own property here. One exception to this is if a resale property is purchased that was held under a previous Non-Belonger license – all property held under that license can be sold to a Non-Belonger even though there might be several different properties or parcels involved.
- Property can be transferred to direct family members with no stamp duty penalty. However, it is strongly recommended preparing an on island will with a local BVI lawyer. Offshore wills very often have to be probated through the courts here before they can be executed which could incur significant costs and time delays. Please note that if the relative being deeded the property does not yet hold a Non-Belonger license, one must be sought for that individual.
- Please note that British citizens are not recognised as Belongers in the BVI and must file as off-islanders as well.
Current State of the Real Estate Market in the BVI
The BVI real estate market has for many decades been a very stable structure. Over 70% of the land is owned by Belongers/Residents in the BVI and is in most cases simply not offered for sale as these people wish to develop the properties themselves or deed to family members as they do not wish to become disenfranchised in their own lands.
This coupled with various restrictions on property purchase with a view to minimising speculation, particularly by off -slanders, has resulted in a slowly appreciating market over decades with no huge appreciations or depreciations in value.
With the world downturn since 2008 until recently, the interest by off-islanders in acquiring resale properties or developing BVI land has been very minimal due to recessionary pressures.
The market remained quite active however with local Belongers and Residents acquiring land and building their own homes.
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In general, resale homes were sold over this period at a much discounted rate (30%-40% off the listing price in many instances) or were not sold at all, resulting in a substantial build-up of inventories in the current market for homes that have already been built.
However, the market for land has remained solid and has held strong demand particularly in Virgin Gorda and to a lesser extent in Tortola.
This is also coupled with the fact that the 12% stamp duty that off-islanders must pay to acquire a BVI property only needs to be paid on land that is bought versus on the full value of a resale home, resulting in substantial savings.
Also, a custom-built home will be exactly what a buyer wants in terms of space, newness, and finishings, making this a particularly desirable option.
Over the last two years, many buyers have come from the US, Britain and Europe in particular looking to acquire a winter vacation home or year round off shore residence. Since many of these buyers have only just started looking in the last year or two, several are indecisive about what island they wish to locate, what area on that island they want to acquire a home in, and if they desire to buy a resale home and remodel or buy land and build.
BVI realtors have been very busy showing a lot of property but resultant sales, although much busier than the previous 5-6 years, is still quite small. Nevertheless, this realtor believes that many of these purchasers will end up buying over the next few years so that is welcome news for sellers and the return of a reasonable sales market.
Contributed by Bonnie Dougall, Principal of Dougall Real Estate BVI, a local BVI Brokerage firm. The views expressed in this Forum are exclusively from Bonnie Dougall and may not represent the viewpoints of Virgin Islands Property and Yacht.