Non Bermudians

Mark Twain, a frequent visitor in the early years of the last century, once famously opined: "You die and go to heaven, I'll stay here in Bermuda". In a letter dated 1910, he expounded on the virtues of the Bermuda life. "There are no newspapers, no telegrams, no mobiles, no trolleys, no trams, no tramps, no railways, no theatres, no noise, no lectures, no riots, no murders, no fires, no burglaries, no politics, no offences of any kind, no follies but church, & I don't go there."

Bermuda has changed a lot since the early twentieth century, yet its natural beauty, enticing climate and growing status as an internatinal business centre ensure that demand for property continues. The island remains an attractive place to acquire a second home for wealthy foreigners, while more recently, expatriates who live and work on the island have entered the housing market.

The rules governing the acquisition of property by non-Bermudians were first set out in the Bermuda Immigration and Protection Act 1956. Under the Act, as amended, Bermuda manages foreign property ownership through government policies that limit the number of properties available for sale to non-Bermudians.

The basic tool used by government to regulate land ownership is the ARV ("Annual Rental Value"), a value assigned to every property in Bermuda and used by the Government as part of its Land Tax calculation. Historically, only homes with an ARV greater than a specified limit (today $153,000 for houses and $32,400 for condominiums) have been available for purchase by a non-Bermudian.

However, on February 8, 2005 this policy was tightened. Under current policy, only houses and condominiums already owned by non-Bermudians may be sold to other non-Bermudians. Bermudians are in other words prohibited from selling properties to non-Bermudians, no matter the ARV, unless granted special dispensation by the Minister of Labour, Home Affairs and Public Safety. Inevitably, this controversial policy has reduced the number of homes available to the non-Bermudian purchaser. These properties are always expensive: homes available to non-Bermudians typically start at about $3 million. Similarly, non-Bermudians may only purchase condominiums that are within one of 17 "designated developments", where prices typically start at approximately $850,000. Non-Bermudians may not acquire undeveloped land.

Policy and price are not the only obstacles to the purchase of a home in Bermuda. A non-Bermudian can only buy a Bermuda property if they have been granted a license to do so by the Minister of Labour, Home Affairs and Public Safety. You will need a Bermuda law firm to submit the application on your behalf, and you will have to provide character and financial references to allow the Ministry to satisfy himself that you are a desirable person. Licenses are not granted on a general basis but rather in respect of a specific property and you should be aware that the process may take anywhere up to six months. Each license contains restrictions on the property use:

• the property must be for residential use only;
• the property may not be sub-divided;
• renting the property requires consent and is usually allowed only for working residents for up to 12 months.

Furthermore, the fee for the grant of a license is pretty steep - 22% of the purchase price for a private house, and 15% for a condominium. This fee, which is paid by the purchaser, must be received by the Minister before the license is issued and the license is required prior to the closing of any transaction.