6 Things to Know About Buying a Holiday Home in Barbados
Barbados is a tropical paradise whose glorious beaches, aquamarine waters and lush countryside enjoy sunny weather all year round. Its famously friendly islanders also offer a warm welcome, providing visitors with a wide range of holiday activities and the highest levels of service. Add to this the luxurious accommodation on offer and it’s no wonder that many people choose to buy their own Barbadian property. If you are considering buying a holiday home in Barbados, here are some things we think you should know.
1. Anyone can purchase a property in Barbados
Unlike some other holiday destinations, you’ll be pleased to know that the government of Barbados doesn’t put any citizenship restrictions on buying a holiday home here. You won’t even need to obtain a purchase visa. If you are a non-citizen, you are just as welcome and as legally entitled to buy a property as a Barbadian resident.
2. Easy and straightforward purchasing procedure
Most countries have established procedures in place to make sure that the purchase of a property goes through smoothly and in accordance with legal requirements. This is also the case for Barbados where the procedures are there to protect both the seller and the purchaser.
The Barbadian process is similar to those in many other countries and begins with the buyer making a verbal offer and the seller giving a verbal acceptance. Once the offer has been agreed upon, it is formalised with the buyer sending a written confirmation of the offer to the seller.
At this point, the process becomes more formal and it is necessary to engage the services of a lawyer who will draw up the contract of sale. Unlike in the UK, the purchaser must pay a deposit of 10% of the price of the property within four weeks of contracts being exchanged. Once this is done, conveyancing work will be carried out and, providing all goes well with this, the sale can reach completion.
On completion, the balance of payments (90%) must be paid in full. The exception to this is where the purchase is of an off-plan development, here it is sometimes agreed to pay the balance in stages based on the progress of the building’s construction.
3. Getting finances in place
Although there are no restrictions on buying a property, if you are a non-resident, you must ensure that all the funds needed to make the purchase come from external sources. As there are some basic procedures in place regarding foreign currency being brought into the country, this should be arranged as soon as possible if you are wanting the sale to go through quickly.
Mortgages of between 5 to 25 years are available to foreign nationals, depending on financial status, and any borrowings you make should be registered with the Central Bank of Barbados. As with all mortgages, you will need to provide a deposit which is usually 30% – 40% of the value. For homes worth more than US$2.5 million, this is 50%. In addition, you will need to provide the usual financial guarantees, such as proof of employment, income tax returns, etc. As a foreign national, you will also be required to submit two forms of government-issued identification, such as a passport and driving licence.
All these things need to be in place before contracts can be exchanged.
4. Arranging legal assistance
Purchasing a property is a complicated legal process and requires the use of a registered conveyancing attorney. Their role is to act on your behalf during the purchase to ensure that all the necessary conveyancing checks take place and that there are no unwanted surprises when you finally move in. They are also there to make sure the process fulfils all the legal obligations. It is advised that you use the services of an attorney who has experience of working for non-citizens buying holiday homes as they will understand the specific requirements of such purchases.
The fees for attorneys are legislated for in Barbados and what you will pay depends upon the value of the property. The pricing goes up in tiers: you’ll pay $1000 for the first $25,000 of the value, 2.5% for the next $75,000, 1.5% for the following $100,000 and so forth. Above $500,000, the fees are 1%. VAT of 17.5% is payable on all legal fees.
5. Yearly property costs
Aside from purchasing the property itself, you’ll also need to factor in annual costs. Most privately owned properties will be subject to annual land tax, the Barbadian equivalent of the UK’s council tax. Just like in the UK, this is based on the value of the property and the amount you pay will change from year to year.
If your holiday home is located on a resort, you may find that the land tax is payable by the resort, not by the individual property owners. However, you may be required to pay annual fees to the resort for the maintenance of the property and grounds and for any membership benefits.
Other costs will be the same as those you incur at home, such as building and contents insurance, power supply, water, broadband, television and telephone services, etc.
6. Benefits of buying
There are numerous benefits to purchasing a holiday home in Barbados. Apart from the luxury of having your own paradise island home, you also have the ability to rent it out to other holidaymakers. Accommodation prices can be high in Barbados so the income can be considerable. Some resorts will even manage the lettings and the property on your behalf.
Another advantage is that property prices usually increase over time and so you may benefit financially if you sell your holiday home. It is helpful to know, therefore, that there is no capital gains tax in Barbados so you get to keep all of your profits.
Barbados is a wonderful place to spend your holidays and for regular visitors looking for a home from home, it is easy to purchase your ideal holiday property. With no restrictions on foreign ownership, the ability to rent out your property and no capital gains tax, you can turn your second home into an investment too.
If you are looking to purchase luxury accommodation in Barbados, take a look at the exceptional villas and apartments here at Royal Westmoreland.