I read some time ago that a poll showed buying a house to be more stressful than bankruptcy, divorce or even bereavement, with a large percentage of those polled stating that getting involved with the property market is one of modern life’s most unpleasant experiences.
Buying property on one of the beautiful islands that make up the Caribbean is not without challenges. Despite this, mention of the Caribbean never fails to conjure up images of a desirable and sought-after lifestyle where sea, sun and sand, along with ample exotic fruits, make the region ideal as a destination for investing in a holiday or retirement home.
Having taken the decision to embark on property ownership in the Caribbean, it is vitally important to first establish source of funds to facilitate your proposed purchase. Will you be a cash buyer or will you require mortgage financing from a local lending institution? Cash buyers will usually have more leeway when it comes to negotiating on the purchase price. Buyers who are dependent on mortgage financing from local lenders will find the process similar to that for, say, the UK, insofar as requirements are concerned (i.e. proof of income, monthly expenditure, credit report, payslips, etc. The difference, however, is that the process tends to be lengthier, in addition to which, lending institutions in the Caribbean will usually appoint separate attorneys to represent their interest in the property being purchased, resulting in three attorneys being involved in the conveyancing process.
The outcome for buyers who view properties before they have been approved for mortgage financing is often one of sheer disappointment on learning that they do not meet the required criteria. Furthermore, vendors will also be affected when a sale falls through as a result of potential buyers being unable to secure mortgage financing. A further knock on effect is that both parties may incur legal fees for work undertaken by their attorneys up to the time the sale and purchase aborted.
Once source of funds is in place, you can now proceed with the search to find a suitable property to purchase on your island of choice. It is advisable to use the services of an established real estate agent who will arrange viewing appointments on your behalf. The agent will also negotiate the price to be paid for the property on behalf of the respective parties, which price will be subject to contract.
Retaining the services of a local attorney to deal with the purchasing formalities on your behalf is essential. They will be familiar with the conveyancing procedures and practices that apply to the particular jurisdiction, as although initially based on English laws, there are variations between Caribbean conveyancing procedures and those of the UK.
Owning a property in the Caribbean does not give you an automatic right to becoming a permanent resident. It is therefore advisable to speak with the relevant Immigration Department for the island on which you intend to purchase property for information about the process for acquiring permanent residency.
Below are some useful tips to consider when buying property in the Caribbean:
- If you are not a cash buyer but dependent on a mortgage for getting that dream property in the Caribbean, you should approach a local Caribbean lending institution before commencing with your property search in order to first establish your status as a borrower.
- The location of your property should be determined by the purpose for which you are buying it in the first instance. For example, is the property to be rented to holidaymakers when not occupied by you as a source for additional income? If so, then it is advisable for your chosen property to be located in an area that is popular with tourists, as opposed to one based solely on personal preference.
- An independent valuation is recommended to ensure that the price being paid for your property is in line with current market value. Such a valuation is optional for cash buyers, but compulsory with mortgage lenders.
- Property boundaries in the Caribbean must be established to ensure that the property being purchased by you is not subject to encroachments.
- Using the services of a Foreign Exchange company to send your funds to the Caribbean will usually see you getting better rates of exchange than those available from High Street Banks or Building Societies.
- It is recommended that payments be sent to the Caribbean in US dollars, as if local currency is sent (where available from the UK) and your purchase should abort, the return of local currency could result in a much lesser sum being returned.
- Purchase funds going into Barbados should be registered with Central Bank, as if not, the proceeds from a subsequent sale will be repatriated overseas by way of annual instalments and not in a lump sum.
- Always retain the services of a reputable local attorney to deal with the legal formalities of purchase on your behalf. This may require contacting the relevant bodies governing attorneys on your island of choice.
- Some Caribbean islands require non-nationals to have an Alien Landholding Licence before they can purchase property. These islands include, but are not limited to, Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, Trinidad and Tobago and St. Lucia.
Buying property in the Caribbean is without doubt an exciting exercise. Doing so safely is achievable with the right advice, support and guidance!
Submitted by Maureen Smith, Founder of Tropical Connections Ltd.