Purchasing Property in the British Virgin Island
The Non-Belongers Land Holding License
All overseas investors, including citizens of the United Kingdom, require a Non-Belongers Land Holding License to purchase property in the BVI. 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 and is non-transferable. Application for a Non-Belongers Land Holding License is made to the Government of the BVI and must be supported by two character references, a financial reference, a police certificate of good standing plus other supporting documentation. The purchase of a property by a Non-Belonger is required to be advertised locally for four consecutive weeks in a local paper prior to submission of the Licence Application to Government.
If the application for a License relates to undeveloped or partly developed land, the applicant will be required to make a commitment to the BVI Government to expend a specific sum on development within a specified period which will normally be three years. The development commitment required will normally be not less than $250,000 and can be proportionately more according to acreage. Environment and other planning considerations will determine the appropriate level of development. Sub-division of land is not encouraged except as a part of a comprehensive development scheme.
Undeveloped land cannot be resold until such a development commitment has been fulfilled or a penalty paid on closing to the Government. Generally, the penalty will be 25% to 40% of the sale contract price. The purchase of developed property for residential purposes will generally not incur a development commitment. The objective of the licensing regulations is to prevent speculation on undeveloped property. Applications for all licences are referred to the Executive Council for approval. There is a license filing fee of $200 for each person named in the application and $300 for companies. The fee for the grant of the License is $600 for each person or company named in the License as well as for each director or shareholder of a company. This $600 fee is also applicable to each director or shareholder of a company.
An overseas investor is free to let a property on a long term or short term (holiday let) basis subject to approval by the Executive Council as part of the Licence application and the granting of a trade licence. Such approval by the Executive Council will be stated on the Licence and will automatically grant approval of the relevant trade licence.
Procedure for Purchasing Property
The following represents the typical sequence of events for a purchase and sale transaction:
• Earnest Deposit: It is normal practice for a prospective purchaser to pay a 10% earnest deposit to the vendor’s agent to be held in escrow prior to signing of a purchase and sale 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 purchase and sale agreement forthwith. Interest earned on this deposit goes to the purchaser in the event that the purchaser withdraws prior to signing contracts. If the purchase proceeds to contract, interest goes to the vendor and the deposit is non refundable.
• Purchase and Sale Agreement: Once agreement in principle has been reached between the purchaser and the vendor, a legally binding purchase and sale agreement drawn up by the vendor’s attorney is signed by the parties. This will normally contain a condition that completion of the purchase is contingent upon the purchaser obtaining a Non-Belongers Land Holding License.
• Application for a Non-Belongers Land Holding License: Generally, purchasers are contractually required to submit their Licence Application within a specified period following signing of the purchase and sale agreement.
• Completion of the Sale and Transfer of Title: This will normally take place shortly after receipt of a Non-Belongers 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 BVI at any stage of the transaction.
Financing a Purchase
The following banks in the BVI offer worldwide banking services:
• Bank of Nova Scotia
www.scotiabank.com
• First Caribbean International Bank (formerly Barclays Bank plc
www.firstcaribbeanbank.com
• First Bank (formerly Chase Manhattan Bank)
www.firstbankbvi.com
• Banco Popular
www.bancopopular.com
• VP Bank (BVI) Ltd
www.vpbank.com
Mortgage finance of up to eighty percent of the appraised value of a property or the purchase price, which ever is the lower, will usually be available to overseas investors subject to status. Construction finance is also available. Mortgages are granted for terms of up to twenty years. Interest rates are generally 1½% above New York Prime rate. Banks will consider financing the purchase of land.
Real Estate Taxes
On the transfer of title to a property Stamp Duty at the rate of 12% of the price or appraised value is payable by the transferee (purchaser). Land Tax at the rate of $50 is due annually for any acreage under a half of an acre. $150 is charged for the first half an acre to one acre and $50 for any additional acreage thereafter. House Tax is also levied annually at the rate of 1½% of the assessed annual rental value. In practice, annual taxes for an average two or three bedroom house will generally be less than $500.
Building a House
Typical building costs range from $100 and $200 per square foot, with the cost for the majority of buildings falling in the middle of this range but with higher rates applicable for more costly forms of construction. A swimming pool may cost in the range of $20,000 to $40,000 to construct. Several first class architects and contractors are based in the BVI and good skilled labour is available. Architects fees will vary according to their level of involvement, responsibility and the complexity of the work. 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 of 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 their own labour.
Planning and Building Control
Development in the BVI is governed by Planning Guidelines which determine general policy. Development work must be approved by the Land Development Control Authority who are concerned with planning matters and by the Building Authority who are responsible for ensuring that building conforms with the building code guidelines. It is preferred if working drawings submitted to these Authorities are prepared by architects based in the BVI.
Utilities and Services
Electricity:
A reliable 110V, 60 cycle mains supply is available on Tortola, Beef Island, Virgin Gorda, Great Camanoe and Anegada.
Water:
Although mains water is available in Road Town and several other parts of Tortola, most water is economically provided by roof catchment of rainwater which is stored in cisterns integrated with the foundation design of each building. Fresh drinking water can also be purchased.
Sewerage:
There is a main sewerage system in Road Town. Elsewhere private septic tanks are normal.
Gas:
Propane gas, supplied in cylinders, is commonly used for cooking. Arrangements can be made for regular delivery.
Telephone:
Modern telephone, facsimile and e-mail services are available. A private company also provides cellular telephone services.
Cable TV:
BVI Cable TV is able to provide a service to the majority of residential areas in Tortola and Virgin Gorda. The service includes 36 channels.
Postal Services:
Postal delivery is provided by a system of Post Office boxes situated in Road Town, East End, West End and on Virgin Gorda.
Work Permits and Trade Licenses
A Work Permit is required by any expatriate wishing to engage in temporary employment in the BVI. Permits will only be granted where it is demonstrated that the position cannot be filled from the local labour force. A Trade License is required to operate a business in the BVI. A work permit will also be required in conjunction with the Trade License if the business operator works in the business. Full details of the regulations can be obtained from the Ministry of Natural Resources and Labour and the Chief Minister’s office.
Immigration
Purchase of a property in the BVI does not in itself establish resident status. However an identification card is available to a person who holds a Non-Belongers Land Holding License which will allow the holder to be granted leave to stay in the BVI for a period of up to six months.
A certificate of residence, entitling the holder to land or embark in the Territory for an indefinite period, may be granted to a person who intends to reside permanently in the BVI.
Income Tax
For homeowners who are not ordinarily resident in the BVI, only income arising in the BVI (such as holiday rental income) will be taxable in the BVI. The tax is levied on a sliding scale of between 0% and 20%.