Buyer's Guide
Guidelines for Purchasing Real Estate
Any person who desires to own a piece of this island in the sun may do so. There are no restrictions and therefore if you are a non-national who would like to purchase a vacation home, retirement retreat, or investment property you are welcomed with open arms. With regards to expenses there is no differentiation between nationals and non-nationals.
Mortgages
All financial arrangements such as mortgage, purchase price and deposit should be in place prior to entering a binding agreement. Financing is available for non-nationals and several banks provide flexible and convenient mortgages to individuals, local or foreign companies, trusts or other entities. Mortgages may be provided for periods of up to 15 years at competitive rates of interest. We will be pleased to direct you to experienced consultants for professional advice and guidance.
Legal Fees
Purchasers must obtain the services of a registered local attorney who will have to search the register and establish title to the property prior to the completion of sale. Property passes by conveyance of title, evidenced by the recording of the deeds and certified survey plans at the registry of title. Purchaser's legal fees for property transfer are legislated in the range of 2% to 3%. There is VAT of 17.5% payable on these fees. Both buyer and seller are responsible for their own attorney fees.
Fund Registration
Funds brought into the island from overseas should be registered with the Central Bank as a formality. You should instruct your attorney or banker to do so with the Exchange Control Division of the bank. This ensures that your funds are protected as a foreign investor which facilitates repatriation of these funds should you sell in the future.
Deposit
A deposit in the amount of 10% is required on signing the sale agreement with the remaining balance due on the transfer of deeds. This deposit is a binding contract which the seller's attorney holds. The period between payment of deposit and completion is likely to be at least 3 months. The balance of the sale price must be paid to the seller's attorney on completion the purchase.
Property Transfer Tax
Buyers do not have to pay Property Transfer Tax for existing buildings. The vendor however must pay 2.5% of the purchase price. Property Transfer Tax of approximately 10% is however payable by the buyer for land purchases.
Property Tax
An annual Property Tax is charged on the property based on an assessment of the improved value, or if undeveloped, on the site value. Valuations are made by the Government and are reviewed every three (3) years. These taxes are rated as follows:
Improved Property (House & Land)
· 0% on the first BDS$125,000
· 0.1% on Bds$125,001 to BDS$350,000
· 0.65% on Bds$350,001 to Bds$850,000
· 0.75% on Bds$850,001 and over
Unimproved Land
· 0.60% on unimproved value of the land
Improved Property (Commercial)
· 0.65% on every parcel of land which is not a residence
Purchaser Expenses
The expenses incurred by a Purchaser (there is no distinction between National or Non-National purchasers due to recent amendments to the Barbados legislation) will be as follows:
· Property Transfer Tax – Nil
· Proportionate part of land tax - This amount will vary depending on the value of the property and the time of the transaction.
· Out-of-Pocket Expenses - BDS$300 (Approximately)
·
It is necessary for a Non-National purchaser to remit the purchase price to Barbados in foreign currency, after which it will be converted into Barbados currency and registered with the Exchange Control Authority of Barbados to facilitate a subsequent repatriation. Exchange Control Authority permission is also necessary for the purchase itself. This is usually readily obtainable once the purchase monies have been registered.
Legal Fees are legislated as follows:
1. Up to $25,000 - $750
2. On the next $75,000 - 2.5%
3. On the next $100,000 - 1.5%
4. On the next $300,000 - 1.25%
5. Thereafter - 1%
VAT of 17.5% is payable on legal fees.
Seller's Guide
Choosing Your Real Estate Agent
On deciding that you are interested in buying and/or listing a property in Barbados the first step would be to choose a recognized real estate agent, who you will be comfortable dealing with.
The website (www.beavainc.com) of BEAVA (Barbados Estate Agents & Valuers Association) lists the recognized agents who have met the qualifications to be a member of BEAVA and these agents are bound by the duties imposed by its Code of Ethics. It is the duty of the real estate agent or valuer that he/she is well informed of current market listings and conditions in order to advise his/her client on the best properties to view that would meet their criteria or the fair market price to list their property.
