Dear Heather: I am a non-Bermudian, what is available for me to buy in Bermuda? — International Purchaser

Dear International Purchaser: International buyers benefit when an experienced agent guides them through the often complex rules determining who may buy property in Bermuda.

The main thing to remember is that there are three main categories of residential real estate in Bermuda: real estate that is available only to Bermudians, real estate that is available to both Bermudians and PRCs, and real estate that is available to Bermudians, PRCs and international buyers.

Our website, www.bermudarealty.com, has a special search feature which lets international buyers choose the category in which they would like to seek.

From this simple distinction it gets more complicated. The following summary of additional requirements, exemptions and exceptions gives you an idea of the process.

• To be eligible for purchase by an international buyer, a private property’s annual rental value (ARV) must exceed $32,400 for a condominium, $177,000 for a house. This translates into an asking price of about $500,000 to $600,000 upwards for a condo, and of about $3,000,000 upwards for a house. Just a note here to say that this represents approximately the top 250 homes on the Island, of which approximately ten percent, ie about 20 to 25, are typically available for sale at any one time. Ironically this percentage of availability remains relatively constant.

• Years ago the ARV was a measure to determine a rental value of a property in order to calculate land tax payable on the property. However, in more recent years, with the rental market becoming more volatile, this represents much more the figure on which land tax is based and much less, on the actual rental value of the property.

• Further restrictions are imposed on condominium properties which must be located in specifically designated developments. There are over 28 complexes designated for non-Bermudian purchase (list upon request).

• International buyers may also buy property in a development designated under the Bermuda Immigration and Protection Amendment (No 2) Act 2010 as tourist accommodation and hotel residences/fractional ownership come under this heading.

• Prospective international buyers must submit an application to purchase, and this will require details of the property which they intend to acquire, their personal details, (nationality, passport, address, profession, marital status etc), as well as a notarised, signed copy of the sale and purchase agreement, a bank reference and two personal references from referees who have known the restricted person for three or more years and, to the satisfaction of the Minister, are of sufficient standing in their communities.

If at least one of the referees does not possess Bermudian status the applicant shall provide a written statement to the Minister to explain why referees who do not possess Bermudian status are being used. This is submitted by the buyer’s lawyer, together with a consideration fee.

• The cost of a Licence to Acquire varies, depending on the type of property you wish to purchase. Fees are set at the following rates but subject to increase in September 2015:

o Six percent of the purchase price of a condominium;

o Eight percent of the purchase price of a house;

o Six-and-a-half percent of the purchase price of a tourist property.

o There will be other fees such as stamp duty and legal fees both on the conveyance and on the lawyer’s fee for administrating and managing the application process.

• Agreement in principle between an international buyer and seller includes a deposit of ten percent of the purchase price. The deposit is held in escrow, subject to contract, and deducted from the overall purchase price.

• International buyers may not buy investment property such as land, or property intended mainly to earn rental income.

• International owners may be granted permission to rent their property by the Immigration Department. Permission rarely extends to periods of more than a year and includes a tax of 7.25 percent. Recently a new policy has come into effect, allowing international companies with a presence here on the Island, to purchase both commercial and/or residential property at the discretion of the Minister.

If you think the above looks a bit complicated don’t worry. A reliable and knowledgeable real estate agent can keep you informed on any policy changes, show you everything on the market, even if it’s listed with another agency or agent, and can then guide you seamlessly through the process.

Heather Chilvers is among Coldwell banker Bermuda Realty’s leading sales representatives. She has been working in real estate for 25 years. If you have a question for Heather, please contact her at hchilvers@brcl.bm or 332-1793. All questions will be treated in confidence.