a guide to purchasing property in the british virgin islands

THORNTON SMITH Think Solution.
A Guide to Buying Land in the British Virgin Islands 2.
About the British Virgin Islands A Guide to Purchasing
Property in the British
Virgin Islands
The British Overseas Territory of the Virgin Islands, commonly called the “British Virgin
Islands”, is located about 60 miles east of Puerto Rico and which along with its largest trading
partner, the U.S. Virgin Islands, forms part of the Virgin Islands archipelago. There are 36
islands and cays with almost as many rocks and islets totaling some 153 km2 (59 sq. mi.).
There is a total population of about 27,000 (2005 est.), the majority of which live on the largest
and central island of Tortola where the capital, Road Town, is located, and about 14 other
inhabited islands with the other main islands being Anegada, Virgin Gorda and Jost Van
Dyke. There is a pristine tropical climate moderated by the North East Trade Winds belt rising
to an average of 32oC (89.6oF) and annual rainfall averaging about 1,150 mm (45.3 in.).
The Official Legal
Services Provider to the
BVI Olympic Committee
Visit our website to see
how The William
Thornton Foundation
supports the BVI
Olympic
Committee
among
its
charitable
work. The main airport, the Terrance B. Lettsome International Airport (EIS), is located on Beef
Island which is connected to the eastern end of Tortola by a modern bridge completed in
2002. The airport has a 4,300 m2 (46,000 sq. ft.) terminal building with a 1,415 m (4,642 ft.)
runway facilitating international connecting flights through Puerto Rico, Antigua and Saint
Maarten, although anyone may fly into the BVI privately by paying landing and parking fees to
the Airports Authority. There are also regular ferry services between the main islands, as well
as to and from St. Thomas in the U.S. Virgin Islands where larger aircrafts and jets fly direct
from the United States and several private resorts have their own private boats for guests that
compliment one of the largest charter yacht industries in the Caribbean.
There is generally good telephone and internet service connected via submarine cable to
Bermuda with the Eastern Caribbean Fiber System (ECFS) submarine cable providing
connectivity to the other countries and territories in the Eastern Caribbean. A single cable
television service provides multi-channel television and about 6 privately owned radio stations
operate on the island with access to several other regional stations. As of 2007,
approximately 45 million kWh of electricity was produced while approximately 41.85 kWh was
consumed with moderate interruption and resumption rates. While only certain parts of Tortola
have access to a public water supply those areas also use private cisterns required by the
Building Code to ensure catchment and access to a steady supply of safe drinking water.
A First Step: The Hazard Vulnerability Assessment Since the terrain of the islands are largely mountainous and the islands are prone to tropical
weather patterns which can cause various natural hazards, it is important to always obtain a
Hazard Vulnerability Assessment (HVA) from the Department of Disaster Management,
especially when purchasing undeveloped land to begin construction. Purchasing land without
an HVA may result in the land being subsequently determined unsafe for certain construction
due to the type of soil composition in the area or other factors.
The Cadastral Map All land in the British Virgin Islands has been officially surveyed since the 1970s creating a
Cadastral Map that enabled the registered land system. It is, therefore, important to get a
copy of the Cadastral Map for the parcel of land for which you intend to purchase. Where
there is a building or other structure on the land it is also recommended to obtain an “As Built”
Survey. A contact list of recommended surveyors can be provided upon request.
The Appraisal Appreciating that the purchase price for land in the British Virgin Islands is determined by
several factors, it becomes necessary to ensure that the market price is determined by an
independent appraiser who has experience and knowledge of the market. A contact list of
recommended appraisers can be provided upon request.
Capitol Chambers P.O. Box 3534 Road Town, Tortola British Virgin Islands Phone: (284)494‐2518 Fax: (284)494‐2519 E‐mail: [email protected] www.thorntonsmith.com 3.
The Agreement for Sale A Guide to Purchasing
Property in the British
Virgin Islands
The agreement or contract for sale normally contains certain provisions required by the
Conveyancing and Law of Property Act (Cap. 220). However, the parties can, and sometimes
actually do, exclude some of these provisions, which apply only if and so far as a contrary
intention is not expressed in the agreement of sale. The contract is usually subject to
financing and the approval of the relevant government authorities, so that the deposit (usually
10% of the purchase price) is refunded to the proposed purchaser in the event that financing
or approval is not obtained. There is no legal obligation on either the buyer or seller until the
agreement is duly executed, although a Letter of Intent and the payment of deposit may
indicate an intention to incur legal obligations.
Anti‐Money Laundering Compliance The Official Legal
Services Provider to the
BVI Olympic Committee
Every purchaser of land in the British Virgin Islands is required to complete due diligence
information for your solicitor, your real estate agent and your lending institution in accordance
with the anti-money laundering legislation. Failure to do so may render you liable to
investigation and may generally cause liability issues for your attorney, real estate agent and
your lending institution ultimately delaying or frustrating the sale.
