The Caribbean with its great expanses of crystal clear blue waters, excellent climate, lovely stretches of golden sand beaches, relaxing lifestyle and stunningly beautiful scenery is an ideal destination for investing in real estate!
With property styles as diverse as the 7000 plus islands that make up the Caribbean, buyers are spoilt for choice. From luxury villas through to studio apartments to building plots of various sizes, there’s something for everyone.
What and where to buy
What and where you buy will be determined by whether you’re looking for an investment property, a holiday home for personal use only or a retirement home. If you’re purchasing solely for investment purposes, you should choose an island that’s popular with tourists, and a property close to amenities and facilities. Owning a home in an isolated location with spectacular scenic views will make you the envy of friends and family, but it will not generate as much rental income as a property within walking distance of the beach.
If you’re buying a second or retirement home, then your location and property type can be more personal. Obviously older buyers of retirement properties should consider the number of floor levels and ease of accessibility to amenities and facilities.
Know from the outset how you intend to finance your purchase. If you require a mortgage, this will need to be from a local lender as funds from a UK lender cannot be secured against your Caribbean property. Some lenders in the Caribbean will require you to have identified a property to purchase before you approach them, which can be lead to disappointment when you find that dream property, only to be told that you do not qualify for a mortgage or sufficient funds to buy it!
The process for obtaining a mortgage from a Caribbean lender may vary from island to island, and from institution to institution, but you’ll need to provide all relevant documentary evidence when applying, just as you would with a mortgage at home. Employing the services of a Caribbean mortgage broker will save you time, in addition to which he/she will be more au fait with the best deals available from different local lenders. Always check first to ascertain whether or not a mortgage broker is ‘tied’ to a particular lending institution, as this means that they only work with one lender whose interest rates may be higher than other lenders.
When you know where and what you want to buy, and how you’ll finance its purchase, the next step is to find it. Being in the Caribbean for two weeks to view properties is not a long time, so it’s a good idea to take your own photos of the homes you are shown, making notes about each as you view them. These will be invaluable for refreshing your memory later when deciding which property to buy.
Committing to purchase
Having finally chosen your property, you need to make an offer to purchase. Some Caribbean islands require that you make your offer in writing, and where this is so, acceptance of your offer should also be in writing. Note that only when you sign the Agreement for Sale and pay over the requisite deposit monies to your attorney (usually 10% to 15% of purchase price) will you be legally bound to proceed with the purchase. Failure to do so could lead to you forfeiting the deposit.
Once your offer has been accepted you’ll need to employ professional services to deal with various aspects of the purchase. A well-prepared valuation report should provide information about the property, its neighbourhood, nearby amenities and current market value. A survey report is also extremely important when purchasing in the Caribbean, as it will highlight such issues as condition of property and any encroachments affecting it. And last but not least, you’ll require an attorney to deal with all legal formalities on your behalf. Attorneys fees will vary from island to island, but you should always insist on getting these in writing.
The conveyancing process for buying in the Caribbean can take anything from three to six months, and sometimes even longer. The pace at which your attorney and the attorney for the other side work, and whether or not there are any legal issues that need to be resolved will impact on timescales.
When the time comes to sign your legal documents, signatures need to be notarised if buyers live outside the Caribbean. Once all legal formalities have been concluded, the title to your property can either be sent to you by your attorney via courier service, or collected by you from your attorney when you next visit the Caribbean to either live or spend time in your newly acquired home in paradise.
It is important to be aware of fluctuating rates of exchange when purchasing property in the Caribbean from abroad, as this can lead to an unexpected shortfall in funds by the time you are ready to complete your purchase or make that last stage payment on your house building project. Although many of the Caribbean islands have their own local currencies, these are considered to be exotic and you could lose money if your purchase aborts and funds have to be returned to you. It is therefore advisable to pay for your Caribbean property in US dollars.
Using the services of a foreign exchange company to transfer your purchase or house building funds to the Caribbean will see you paying less in pounds sterling for your US dollars than you would using a bank or building society. You’ll also have the option to buy US dollars when exchange rates are good, even if you are not yet ready to transfer funds to the Caribbean. This is known as a ‘Forward Contract’ which allows you to buy US dollars at a fixed rate for use at a later date. Funds are transferred quickly and there are no commission fees or charges payable with most foreign exchange companies for your transfers. And best of all, setting up your foreign exchange account is easy.
Your investment property, holiday home or retirement home in the Caribbean is waiting for you!
Article by Maureen Smith, Caribbean Property Consultant – Published in the March 2015 issue of The Phoenix Newspaper