Property fees reduced for non-Bermudians — a great time to buy!
About MJM Limited
MJM is one of Bermuda’s leading law firms. We have a broad ranging practice with an emphasis on civil and commercial litigation, banking and finance, general corporate, trusts, insolvency, restructuring, insurance and reinsurance. We also offer advice and services to international individual and commercial private clients.
A non-Bermudian can only buy a property in Bermuda if they have acquired a licence to do so. This involves applying to the Minister of National Security and paying an application fee which is approximately $1,500 and is refunded if the licence is granted. Once the licence is granted the licensee may purchase a property in Bermuda subject to certain restrictions. Not all property on the market in Bermuda is available to the licensees, and roughly only 5% of the market is accessible. These are generally houses that start at $3.5 million and condominiums that start at around $800,000. The houses must have a minimum ARV (Annual Rental Value) of $177,000 and the condos must have an ARV of at least $32,400 in order to be extended to non-Bermudians. Undeveloped land is not available to non-Bermudians and they are restricted from renting or subdividing the property which they have acquired.
Once the licence has been obtained a one-off premium is payable to the Government. The premium, up until recently, was 25% of the value of the house or 18% of the value of the condo over and above the usual stamp duty and legal fees.
Following the Budget earlier this year, the Government has reduced these licence premiums significantly in an effort to revitalise the economy. The premium payable on a house has been reduced to 8%, and on a condo to 6%, and the reduced fees are available until October 2014. If you are contemplating purchasing then it is worth noting that an application for a licence will generally take about 3 months to be approved and granted. Licences are rarely rejected when prepared by an attorney.
Non-Bermudians who are PRC (Permanent Resident Certificate) Holders also benefit with a reduced fee from 8% to 4% for a house or condo that they wish to acquire. However, PRC Holders will continue to have a wider choice of properties to purchase than other non-Bermudians.
It is hoped that the reduction in licence fees payable by non-Bermudians will stimulate sales and subsequently generate jobs and boost the construction industry. It is a fantastic opportunity for non-Bermudians to purchase and should have a positive impact on the economy. If you are a non-Bermudian, consider taking advantage of this significant reduction before the fees are increased again in October 2014!