After the Agreement is Signed Visit our website to see
how The William
Thornton Foundation
supports the BVI
Olympic
Committee
among
its
charitable
work. Capitol Chambers P.O. Box 3534 Road Town, Tortola British Virgin Islands Phone: (284)494‐2518 Fax: (284)494‐2519 E‐mail: [email protected] www.thorntonsmith.com Once the agreement is signed various searches, applications, drafting, execution, stamping
and registering will be made. The land searches are conducted at the Registry of Lands on
Tortola where the system of registered land facilitates the rapid turnaround of information
within approximately 3 business days. Additionally, searches are done on the cause list and
files at the High Court Registry since a judgment against the seller operates as a charge upon
all the land of the seller in the BVI and may affect the purchaser if the judgment creditor
obtains an order for the sale of the land in satisfaction of the judgment debt. Additional
searches are done at the Inland Revenue Department to determine if all property taxes have
been paid by the seller since no transfer will proceed without all outstanding taxes having first
been paid.
Land Holding License Any person who does not “belong” to the BVI, which is roughly the equivalent of citizenship, or
a company controlled by non-belongers, must obtain a license to purchase and hold land in
the BVI. To discourage land speculation, the application to purchase undeveloped land must
outline the intended use and attach a plan of the development. The plan must be approved by
the Department of Town and Country Planning prior to any construction works. An application
fee of $75.00 must be paid to obtain the building permit. A contact list of recommended
architects can be provided upon request. The land must be developed in accordance with the
approved plan within a specified timeframe, usually three years, otherwise a penalty of up to
40% of the purchase price may be incurred. A contact list of recommended contractors can be
provided upon request. Prior to the deadline it is advised that an application for extension of
time, up to 1 year, should be made. Also, if any design changes are to be made an application
to amend the license is required setting out the nature of the intended changes in design. The
more complicated the development the more time it will take for the relevant authorities to
scrutinize the application, but generally a 12 month window should be provided in the
agreement for sale to allow for the license approval as a condition precedent. The application
form and additional information for the license can be provided upon request.
4.
Incentives for Purchasing Land A Guide to Purchasing
Property in the British
Virgin Islands
1. RESIDENCY. While owning land does not in itself provide residency status under the
Immigration and Passport Ordinance (Cap. 130), it helps to determine that a person has
an intention of residing permanently in the Territory, which is a criteria for granting
residency.
2. PIONEER STATUS. A person or business interested in developing land in the BVI may be
granted pioneer status which provides relief from customs duties on capital equipment as
well as a tax holiday for a maximum of 10 years. The application is made to the Premier’s
Office in accordance with the Pioneer Services and Enterprises Ordinance (Cap. 297).
3. HOTEL AID. A person or business interested in building a hotel or expanding an existing
hotel in the BVI may be granted aid in accordance with the Hotel Aid Ordinance (Cap.
290) which provides a tax holiday for a maximum of 20 years and relief from customs
duties on capital equipment.
Property Financing The Official Legal
Services Provider to the
BVI Olympic Committee
To raise real estate financing you can either use security-backed debt financing or equitybased financing using a private equity fund, a joint venture or similar structure. However, you
chose to finance your purchase having the monies available prior to closure will be significant
and so an early start to understanding what would generally be required in loans of this nature
is absolutely critical. You may obtain a mortgage loan for up to 30 years if it is residential and
20 years if it is commercial. Interest rates generally range from 0.5 - 2 base points above the
U.S. Prime Rate. A contact list of all licensed lending institutions can be provided upon
request. Where the loan is for the construction of new structures on the land you will be
required to obtain insurance on the property. A contact list of all licensed insurance
companies can be provided upon request.
Completion Visit our website to see
how The William
Thornton Foundation
supports the BVI
Olympic
Committee
among
its
charitable
work. Normally within 30 days after the land holding license is issued completion of the sale takes
place, at which stage the balance of the purchase price becomes due and payable. It is not
necessary for the purchaser or seller to be present in the BVI for completion as this can be
completed through BVI Solicitors.
Taxation The transfer of the land itself is subject to stamp duty based on the purchase price or the
appraised value, whichever is higher as follows:
12% - Non-Belongers
4% - Belongers
Additionally, there is property tax based on whether or not it is developed or undeveloped and
also whether the land is owned by a belonger or non-belonger, including companies
controlled by either group.
Capitol Chambers P.O. Box 3534 Road Town, Tortola British Virgin Islands Phone: (284)494‐2518 Fax: (284)494‐2519 E‐mail: [email protected] www.thorntonsmith.com This Guide was prepared for convenience of reference only. THORNTON SMITH
assumes no responsibility for the accuracy or reliability of any reproduction
derived from this document. For purposes of interpreting and applying the
contents of this Guide, readers should seek legal advice from a lawyer qualified
to practice in the British Virgin Islands and has been so practicing recently.
THORNTON SMITH reserves the right to amend, alter, revoke or suspend any
part of this Guide at anytime and without notice.
This Guide was last updated on 15 September 2011.