Buy in Caribbean

Why buy in the Caribbean?

The answer to this question is simple: the Caribbean is synonymous with luxury. It is many people’s dream to holiday in these exquisite islands – to be able to buy your very own piece of such tropical paradise is often pure fantasy.

An amazing landscape, near-perfect weather and a laid-back lifestyle all help to entice buyers who are fortunate enough to be able afford to get on the Caribbean property ladder. And tax-free living, which many islands offer, is no small attraction either.

English is widely spoken, flights from the UK are frequent and political stability tends to be good. Tourist infrastructure, including golf courses and marinas, are good quality and mature – resulting in plenty of repeat business.

Ultimately, a home in the Caribbean is a lifestyle choice. Whether you intend to enjoy this lifestyle yourself, or plan to profit from others enjoying it, a property on one of these islands is the doorway to the playground of the rich and famous.

Legal issues

The legalities of each island differ enormously, so it is imperative that you seek advice from a local lawyer before committing to any purchase. In some islands, UK solicitors are not even allowed to practice, so this really is a case of seeking local knowledge.

If you are considering buying in Barbados, be aware that any non-resident will have to receive permission from the Central Bank of Barbados before they can proceed. In the British Virgin Islands and Anguilla, it may be necessary to apply for an Alien Landholders Licence. In the Caymans it is possible to purchase residency for a one-off fee. In Tobago, you will only need to acquire a Landholders Licence if you wish to buy more than five acres of land – it’s three acres in Dominica.

We’re sure you’re beginning to get the picture of how diverse the legal requirements can be, so again the advice here has to be to receive personal advice for your individual situation.

The buying process

Generally, when buying an off-plan property, you will be required to make stage payments. This will usually consist of an initial ten per cent deposit, but payments of the remainder of the balance will depend on the development in question. Even though you are purchasing a new-build home, your solicitor will still need to search for the Register of Title, so it is best to use an independent lawyer rather than one recommended by the developer.

If you are buying a resale property, you will need to acquire a solicitor as soon as a price has been agreed – just as you would in the UK. The good news is that generally, throughout the Caribbean, the red tape seems to be far less than we are used to, but the major difference is that you will be required to pay a ten per cent deposit on signing the purchase agreement. This money is then held in the vendor’s lawyer’s escrow account until you pay the balance on completion and it is all transferred to the seller. The buying process for a resale property should take around three months.

Financing your property purchase

Many of the Caribbean islands have different currencies, including the Barbados and Eastern Caribbean dollars, but the majority of property transactions are conducted in the US dollar – even on the islands where it isn’t the official unit of currency.

Local mortgages are available, but they generally require a 40 or 50 per cent deposit. Occasionally banks will lend up to 80 per cent loan-to-value, but this is the exception rather than the norm. The length of the mortgage term is also shorter than us Brits are used to, at 15 to 20 years – which can make for a rather hefty monthly repayment bill. However, banks tend to be flexible as long as they are sure you will be able to repay the loan.

If your dream is to build your own island bolt-hole, it is also possible to get a mortgage for an undeveloped plot of land. Building in the Caribbean is relatively affordable, thanks to the reasonable cost of labour so, if you have the time and the patience, this could be an economical way to get on the property ladder – just make sure that you have gained planning permission prior to applying for the loan.

Caribbean Property: Fees and taxes

In a bid to increase tourism, the Dominican Republic government has launched a few tax incentives, such as no stamp duty, no tax on rental income, no capital gains tax for 10 years and no tax on purchases. This brings the island in line with many others which offer favourable tax breaks.

The Turks and Caicos islands, for example, boast no income or capital gains tax – yet stamp duty here is charged at 9.75 per cent of your purchase price. In the British Virgin Islands stamp duty is levied at eight per cent.

Barbados’ taxation system is different again, with a ten per cent transfer tax charged. However, if you buy your home here through an offshore firm then you will be exempt from some tax when you come to sell.

Ultimately, no two islands are the same, so make sure you consult a tax expert before you purchase anything in the Caribbean. As a rule of thumb, you can expect to pay legal fees of around two to three per cent in all islands.

Visas, residency and work permits

The majority of islands will require a tourist visa before UK citizens can enter the country – the amount of time that one of these is valid for varies. For example, in the Dominican Republic, Brits are entitled to stay for up to 90 days, while the British Virgin Islands are more flexible with a six-month limit.

Residency is not usually hard to obtain – providing that you have adequate funds. In many of these islands it is a case that money talks, and so the more funds you can prove, the easier the process will be. Some islands demand the import of all foreign currency to be declared.

If you are planning on working in the Caribbean however, you may find the process slightly harder. Work permits tend to only be issued to those people who are planning on setting up a new business – to those who are willing to invest in the local economy – and the local workforce. If you are seeking general employment, then you will be required to prove that the job that you are intending to take can’t be done by a Caribbean resident. They don’t call it a millionaire’s playground for nothing!