Buying a Property in Bermuda?

Land is a scarce resource in Bermuda and one that the Government have placed a number restrictions on who can own a Property on the 24 square mile island. The right to buy land is broadly broken down into two distinct categories, Bermudians (as well as Naturalized British Overseas Territories residents and Permanent Residence Certificate holders “a PRC”) and non-Bermudians i.e. international buyers or residents who haven’t been living in Bermuda for sufficient time to obtain a PRC. The latter unflatteringly are often legally referred to as aliens.

There are no restrictions on buying bare land or a Property placed on a Bermudian, you simply need to have available access to finance and to find a Property of your liking.

As a non-Bermudian you may still buy Property (no more than 2), however, the options are more limited. Firstly you cannot buy bare land to develop (or hold) and secondly there are restrictions on the Properties available for you to buy (this is to protect the lower valued Properties for Bermudians). All habitable buildings in Bermuda are given an Annual Rental Value (ARV) which is a hypothetical figure placed on a Property to assist the Government Land Valuation Office in valuing a Property for land taxes. As a non-Bermudian you can only by a house with an ARV over $126,000.00 or for a Condominium (apartment or house forming part of a complex) with an ARV over $25,800. For a house this roughly equates to a property valued in the $2.5m to $3m and above range.

Once you have found a Property that meets the ARV threshold and have agreed the price and terms with the vendor you may commence the legal process to buy that Property. You will need to obtain a licence from the Government authorizing the purchase of the Property and you’ll want a local real estate attorney to represent you and guide you through the legal process of buying a Property in Bermuda. They’ll agree with the vendor’s attorney the form of purchase contract as well as the terms of the same including a period of time for you to obtain the Government licence to acquire the Property.

The licence to acquire Property is obtained from the Government, a proscribed form is utilized as well as a requirement to provide a banker’s reference and two personal references. Ideally the references should be from a Bermudian national, however, this isn’t mandatory. A fee is payable for the application as well as a further “Licence Fee” due on the grant of the licence which is a one off payment based on the value of the Property being purchased. For a freehold house that fee is 12.5% of the Property value and for a house or apartment that forms part of a condominium the fee is 8%. Other reduced fees may be due for different types of Property not specifically covered by this article.

The licence to acquire Property will also contain certain restrictions such as:

• Limiting its use for private residential purposes for you and your family;
• Preventing the Property from being developed or altered to create more “dwellings”;
• Limiting the right to rent the property; and
• Preventing the Property (land or building) being sub-divided into smaller units.

The process to obtain a licence to obtain Bermuda Property used to take up to 12 months from application to issue of the licence, however, in recent times this period has dropped significantly and can now be expected in 3 to 6 months from application. Once the licence has been granted and any other “conditions” set out in the purchase agreement satisfied a date to complete the purchase will be set, known as closing, and subject to payment of the purchase price and all associated fees, the Property will be yours.

Whilst Bermuda is known for having a favourable tax regime you will need to pay Stamp Duty tax on both the documentation (nominal fees) and also by reference to the Purchase price. These are calculated on a sliding sale by reference to the Property value:

Should you be interested in buying Property in Bermuda, either as a Bermudian or non-Bermudian, we look forward to hearing from you to discuss how we can guide you through the process of buying your Property.

William Warnock – Head of Real Estate

Chancery Legal Ltd.

This publication is intended to cover the general aspects of acquiring property in Bermuda. For further clarification or more detailed information please contact our Real Estate Department.

The figures and fees quoted in this article are correct at the time of writing, however, are subject to change by the Government of Bermuda.

This publication should not be construed as legal advice and is not intended to be relied upon in relation to any specific matter. It deals in broad terms only and is intended merely to provide a brief overview and give general information