New law will allow exempt companies to buy property
Businesses owned by non-Bermudians will be able to buy up residential and commercial properties under new Government proposals.
But Economic Development Minister Grant Gibbons cautioned that, because land is a scarce commodity, restrictions limiting the capacity of companies to acquire land will be in place.
At a press conference earlier, Dr Gibbons explained that the laws relating to land purchase had become confused and inconsistent in recent years and that the amendments — which are expected to be debated in the House of Assembly on Friday — will “for the first time, a clear and transparent written policy on corporate landholding in an otherwise cloudy area of law and practice”.
The Companies Amendment Act 2014 was tabled earlier this month while the Corporate Landholding Policy was tabled yesterday. The policy states: “The holding of land by corporate entities became a restricted business practice under the Companies Act. This policy is to provide guidance for the Minister in making the decision as to whether to provide consent for a business entity to acquire and/or hold land.”
Dr Gibbons said that the changes will also “stimulate turnover in the real estate market and create jobs in the construction sector”, and make the Island “a more attractive and competitive jurisdiction”. According to Dr Gibbons some companies had been unable to sell on their properties because of irregularities with the current laws.
“The Ministry is aware of at least ten such cases that have been brought to its attention over the last couple of years,” Dr Gibbons said.
“There may be many more, as some companies will not realise there is a problem until they attempt to sell their property.
“The Bill addresses this ‘title’ issue. If adopted, the Minister will be able to provide rectification to situations where, if a company can prove that they should have had proper ministerial consent, they will be able to receive it. This consent will then put them in a position to pass on clean title to prospective buyers.”
Dr Gibbons said the most significant change under the new proposal would allow local and exempt companies to purchase residential property.
He added: “The residential properties they will be allowed to purchase are very specific and are the properties that are already available to restricted persons. This restricted person category is a designation that the Department of Immigration uses for foreign nationals or persons who do not possess Bermudian status.
“Residential properties with an Annual Rental Value of $177,000 and above are the properties available to restricted persons. There are about 250 high end residential properties in this category, as well as a number of condos that are similarly designated.”
The new law will prevent companies from renting these properties in the market, and the changes will also allow exempt companies to hold commercial property if it is used for the specific purposes of their business. Similar provisions will apply to local businesses.
Dr Gibbons pointed out that the revisions did not affect the Bermuda Immigration and Protection Act.
“The decision making of the Minister of Home Affairs with regard to Immigration consent still applies on landholding,” he said.
“Without getting too deeply into the legislative complexities I will simply advise that the previous situation was unnecessarily complex and contradictory,” Dr Gibbons said.
“That’s why we are seeking to clarify it by modifying the law, and producing a clear policy. Consultation with the Bermuda Bar Association and the Chamber of Commerce on the proposed amendments has taken place over the past year.
“We believe that with passage of this Bill, several properties that are currently on the market will be acquired. This will produce revenue for the government via stamp duty. And, most importantly, this will produce jobs in the construction sector. Many of the properties, once acquired, will undergo renovation and redevelopment.
“This is a forward-thinking Bill and policy and one which we believe will move the real estate, construction and conveyancing sectors in a positive direction.”
Independent MP Terry Lister, responding to the proposals, said: “The Minister has outlined a policy that should, on the whole, be welcomed by Bermudians. The fear that these companies will buy up all the land in Bermuda should be reduced when it is realised that the properties that will be available for purchase are those same 250 or so properties that are available for non-Bermudians to purchase now. What this does is that it creates another group that can buy from this selection of 250 homes.
“What is even more important is that the exempted companies that buy properties will be further cemented to Bermuda. At a time such as this when Bermuda is at risk of flight of IB, this move is a plus.
“The most important change is allowing companies to buy raw land. This has never been allowed and this MUST be controlled. I believe that the companies must be given a time frame by which they must have completed the house to be built on the purchased land. Having these plots of land being sat on will do nothing to stimulate construction and jobs.”
He added: “Overall I think this is a wise policy that is aimed at securing Bermuda’s relationship with IB. Of course, this must be monitored to see what results. If it is not successful then Government must act to ensure that the desired goals are achieved.”