Real Estate Agents Fees
Typically the fee associated with the sale of a property is 5% of the agreed selling price of the property. This fee may vary slightly from agent to agent but this is the generally accepted fee charged by members of BEAVA Inc. The fee charged for renting a property is generally one month's rent on a long term rental. It should be noted that the above fees are subject to 17.5% VAT. The fee charged on a short term rental (holiday rental) is generally 17.5% and is subject to 7.5% VAT.
Selling a Property
It is advisable, once you have chosen a real estate agent that you decide on what type of agreement you are willing to enter into with that agent.
Sole Listing Agreement: This agreement is used in cases where only one agent is authorized to offer the property for sale, but the owner may sell directly to a purchaser with no obligation to pay commission to the sole agent.
Exclusive Listing Agreement: This agreement is used in cases where the real estate agent is authorized to sell the property and the vendor must pay the agreed commission to the said agent regardless of whether he sells the property or indeed even gives it away.
In both of the above cases the Sole or Exclusive agent can sub-list the property with the other agents on the island and is encouraged to do so by BEAVA in order to give the property the widest possible coverage.
Non-exclusive Listing Agreement: This agreement is used in cases where the owner appoints more that one listing agent himself. However, all of the listing agents must have the same information and listed price.
Vendor Expenses
The expenses incurred by a Vendor (there is no distinction between National or Non-National vendors due to recent amendments to the Barbados legislation) will be as follows:
Property Transfer Tax
If land only - 2.5% of the Purchase Price If house and land - first $125,000 exempt, 2.5% on the excess Stamp Duty - 1% of the Purchase Price Land Tax - This amount will vary depending on the value of the property at the time of the transaction Land Surveyor's fee - Approximately BDS$1,500.00 Real Estate Commission - Normally 5% of the Purchase Price (plus 17.5% VAT) Out-of-Pocket Expenses - $300 (Approximately)
Legal Fees are legislated as follows:
1. Up to $25,000 - $750
2. On the next $75,000 - 2%
3. On the next $100,000 - 1.5%
4. On the next $300,000 - 1.25%
5. Thereafter - 1%
VAT of 17.5% is payable on legal fees
Landlord's guide
Finding tenants for your rental property can be time-consuming and stressful. Some landlords believe that using a real estate agent can help make the process easier and there are indeed several benefits to be found in hiring a professional to fill a vacancy at your rental property.
Below are a few benefits in using a real estate agent:
1. The agent will be the one to show the property physically. Their time is wasted, not yours if the prospective tenant doesn't show up or turns out to be unacceptable.
2. The agent can help you accurately price your rental because they should have experience with the rental market in your area. They will look at the size and amenities of your property and compare them with three or four others in the area. These comparable properties will form a basis as to what the agent believes your rental is worth. The goal is to get the highest rent possible but not price your property so high that your rental sits on the market for months.
3. The agent will be able to easily screen prospective tenants to determine if the information included in their applications checks out.
4. The agent will provide the lease agreement that they regularly use. It will include the most basic and necessary clauses of a lease such as duration, amount of monthly rent, when the rent must be paid, the basics of the security deposit, and how the tenant can and can't use the property. This can be helpful if you've never drafted a lease before and you don't want to pay a lawyer to do it for you.
5. The agent will charge a commission in exchange for finding a tenant for your rental. The amount charged will depend on your agreement with them which is equivalent of one month’s rent. But the agent is only paid this commission if they find a tenant to rent your property.
Below is a checklist we use to make sure you are ready for your tenant(s).
On the day your tenants move in
Skyvillas Realty Inc. is a real estate company providing sales and rental property expertise across Barbados.
We have experience in a comprehensive range of property services including real estate sales, long-term rentals, property management and holiday rentals. Our extensive, regularly updated property listings include rentals, sales, development opportunities and much, much more - all at a high quality and supported by our professional and fully trained sales and marketing staff.
We take pride in providing outstanding customer service and satisfaction, combined with a personal, hands-on client focussed relationship to ensure that all your property requirements are met.
So, whatever your property needs in Barbados, put our team to work for you today.
