Buying A Residential Property In Bermuda
You will find the beautiful island of Bermuda in the North Atlantic Ocean and is a British Overseas Territory. This territory retains a lot of autonomy as it has its own government, laws, processes, and even a constitution. Bermuda is a highly successful territory with a great GDP per capita. Industries like tourism thrive here because of the beautiful environment and tropical weather. That’s one of the reasons why many people wish to buy property here.
Unfortunately, everyone who has tried realizes that this isn’t an easy experience. Land is a limited and valuable resource here so the Bermudian government has taken steps to protect the interests of its citizens. Here’s a look at the region’s real estate industry and the hurdles associated with it.
- Properties are Very Expensive
All properties in Bermuda are very expensive and often out of the reach of locals. It is difficult to buy even a reasonably sized cottage that needs repairs for under $1 million. The limited space along with high demand has caused the property rates to soar considerably. The situation is worse for non-Bermudian buyers as they must navigate the rough waters of government regulations and fees to purchase property on this beautiful island.
Because of this, only the most wealthy and influential can buy properties in Bermuda. Locals often find renting a more affordable alternative and most believe they won’t be able to own a home. The government has restricted real estate sale and purchase involving foreign buyers in an effort to make things easier for locals. It is yet to be seen if restricting sale to non-Bermudian individuals.
There are a number of additional expenses involved in property transactions, including stamp duties, permits, and legal fees. Buyers and sellers need to hire legal professionals to navigate through the different laws in place. Buyers and sellers will also need to hire professional real estate agents, who will charge a hefty fees for every transaction. The real estate market in Bermuda is very different from the market in other countries so you need the services of local real estate agents to make a good deal.
- You Can’t Buy More Than One House
According to Bermuda government rules, you can’t purchase more than one property on this tiny slip of an island. Only individuals can purchase residential property and corporations and businesses with roots overseas can’t buy residential property here.
Owners can’t lease properties they own partially or fully to tenants. That means non-citizens can’t buy investment property on this island. It is tempting to buy investment property in a tourism-heavy region, but that resource is only available to locals.
- Only One Car Per Household
Many families find this very inconvenient because it can be difficult to manage with just one car. Unfortunately, Bermuda government doesn’t allow more than one car per house and they enforce this strictly. You can own a single four-wheel vehicle per residence. The vehicle is only permitted if the owner has a registered house or apartment. They will impound cars that aren’t registered or insured.
This territory is considered the most expensive place in the world to own a vehicle. The government doesn’t just control the number of vehicles but also the size and quality of the vehicles. If your vehicle violates the rules, you won’t be able to use it on Bermuda’s roads.
- You Need to Get Permit from the Government
Foreign individuals can’t purchase property without an Acquisition License. This is provided by Bermuda´s Ministry of Labour and Home Affairs. This license requires a fee of 22% for houses and 15% for condominiums. This adds to the cost of house ownership.
The buyer will also have to pay 10% of the property value in escrow during the property transaction. There is also a consideration fee of around US$1,152 which will be refunded to the applicant if the application is successful. This process takes anywhere between two to six months, which is why it is important to ensure all the paperwork is accurate and you don’t have to repeat the process again.
- All Properties aren’t Available to Foreign Buyers
In an attempt to reserve the more affordable properties for locals, the government only allows foreign buyers access to the more expensive properties.
Properties should have an Annual Rental Value or ARV of over $153,000 or more for houses or $32,400 or more for condominiums if a non-resident wishes to buy it. The ARV is assessed every year and is always current during the time of the purchase.
Foreign people can only purchase property in land specifically set aside for the purpose. They can’t buy undeveloped land that isn’t designated for non-Bermudians.
You can carry out the transaction while the government work through your application process. Real estate agents can help you conduct a thorough title search and carry out negotiations during this time. This will help reduce the time needed to carry out the transaction.
As you can see, this process is very complicated and expensive. You are limited to a few expensive properties and can’t use it to earn a living. You’re not permitted to remain on the island if you rent out your property. There are hefty fees and conditions involved while buying a property here. However, once you have a home in Bermuda, it is a very rewarding experience.