Why invest or develop property in Barbados?  The island has enjoyed a boom period in real estate growth and construction over the past decade. This has seen property prices steadily increase annually in the 7 -10% range but much higher in beachfront locations where demand has greatly exceeded supply.
 
Some of the reasons Barbados is considered an attractive overseas investment opportunity:
 
Easy-to-purchase legislation
Low tax incentives
Relatively crime-free environment
Progressive and visionary government
Buoyant economy
Excellent tourism product and facilities
Proven performance at the top of the hospitality ladder
Wide range of property types
Proven return on investment and capital appreciation

Purchasing Property in Barbados

In Barbados property passed by conveyance of title, evidenced by the recording of title deeds
and certified survey plans at the registry of title. A purchaser will require a registered
Barbadian attorney to search the register and establish title to the property prior to the
completion of a sale.

The purchaser agrees the terms with the vendor and enters into a contract prepared by the
vendor's attorney, which provides for a deposit of 10% to be made to secure the property.
This deposit is held by the vendors' attorney in escrow until completion (approx. 90 days),
when the balance of the purchase price is paid and the title passes to the purchaser by way
of the conveyance. Between the time of executing the contract and the completion of the sale,
the legal representative of the purchaser will search the title, and ensure that there are no
encumbrances, charges, encroachments, or other impediments to the sale.

The title may be taken in an individual's name or through a corporate vehicle set up to own
the property. It is usual in the case of non-residents of Barbados that they purchase
property through a company which may be incorporated outside Barbados, but which must be
registered to do business in Barbados.

In many cases, non residents use such a corporate vehicle in order to make the onward sale of
the property simple.

Town and Country Planning Approval

If the purchaser is buying vacant land, the vendor will require a Certificate of Compliance
from the Town and Country Planning Office (TCPO), which certifies that the roads and services
have been provided in accordance with planning guidelines. It is therefore illegal for a
vendor to sell a property without a Certificate of Compliance.

If the purchaser is buying a built property which is to be improved, or intends to build a
property on the land, he will require planning permission from TCPO. The planning permission
is granted in accordance with a set of guidelines established by acts of Parliament and
statutory instruments, which govern such things as set backs from adjoining properties, roads,
cliff tops, and the high water mark, if the property is on the beach. The guidelines also
cover density and building height. In addition, TCPO would be guided by the zoning of the
land and environmental issues, such as the method of effluent disposal, and the capturing of
rainwater for irrigation purposes.

In all cases application is made to the TCPO and permission is usually granted within a
period of two to six months.

Transaction Costs

In 1998 the Government abolished property transfer tax for non-national purchasers, which was
previously set at 10%. Sales commissions and survey costs are borne by the vendor. Each party
bears their own legal fees, which are based on a scale of fees ranging between 1.5% - 2%. On
average, the cost would be approximately 1.5% for the purchaser. This is the only purchase
transaction cost other than incidental costs of forming and registering a company if a
corporate vehicle is to be used.

When selling a property the vendor would normally incur sales commissions of 5%, transfer tax
of 2.5%, stamp duty of 1% and legal fees of approximately 1.5%.

Operating Costs

The owner of improved property (house and land) in Barbados will have to pay an annual land
tax at the following rates:

0% on the first US$62,500
0.10% on US$62,501 - US$175,000
0.65% on US$175,001 - US$425,000
0.75% on Excess over US$425,000
Commercial Properties
0.65% of value
Unimproved Land (land only)
0.60% on unimproved value of land

The main other operating costs would include insurance, which ranges from 0.4% for residences;
0.6% for commercial buildings; 0.9% for hotels, and in all cases would depend on
characteristics of the building and the site. Other major costs would include metered
utilities, and any common assessments applicable to master planned communities.
 
Let Barbados Living help you find the right property and the right partners for your development.
 
For more information, contact us at investors@barbadosliving.com