Can I see everything that is available with just one agent?
The short answer is yes. The process of co-brokerage (a non-automated form of sharing listings among agencies) works well in Bermuda. If you have chosen one agent who satisfies your needs and with whom you are happy, they can work with all of the other agencies on the island to show you every property available which suits your requirements.
Is my agent working just for me?
Unless you have specifically arranged otherwise, by entering into a 'buyer agency' contract with your agent, you should assume that they are working, directly or indirectly, for the owners whose property they are showing you. They are, however, obligated not to misrepresent the facts regarding any property, insofar as they know them.
What can overseas buyers buy?
Houses are defined as eligible for sale to non-Bermudians by virtue of their assessed annual rental value (or 'ARV') exceeding a limit stipulated by the Bermuda Government. The minimum ARV to qualify a single family home for this market is $126,000 and a Property within a designated resort development.
This value is periodically reevaluated by the Bermuda Government, along with an island wide assessment of ARVs (last done in 2009 and 2015).
The Licence to Acquire Property
note: For Overseas Buyers who are not Permanent Resident Certificate holders - PRCs
What is the license fee for Overseas Buyers?
The Licence to Acquire Property is required for non-Bermudians wishing to buy a home in Bermuda. The Government charges a fee of 12.5% of the price of a house or 8% if you are buying a condominium, when the licence is granted. The review process is designed to determine that you are financially independent, and that you are considered a desirable person to own Bermuda property. Personal and financial references will be required, and some research will be conducted. Your local property lawyer will coordinate the process for you. License fee is $1,800.00
The Process of The Purchase, itself:
What is the general process of purchasing property?
Looking at the properties available:
If you are working with a single agent, make sure you are being shown both their own and other agencies' listings according to your specifications. We find that it is difficult to fully take in more than about six to eight houses or condominium complexes in a comfortable day of looking. Try to give your agent comprehensive positive and negative feedback on every property they show you... It will help to refine your agent’s sense of what you are looking for and your subtler preferences...
A. If you have been given a printout on each house, or a written list of the properties you'll be seeing, make notes on the ones you like.
B. After you have let the agent know your thoughts, try to put out of mind entirely any property that is not of interest. It helps to 'save room' for the more interesting ones.
C. If you are not very familiar with the island, it helps if you plot locations on a map, too. Your agent will be happy to help you!
Typically, negotiations will be conducted on your behalf by the agent with whom you are working. In complex situations, it may be helpful to set your wishes down in writing to ensure accuracy of communication.
Note: In Bermuda there is no normal 'spread' between asking and selling prices.
Note: Building Inspection: The purchaser's lawyer may recommend that the contract contain a provision for a structural survey and inspection of the building (at the buyer's expense) and where this condition is included, the sale will be subject to the buyer's satisfaction with the survey result.
What happens when a price and terms have been agreed upon?
Ensure that the agreement as to price and most basic terms is documented in the form of a signed Offer Agreement. The agent with whom you are working can provide the necessary form or it can be done in a simple exchange of faxes or emails. Typically, this agreement will be specified as being 'subject to contract'.
The Vendor may choose to have either his agent or lawyer draft a sales agreement. Once the Vendor has agreed that the contract reflects the terms to which he has agreed, you will receive a copy. It is advisable to have your lawyer review it before you sign. It will form the basis of his instructions for handling the actual conveyance.
You may have to use the time between signing a sales agreement and closing the deal to secure your financing, to secure a Licence to Acquire Property (if you are not Bermudian - your attorney will provide you with necessary forms and instructions), or you may wish to re-enter the house to measure for furnishings, etc. These things will be determined by your needs and wishes and your agreement with the Vendor.
Immediately before closing
You may need to arrange with the various utility suppliers such as telephone, electricity, central water, cable TV, gas, internet provider, etc., to have any relevant services switched over or set up in your name. If you have development plans, it can be arranged, by agreement with the Vendor, to have drawings done and submitted to the Department of Planning prior to the closing date, if you so wish.
At closing (and how long will that take?)
The shortest time in which closings normally take place (for Bermudian purchasers) is 28 days. If you are an overseas buyer, the length of time will be determined by how long it takes the Department of Immigration to process your application for the Licence to Acquire Property. This process usually takes a minimum of 6 months but this can vary. Sales contracts usually specify that the closing take place within a set time from the date of the grant of the Licence. A delayed closing is possible by mutual agreement between the vendor and purchaser.
You may encounter prices listed as 'gross' or 'net'. The 'gross' price is the historical standard in Bermuda and implies that the vendor will pay the agent’s commission plus half of the stamp duty and half of the conveyancing cost. The purchaser pays the other half of the stamp duty and conveyancing costs. Some vendors prefer to stipulate in their pricing that the purchaser pay the agent(s) and/or all of the stamp duty and conveyancing costs. These variations are referred to as 'net' (or sometimes 'net net'). Rule of Thumb: On a 'gross' price, you will generously estimate your own costs if you add an additional 2.5% (plus the Licence Fee, if you are not Bermudian); on a 'net' price, 10% will comfortably overestimate added costs (plus the Licence Fee, if you are not Bermudian).
The standard sales commission in Bermuda is 5%. This is established by the Real Estate Division of the Bermuda Chamber of Commerce. This is normally paid by the Vendor, but the purchaser sometimes elects to assume this cost as part of the negotiating process.
