Buying BVI Real Estate | US Virgin Islands Real Estate Blog

US Virgin Islands Real Estate Blog

Buying BVI Real Estate

PURCHASING BRITISH VIRGIN ISLANDS REAL ESTATE

Are you interested in purchasing a home in Tortola? How about a luxury villa at Nail Bay on Virgin Gorda? We can help! However, it is important to know that buying BVI Real estate is not the same as buying property in the Virgin Islands, Puerto Rico, or even the US mainland. Before you begin your search for your beautiful Scrub Island vacation home, please take a moment to read through the BVI real estate purchasing process. Feel free to contact us with any questions!

The BVI sailing flag

The BVI sailing flag (Photo credit: Wikipedia)

Alien Land Holding License

All investors, including citizens of the United Kingdom are required to obtain an Alien Land Holding License to purchase property in the BVI. Agreements to purchase property are therefore made contingent upon a license being obtained by the purchaser. A License gives entitlement to own a specific property.

Application for a Non-Belongers license is made to the Minister of Natural Resources, Government of the British Virgin Islands and must be supported by two character references, financial references and a police certificate of good standing.

If an application for a license relates to undeveloped or partially developed land, the applicant will be required to make a commitment to the BVI Government to expend a specific sum on development within a period of time, usually 3 years. The development requirements will be over $250,000 and will generally be proportionately more according to acreage. Environment and other planning considerations will determine the appropriate level of development. Sub division is only allowed if part of a comprehensive development.

A property cannot be resold until the development commitment has been fulfilled. One of the objectives of the licensing regulation is to prevent speculation on undeveloped property.

The Minister of Natural Resources and Labour is responsible for approval of License application except those in respect of sites which extend to more than three acres are referred to the Executive Council.

There is a license filing fee of $200.00 for each person or $500.00 for a company named in the application. Typically approval may take between three and six months to obtain. The fee for the grant of the License is $600.00 for each person or $1000.00 for each company named in the license.

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 (see trade license requirements). We can assist with whatever rental management you require.

Procedure for Purchasing Property

1) Find the Property: Let us help you find your dream home or piece of land to build on.

2) Earnest Deposit and Letter of Intent: It is normal practice for a prospective purchaser to submit a ‘Letter of Intent to purchase’ along with a 10% earnest deposit to the Vendors 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 vendor. We will work with you to prepare the Letter of Intent and negotiate an acceptable Sales deal with the Vendors agent

3) 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 attorneys is signed by the parties. This will normally contain a condition that completion of the purchase is contingent upon the purchaser obtaining an Alien Land Holding License. We can recommend excellent lawyers to work with you on the Purchase and Sale agreement.

4) Application for an Alien Land Holding License: This may be made prior to, and in any event should be made as soon as possible after signing of the purchase and sale agreement. If you are not from the British Virgin Islands (Non-Belonger), the property must be advertised in one of the local BVI papers for 4 consecutive weeks to allow a Belonger or Resident to purchase the property at the same price and terms as your offer. If no such offer is forthcoming, the Non-Belonger application is submitted to Natural Resources in the BVI government for approval.

Who is a Non-Belonger?

The Non-Belongers Land Holding Regulation Act (the Act) defines a Non-Belonger by reference to persons excluded from the category of persons defined as a Belonger under section 2(2) of the Virgin Islands Constitution and section 3 of the Immigration and Passport Ordinance (Cap. 130). Belongers include, inter alia, anyone born within or outside the BVI of a mother or father born within the BVI or a naturalized person.

Similarly, a Non-Belonger Company is defined as any company incorporated outside the BVI or any company incorporated in the BVI in which any one of the directors is a Non-Belonger or where anyone of its shareholders, being a Non-Belonger, holds more than one-third of its shares. Section 6 of the Act sets out the criteria used to determine companies under the control of Non-Belongers and thus requiring a License to hold land.

