guide to buying property in the british virgin islands · to purchase property in the british...

Guide to buying property in

The British Virgin Islands

Contents

The Non-Belongers Land Holding License (NBLHL) 4Procedure for Purchasing Property 7Building Your Property and Living in the BVI 8 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 9At a glance 10Contacts 12

2 Guide to buying property in The British Virgin Islands



Buying 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


Guide to buying property in The British Virgin Islands 3Guide to buying property in The British Virgin Islands 3

The Non-Belongers Land Holding LicenseFor 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.



Application for the NBLHLApplication 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 CommitmentWhere 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 CommitmentUndeveloped 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 PropertyThe normal sequence for purchasing property in the British Virgin Islands is as follows:

1 Earnest DepositA 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 AgreementOnce 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 NBLHLUnder 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 SaleCompletion 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 DutyFollowing 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 TitleFollowing 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.



Financing a PurchaseThe 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



Building a HouseSeveral 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 ControlDevelopment 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 TaxesAn 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 ServicesElectricity: 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 LicencesA 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.

ImmigrationPurchase 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.



At a glance

Buying

Transaction costs

Attorney feesww 2% of the first US$50,000 and 1% of the remaining consideration,

but not less than US$150.00Non-Belongers Land Holding License (NBLHL) for individualsww Licence filling fee of US$200.00 ww Fee for the grant of the Licence is US$600.00 for each person named

in the LicenceNon-Belongers Land Holding License (NBLHL) for a companyww Licence filling fee of US$500.00 ww Fee for the grant of the Licence is US$1,000.00 plus US$600.00 for each director

and shareholderStamp Duty ww 12% of the price or appraised value is payable by the purchaser

Standard purchase proceduresww Deposit: Purchaser pays a 10% deposit to the vendor’s agent (held in escrow)ww 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 NBLHLww Application for a NBLHL: Purchasers are contractually required to submit their

Licence Application within a specified period following signing of the purchase and sale agreementww 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 fees

ww 2% of the first US$50,000 and 1% of the remaining consideration, but not less than US$150.00

Agents’ fee

Taxes

ww No Stamp Duty Taxww No property transfer tax

(No capital gains, death duties, corporation or personal income tax.)



Owning

Annual costs

Property Insurance

Contents Insurance

Taxesww There is no corporation and income tax, death duties or estate tax

Land Tax ww US$150.00 is charged for the first half an acre to one acreww US$50.00 for any additional acreage thereafter

House Taxww 1.5% of the assessed annual rental value

Hotel Taxww 7% for those that have rentals with rental periods of less than six months

Import dutyww 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 ww After 6 months such items are subject to duty at rates between 5%‑20%ww Import duty on vehicles is 20%

Monthly costsww Electricityww Water ww Gasww Telephoneww Cable TVww Pool and garden maintenance

Property Managementww Starting from US$200 per month

Buildingww Typical building costs range from US$250 ‑ US$350 per sq. ft. plus soft costs

and external improvementsww Swimming pool may cost between US$60,000 ‑ US$100,000

depending on size and design of poolww Architects fees will varyww Design and supervision between 10% ‑ 12%ww Materials imported directly are liable to import duty levied at rates of 5%‑20%

Rentalsww Long term ‑ Standard fee is one month’s rent with no fee after the first yearww Short term ‑ Broadly speaking 10%‑25% commission is payable on

short term rentalsFor those seeking to rent on a short term basis (less than six months), permission to rent as well as a trade licence are required.



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 with registered number OC305934. Our registered office is 55 Baker Street, London W1U 8AN, where you may look at a list of members’ names. 5. Members of the Knight Frank Global Network: References to Knight Frank may be to, or include, any Member of the Knight Frank Global Network. Those Members are Knight Frank LLP and its direct subsidiaries which provide services in the UK and an international network of separate, distinct and independent entities or practices which provide services internationally. No Member has any authority to bind or represent any other Member. No Member operating under the name of Knight Frank (including Knight Frank LLP) is liable for the acts or omissions of any other Member.

@KFInternationalKnightFrank.com

Fran ThackerInternational ResidentialT +44 20 7861 1275E [email protected]

Edward de Mallet MorganInternational ResidentialT +44 20 7861 1553E [email protected]

RICHARDG

Sticky Note

Please can we add Jess: Jessica Hartley International Residential T +44 20 861 1275 E [email protected] Awaiting new image, which was taken recently

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