Stamp Duties are charged on a sliding scale:
- 2% on the first $100,000;
- 3% on the next $400,000;
- 4% on the next $500,000;
- 6% on everything over $1,000,000 plus
- 7% on everything above $1.5 million.
(Thus, any property sale for more than $1,500,000 will incur stamp duty of $64,000 plus 7% of the value above $1,500,000.) These are normally divided between Vendor and Purchaser, but the split may be negotiated.
Conveyancing and other miscellaneous legal fees
Legal fees for conveyancing are charged on a sliding scale set by the Bermuda Bar Association. The rate starts at 1% of the sale price for the first $250,000. The rate is then 0.75% for the next $250,000 of the sale price. The rate continues to decrease in stages as the price increases until the price is $2,000,000 or more and the rate charged is 0.125%. Generally legal fees are split between the Vendor and Purchaser in equal amounts, with each party being responsible for any additional personal legal and incidental costs incurred during the conveyancing process.
License Fee - for overseas purchasers only
Houses = 8%
Condos = 6%
What institutions in Bermuda provide funds?
Mortgages may be provided by any of the following:-
A. The retail banks: HSBC Bank Bermuda and Bank of N.T. Butterfield and Clarien Bank.
B. Also, occasionally, we understand, by other financial institutions, such as insurance companies
C. Some law firms' trust departments
D. Bermuda Housing Corporation (qualified Bermudians only)
Will they lend to overseas buyers?
Each institution has its own rules for determining eligibility. Some prefer to lend to prior depositors. But most will undertake to lend to overseas buyers as well as local.
What are the terms normally available?
Terms will range from 15 to 20 years, typically, with interest rates variable. Most mortgages provided in Bermuda are callable.
Can I do whatever I want by way of development?
Bermuda's Department of Planning ultimately determines what can and cannot be done by way of development, however their guidelines are set out in written form. You will not be denied permission to do anything which falls within these specifications, and with the right guidance may well be permitted to do projects which fall beyond that scope. It is highly recommended that you work with a local architect who has a good track record at working with the Planning Department.
Can I subdivide?
The potential for subdivision will be governed by the zoning of the area. Non-Bermudians may not subdivide unless the portion subdivided is sold to a Bermudian and the portion retained has a qualifying ARV.
What zoning areas are there?
Residential properties are typically zoned either Residential 1 or Residential 2. Residential 1 is higher density than Residential 2. At The Property Group we have a copy of the complete guidelines in our office, if you would like more specifics.
Where are the guidelines set out?
The Bermuda Plan 2008 - Planning Statement is the book to which you should refer to find out the details of allowable site coverage, set backs, etc. for any given area. The Bermuda Plan - 2008 MAPS will show the 2008 proposed zoning for every part of the island. This is usually accurate (unless objections were successfully lodged.) We have copies in our office.
Taxes On Property
What are the tax conditions on properties?
Bermuda's land taxes are relatively low by world standards. Payable by Bermudians and non-Bermudians, twice a year, they are calculated annually on a sliding scale based on the ARV (Government-assessed 'Annual Rental Value'), not the market value of the property.
There are no other taxes on property
Other Property Ownership costs
What other costs need to be taken into account when owning a property?
Electricity is expensive in Bermuda. Cost varies on each property according to the amenities, such as a pool and air conditioning which will add to the cost. Your agent can ask the owner for recent costs, for any property which is of particular interest to you.
Every house has its own catchment area (roof) and cistern or tank (usually below the house, itself) to supply all your needs. The smaller the tank, the greater the likelihood that you will need to supplement that supply. This can by done through a well on the property (with a reverse osmosis system, if needed, to desalinate that supply), Bermuda Waterworks water which is piped in, Government water (if you are in a location where it is available), or purchasing water from a water truck supplier.
Costs will vary with your preferences. Houses should be painted every 5 years or so (exterior) and roofs every 2-3 years, as needed. Contractors’ costs will generally run in the $45/hour to $80/hour range.
Basic building costs are reckoned to start at about $350 psf. Superior quality finishes can add significantly to this cost.
There are numerous gardening contractors who will quote you for year-round maintenance.
Additional Frequently Asked Questions
What areas are most secure?
Bermuda's crime rate has historically been relatively low, with petty burglaries the most prevalent crime. Almost all of Bermuda is, therefore, relatively secure. The prime residential areas have a particularly low crime rate. These include, among many other areas, Tuckers Town, Fairylands, Point Shares, Paget's south shore and the Harbour Road area.
Do we have to pay a tax when we sell?
There is no “sale” tax or capital gains tax to the vendor but the vendor is typically responsible for paying 50% of the stamp duties and conveyance costs on closing (see 'Closing Costs', above).
If we buy a house does it entitle us to Bermuda citizenship?
No; nor does extended residence on the island.
What nationalities tend to buy in Bermuda?
Americans, English and Canadians figure most prominently among our guest residents, with other Europeans also well represented, as well as Australians, and to a lesser degree Asians.
What tax benefits do we have (in our home country) if we buy a house in Bermuda?
A tax specialist with expertise in your own country's laws will have to help you on this one.
If we rent a house does that give us the right to a residency permit?
The licence that permits home ownership will give you the right to come and go freely. The right to reside for very extended periods must be separately granted by the Department of Immigration. There also exists a separate document called a 'residency permit', about which your Bermuda lawyer can tell you more.