Applying for a Non-Belonger Land Holding License

Proof of advertisement is required as part of the application process and the onus is on the seller of the property to provide such. Additionally, applicants must submit a completed application form together with the following supporting documents:

• Two personal references, for each individual or each shareholder and director. In the case of individual applicants, one reference must support the applicant’s ability to purchase and develop the property
• Two character references for each individual or each shareholder and director
• In the case of individuals, a financial report/statement from a financial institution evidencing a banking relationship for no less than one consecutive year is required
• A recent police certificate for each individual applicant or each shareholder and director
• One passport size photograph (colored) of each applicant or shareholder and director
• A copy of the applicant’s Trade License (if self-employed) or a copy of the company’s Memorandum and Articles of Association, Certificate of Incorporation, current Certificate of Good Standing and Annual Summary of Members or a Certificate of Incumbency from a Registered Agent
• A recent valuation report of the property
• A non-refundable application fee of Two Hundred Dollars ($200) per person for individuals and Five Hundred Dollars ($500) in the case of a company
• A copy of the Agreement for Sale
• A copy of the record(s) reflecting existing ownership of the land
• A letter sized copy of the Cadastral Survey Plan

The application is submitted to the Ministry of Natural Resources and Labour. Provided the application is in order, it will be processed by the Ministry and submitted to Cabinet for determination. The applicant will be informed by the Ministry whether or not approval has been granted. This will take anywhere from twelve (12) to fifteen (15) weeks.

Provided an approval has been given for the grant of a Non-Belonger Land Holding License by Cabinet, the Ministry will request that the applicant submit four copies of an engrossed License for signing by the Governor.

In order to collect the signed License, a fee separate and apart from the application fee, will be required. The applicable fee is Six Hundred Dollars ($600) for each individual, One Thousand Dollars ($1,000) for a company plus Six Hundred Dollars ($600) for each shareholder and director.

Licenses may be granted with conditions for development within a specified period of time. A breach of these conditions may result in a restriction being registered against the property by the Government or a penalty on the sale of undeveloped property. However, an extension of time may be granted to fulfill development commitments, upon application to the Ministry and the fulfillment of the necessary requirements.

Completion of the sale and transfer of title & Stamp Duties

The applicant will be required to register the License at the Land Registry Department and provide the Ministry with a registered copy of the document and the registered Instrument of Transfers within three (3) months of the date of the License, for record keeping purpose.

Payment of the balance of the purchase price is due at this stage. Freehold Property: For Non-Belongers, a 12% stamp duty on the purchase price or appraisal price (whichever is higher) will be required to transfer the property into their name; Belongers pay a 4% stamp duty on the purchase price or appraisal value (whichever is higher). A recent appraisal of the property will be required in order to complete the transfer. Leasehold Property: Non-Belongers pay 1½% of the total premium paid for the lease (i.e. the purchase price) plus the first 20 years’ rent. For Belongers the rate is 1%.

Note: Neither purchaser or vendor need be present in the BVI at any stage of the transaction.
Attorneys

The legal system in the BVI is based on English common Law and locally enacted legislation. It is essential that the purchase appoints any attorney in the BVI to act in the purchase transaction. An Attorney’s responsibilities will normally include submitting the application for an Alien Land Holding License. Standard conveyance fees are 1.5% to 2% of the purchase price, depending on the value to the property. We can recommend excellent lawyers to work with clients.
Tenure and Registration Section

The majority of land in the BVI is owned in fee simple. A purchaser will normally acquire absolute title which is registered in the BVI Government land Registry. Registered titles relate to a detailed cadastral survey which defines legal boundaries. No transfer of land can take place unless the boundaries of the property have been determined to the satisfaction of the Registrar of Lands. Property in the BVI may also be held on long lease from the Crown or private individuals. Most often the duration of such leases is 99 years. 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.

Financing a Purchase

Banks in the BVI offer worldwide banking service. Mortgage finance of up to eighty percent of the appraised value of a property or the purchase price, whichever is the lesser, 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 1 1/2% above New York Prime rate. Banks will consider financing the purchase of land. (See listings of banks in the Category section).

Real Estate Land and House Taxes

Land Tax is assessed annually at the rate of $50 for sites up to .5 acre, $150.00 for sites between 0.5 and 1.00 acre and $50 for each additional acre or part thereof. House Tax at the rate 1.5% of the assessed annual rental value, are levied. In practice this means that for an average two or three bedroom house the annual taxes will be less than $500.00.

Import Duty on Possessions and Furnishings

Within six months of first arrival in the BVI, each adult immigrant or person staying for more than six months is permitted to import up to $1,000 worth of used possessions and furnishing without incurring liability to import duty. After six months such items are subject to duty at a rate which varies between 5% and 20%. Import duty on vehicles is 20%.

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 main 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.

Sewerage in Road Town there is a main sewerage system. Elsewhere private septic tanks are the normal Internet-High speed DSL internet is readily available throughout the BVI

British Virgin Islands 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 an Alien Land Holding License which will allow the holder to be granted leave to land 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.

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