Bermuda offers an unparalleled combination of breathtaking landscapes, a stable government, and attractive financial policies, making it a premier destination for property investment. Whether you are seeking a second home, a retirement retreat, or a savvy real estate investment, Bermuda's vibrant culture and strategic location in the Atlantic make it incredibly appealing. However, purchasing property here particularly as a non-Bermudian comes with specific rules and processes. This step-by-step guide will equip you with everything you need to know to navigate the journey successfully and confidently.
Understanding the Legal Landscape
Eligibility for Property Ownership
Non-Bermudians are allowed to purchase property in Bermuda but within certain boundaries designed to maintain the island’s real estate balance. Only particular properties, generally at the higher end of the market, are available for foreign ownership. This ensures that the local housing stock remains accessible to Bermudian residents. Eligibility also hinges on the property's Annual Rental Value (ARV), a government assessment used to determine real estate taxes. For houses, the minimum ARV requirement is $126,000, while condominiums must have an ARV of at least $25,800. These thresholds typically translate to luxury residences, ensuring that foreign buyers are investing in premium real estate sectors.
Licensing Requirements
Before a non-Bermudian can officially purchase property, they must secure a license from the Bermuda Government. The licensing application is submitted to the Minister responsible for Immigration and includes detailed personal and financial documentation such as bank references, character endorsements, and a full financial profile. The government carefully reviews these to ensure buyers have the financial stability to invest responsibly. License fees are substantial and vary depending on the property type 12.5% of the purchase price for houses and 6.5% for tourism-designated condominiums. Buyers should expect the licensing process to take approximately 60 days, and no transaction can legally close without this approval.
Step-by-Step Guide to Purchasing Property
Step 1: Define Your Objectives
Before diving into the property search, it is essential to clearly outline why you want to buy in Bermuda. Are you seeking a primary residence to live year-round, a vacation home for seasonal retreats, or a property purely for investment purposes? Your goals will significantly influence the type of property you should pursue. For instance, vacation homeowners might prioritise ocean views and proximity to tourist areas, whereas investors will likely focus on rental potential and property appreciation. Establishing your objectives upfront ensures a focused and efficient search process.
Step 2: Engage a Reputable Real Estate Agent
Partnering with an experienced and licensed real estate agent is crucial for a smooth transaction in Bermuda. A knowledgeable agent will not only have access to eligible properties for non-Bermudians but will also provide critical guidance throughout the buying process, from initial viewings to negotiations and legal compliance. A reputable agent understands the nuances of the local market, including pricing trends, neighborhood dynamics, and off-market opportunities, giving you a competitive edge in finding the right property.
Step 3: Secure Financing
If you require financing, obtaining pre-approval from a lender should be a priority. Pre-approval clarifies your budget and strengthens your credibility when making an offer. In Bermuda, both local banks and international lenders offer mortgage products to foreign buyers, although requirements can be more stringent than in other markets. Typically, buyers should expect to make a down payment of 20% to 30% of the property’s purchase price. Having financing arrangements in place early avoids delays during the closing process and allows you to move swiftly when you find the right property.
Step 4: Property Search and Selection
With your agent’s assistance, you will start identifying properties that match your budget, lifestyle preferences, and legal eligibility. This phase involves visiting potential homes, evaluating neighborhoods, and assessing amenities such as proximity to beaches, marinas, golf courses, and shopping centers. It’s crucial to balance emotional appeal with practical considerations like property maintenance, future resale potential, and rental desirability. Non-Bermudians must ensure they are only considering properties that meet the ARV requirements and have been approved for foreign ownership.
Step 5: Make an Offer
Once you’ve found the right property, your agent will prepare and submit a formal offer to the seller. This offer outlines the proposed purchase price and any conditions you wish to include, such as financing contingencies or property inspections. Negotiation is a common part of the process, and it may involve several rounds of counteroffers before both parties reach an agreement. Upon acceptance of your offer, a 10% deposit is typically required, which will be held in escrow until closing.
Step 6: Legal Due Diligence
Engaging a Bermudian attorney early in the process is essential for thorough due diligence. Your lawyer will conduct a title search to confirm that the property is free from liens or ownership disputes. They will also review the Sale and Purchase Agreement to ensure it aligns with your interests and advise on any necessary adjustments. Additionally, your attorney ensures that all aspects of the transaction comply with Bermuda’s legal requirements, safeguarding your investment from potential legal issues.
Step 7: License Application
After an offer is accepted and due diligence begins, your attorney will also help you prepare and submit your license application. The application requires several key documents, including bank references to demonstrate financial solvency, character references, proof of income, and full property details. Processing times can vary, but generally, applicants should allow up to 60 days for the government’s review and approval. A timely and complete submission can expedite the process considerably.
Step 8: Closing the Deal
Once your license has been approved and all other conditions have been satisfied, the final steps include settling the remaining balance of the purchase price and signing the official deed of conveyance. Your lawyer will facilitate the formal closing, ensuring that all documents are correctly filed and the transaction is properly recorded with the Land Title Registry. Congratulations you are now the official owner of a Bermuda property!
Financial Considerations
Additional Costs
Beyond the purchase price, buyers should be prepared for several additional costs. Stamp duty is a significant expense and is generally split between the buyer and seller based on a sliding scale tied to the property’s value. Legal fees for your attorney typically range from 1.5% to 2% of the purchase price, depending on the complexity of the transaction. Additionally, real estate agents' commissions, usually around 5%, are paid by the seller, but it is important to understand how this affects pricing negotiations. Buyers should also secure property insurance, with premiums varying based on the property’s size, age, and location.
Ongoing Expenses
Owning property in Bermuda comes with ongoing costs that buyers must factor into their long-term planning. Land tax is levied annually based on the property’s ARV and must be paid to the Bermuda Government. Maintenance costs can be higher than in other markets due to Bermuda’s island location and the need for hurricane-proofing and saltwater-resistant materials. Utilities, homeowner association fees (for condominiums), and regular upkeep expenses should also be considered to protect and enhance your investment over time.
Frequently Asked Questions (FAQ)
Can foreigners buy any property in Bermuda?
No. Non-Bermudians can only buy properties with specific ARVs that have been pre-approved for foreign ownership.
How long does the buying process take?
The process, including licensing, can take 3–6 months depending on government approvals and transaction complexity.
Can I rent out my Bermuda property?
Yes, in most cases. However, there are restrictions, and it’s essential to consult with your real estate agent or attorney.
Is financing available to non-residents?
Yes. Both local and international lenders offer financing to non-Bermudians, but down payments and interest rates may differ.
Are there property taxes in Bermuda?
There are no traditional property taxes, but an annual land tax based on ARV must be paid.
Conclusion: Make Your Bermuda Property Dream a Reality
Purchasing property in Bermuda is an exciting and rewarding endeavor, but it requires careful planning, expert advice, and a clear understanding of local laws. By following the steps outlined in this guide and partnering with experienced professionals like The Property Group you can navigate the process confidently and secure your piece of paradise. Ready to start your journey? Contact The Property Group today for expert assistance in finding your dream Bermuda home.