Guide to buying property in
The British
Contents
The Non-Belongers Land Holding License (NBLHL)
4
Procedure for Purchasing Property7
Building Your Property and Living in the BVI8
Financing a Purchase
8
Building a House
9
Planning and Building Control
9
Property Taxes
9
Utilities and Services
9
Work Permits and Trade Licences
9
Immigration
9
At a glance
10
12
The British Virgin IslandsBuying property in the British Virgin Islands should be relatively straightforward,
but we would always recommend that you instruct the services of a reputable
agent, attorney and surveyor.
This document has been compiled as a guide for potential purchasers of
property in the British Virgin Islands. It does not seek to provide or replace legal
advice which you should obtain, nor is it intended to have any contractual effect.
The Residential property
purchase procedure in
the British Virgin Islands
The British Virgin Islands
Guide to buying property in The British Virgin Islands 3 Guide to buying property in The British Virgin Islands 3
The Non-Belongers Land
Holding License
For the most part, purchasing property in the British Virgin Islands follows a pattern which is common to other English Common Law jurisdictions. The main feature of the process that will be unfamiliar to most purchasers from overseas is the Non-Belongers Land Holding License (NBLHL).
All overseas investors (including citizens of the United Kingdom) require a NBLHL to purchase property in the British Virgin Islands. Agreements for the purchase of property are therefore made contingent upon the purchaser securing this license. A license entitles the purchaser to own a specific property and is non‑transferable. The British Virgin Islands
Application for the NBLHL
Application for a NBLHL is made to the Ministry of Natural Resources of the Government of the Virgin Islands and must be supported by two character references, a financial reference, and a police certificate of good standing plus other supporting documentation. The purchase of a property by a Non-Belonger must be advertised locally for four consecutive weeks in local off line and on line media prior to submission of the license application to the Government.
The purchaser’s attorney will normally assist the purchaser with the preparation and submission of the license application to the Government. There is a License filing fee of US$200 for each person named in the application and US$500 for companies. The fee for the grant of the License is US$600 for each person named in the License or US$1,000 for a company plus US$600 for each director and shareholder of a company.
Development Commitment
Where a License application is made to buy a parcel of undeveloped land, the applicant will be required to make a commitment to spend a specific sum on development (normally not less than
US$250,000) within a specified period (normally not more than three years).
The development commitment will vary depending on the size of the property, environmental and other planning considerations. The sub-division of land by Non-Belongers is not encouraged except as a part of a comprehensive development scheme.
Re-sale of Property subject to
a Development Commitment
Undeveloped land cannot be resold until any development commitment has been fulfilled. Penalties will apply in cases where the property is sold without fulfilling the development commitment. The objective of the licensing regulations is to prevent speculation on undeveloped property.
Guide to buying property in The British Virgin Islands 5
Procedure for
Purchasing Property
The normal sequence for purchasingproperty in the British Virgin Islands is as follows:
1
Earnest Deposit
A prospective purchaser will usually pay a 10% earnest deposit to the vendor’s agent which will be held in escrow prior to the signing of a purchase and sale agreement. This ‘good faith’ deposit confirms the intent to proceed with a purchase but is made ‘subject to contract’. Therefore it does not create a legal obligation on either party and is fully refundable until a purchase and sale agreement is signed.
2
Purchase and Sale Agreement
Once agreement in principle has been reached and a deposit has been paid the vendor will normally engage their attorney to prepare a legally binding purchase and sale agreement to be signed by the parties. Typically this will contain a condition that completion of the purchase is contingent upon the purchaser obtaining a NBLHL.
3
Application for a NBLHL
Under the purchase and sale agreement the purchaser will agree to submit their License application to the BVI Government within a specified number of days following signing of the purchase and sale agreement.
4
Completion of the Sale
Completion will take place shortly after the purchaser receives the NBLHL. The vendor signs a Deed of Transfer and this document is counter-signed by the purchaser. Payment of the balance of the purchase price is due at this stage.
5
Payment of Stamp Duty
Following completion of the sale and prior to registering the title at Land Registry, the purchaser must pay Stamp Duty to the Inland Revenue Department. For overseas purchasers, Stamp Duty is levied at the rate of 12% of the price or appraised value and is payable by the purchaser.
6
Registration of Title
Following completion the purchaser’s attorney will normally register the title with the Registrar of Lands. The Land Register provides definitive evidence of title.
Neither purchaser nor vendor need be present in the BVI at any stage of the transaction.
The British Virgin Islands
Financing a Purchase
The following banks in the BVI offer retail banking services to overseas purchasers:
Banco Popular de Puerto Rico www.popular.com CIBC First Caribbean (formerly Barclays Bank plc.) www.cibcfcib.com
First Bank www.firstbankbvi.com
Scotiabank (BVI) Limited www.scotiabank.com
VP Bank (BVI) Ltd www.vpbank.vg
Mortgage finance will usually be available to overseas investors subject to status. Construction finance may also be available for new construction. Mortgages are granted for terms of up to twenty years. Interest rates are generally pegged to LIBOR or New York Prime rate. Banks will consider financing for the purchase of land.
Building Your Property
and Living in the BVI
The British Virgin IslandsBuilding a House
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.
Most building materials are imported through local merchants. Materials may be imported directly and will be liable to import duty levied at rates of 5%‑20%. From the planning stage, a house may take 9‑18 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 Development Guidelines which determine general policy. Development plans must be approved by the Land Development Control Authority, responsible for compliance with Development Guidelines and by the Building Authority who are responsible for ensuring that building conforms to the building code guidelines.
Property Taxes
An annual Property Tax is payable to the Government comprising Land Tax, which is levied at the rate of US$150 for the first half an acre to one acre and US$50 for any additional acreage thereafter and House Tax, levied at the rate of 1.5% of the assessed annual rental value. In practice, annual property taxes for an average two or three bedroom house will generally be less than US$1,000.
Utilities and Services
Electricity: A reliable 110V, 60 cycle
mains supply is available on Tortola, Beef Island, Virgin Gorda, Jost Van Dyke, Great Camanoe and Anegada
Water: Although mains water is
available in most parts of Tortola and some areas of Virgin Gorda, Jost Van Dyke and Anegada, most domestic water requirements can be provided by rainwater roof catchment stored in cisterns, which are integrated into 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: Three companies provide
modern telephone, facsimile and internet service throughout the Territory
Cable TV: BVI Cable TV provides service
to the majority of residential areas in Tortola and Virgin Gorda
Internet: Current internet connection
speeds are up to is 8mbps
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 Licences
A Work Permit is required by any expatriate wishing to engage in full time or 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 Licence is required to operate a business in the BVI. A work permit will also be required in conjunction with the Trade Licence if the owner of the business also works in the business. Full details of the work permit regulations can be obtained from the Labour Department. The Department of Trade and Consumer Affairs can provide further information on the Trade Licence requirements.
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 NBLHL which will allow the holder to be granted leave to stay in the BVI for a period of up to six months.
An annual certificate of residency, 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.
Guide to buying property in The British Virgin Islands 9
At a glance
Buying
Transaction costs
Attorney feesw
w 2% of the first US$50,000 and 1% of the remaining consideration, but not less than US$150.00
Non-Belongers Land Holding License (NBLHL) for individuals
w
w Licence filling fee of US$200.00
w
w Fee for the grant of the Licence is US$600.00 for each person named in the Licence
Non-Belongers Land Holding License (NBLHL) for a company
w
w Licence filling fee of US$500.00
w
w Fee for the grant of the Licence is US$1,000.00 plus US$600.00 for each director and shareholder
Stamp Duty
w
w 12% of the price or appraised value is payable by the purchaser
Standard purchase procedures
w
w Deposit: Purchaser pays a 10% deposit to the vendor’s agent (held in escrow)
w
w Purchase and Sale Agreement: All parties sign a legally binding purchase and sale agreement drawn up by the vendor’s attorney. The purchase is contingent upon the purchaser obtaining a NBLHL
w
w Application for a NBLHL: Purchasers are contractually required to submit their Licence Application within a specified period following signing of the purchase and sale agreement
w
w Completion of the Sale and Transfer of Title: After receipt of a NBLHL the purchaser settles the balance of the purchase price and pays Stamp Duty to the Inland Revenue prior to the transfer document being registered
(Neither purchaser nor vendor need be present in the BVI at any stage of the transaction)
Selling
Transaction costs
Attorney feesw
w 2% of the first US$50,000 and 1% of the remaining consideration,
but not less than US$150.00
Agents’ fee Taxes
w
w No Stamp Duty Tax
w
w No property transfer tax
(No capital gains, death duties, corporation or personal income tax.)
Owning
Annual costs
Property Insurance Contents Insurance Taxes ww There is no corporation and income tax, death duties or estate tax
Land Tax
w
w US$150.00 is charged for the first half an acre to one acre
w
w US$50.00 for any additional acreage thereafter
House Tax
w
w 1.5% of the assessed annual rental value
Hotel Tax
w
w 7% for those that have rentals with rental periods of less than six months
Import duty
w
w Up to 6 months an individual (first arrival in the BVI staying for more than
6 months) is permitted to import up to US$1,000 worth of “used” possessions
and furnishings without incurring liability to import duty
w
w After 6 months such items are subject to duty at rates between 5%‑20%
w
w Import duty on vehicles is 20%
Monthly costs w w Electricity w w Water w w Gas w w Telephone w w Cable TV w
w Pool and garden maintenance
Property Management
w
w Starting from US$200 per month
Building
w
w Typical building costs range from US$250 ‑ US$350 per sq. ft. plus soft costs and external improvements
w
w Swimming pool may cost between US$60,000 ‑ US$100,000 depending on size and design of pool
w
w Architects fees will vary w
w Design and supervision between 10% ‑ 12%
w
w Materials imported directly are liable to import duty levied at rates of 5%‑20%
Rentals
w
w Long term ‑ Standard fee is one month’s rent with no fee after the first year
w
w Short term ‑ Broadly speaking 10%‑25% commission is payable on short term rentals
For those seeking to rent on a short term basis (less than six months), permission to rent as well as a trade licence are required.
Guide to buying property in The British Virgin Islands 11 The British Virgin Islands
contacts
Important Notice
1. No reliance on contents: This is only a guide to the buying process in British Virgin Islands. It is not definitive and is not intended to give advice. It must not be relied upon in any way. So far as applicable laws allow, no responsibility or liability whatsoever will be accepted for any errors or for any loss or damage resulting from any use of or reference to the contents. As a general overview prepared using information from British Virgin Islands. lawyers, this guide does not necessarily represent the view of Knight Frank in any respect. 2. Independent advice: You must take specific independent advice from your professional advisers in all cases. In preparing this guide, we do not imply or establish any advisory or professional relationship. We do not have any relevant authorisation from the Financial Services Authority to undertake regulated activities. 3. Intellectual property: © Knight Frank LLP 2013. All rights reserved. Copying, modification or reproduction of this review in whole or in part is not permitted without the prior written approval of Knight Frank LLP. 4. General: Knight Frank LLP is a limited liability partnership registered in England
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