There are no restrictions on foreigners purchasing property in Barbados, but non-residents need to ensure that all the funds for property purchase are derived from external sources. You are also advised to have all your financial arrangements, including a mortgage, in place prior to entering into a binding agreement.
The first thing you need to do is to instruct a registered local lawyer who will do everything that is required to enable you to complete a purchase. The lawyer's fees will be between 1.5-2% of the sale price and are subject to 15% VAT. Both the buyer and seller are responsible for their own legal fees. The process of purchasing a property in Barbados takes about 3 months.
Property changes hands by conveyance of title, evidence by the recording of the deeds and certified survey plans at the Land Registry. This is all handled by your lawyer, who will check the Purchase Agreement as drawn up by the vendor's lawyer before you sign and put down the 10% deposit. The vendor then signs this agreement and his solicitor holds the deposit in escrow. If you drop out of the purchase at this stage or after, you will forfeit the deposit.
Your lawyer searches the register to establish title and that the property or land is free from any charges or encumbrances. The vendor's lawyer draws up the conveyance, which is checked by your lawyer before you sign it and pay the balance of the funds. The conveyance then goes back to the vendor's lawyer where it is signed by the vendor and the sale is completed. In the case of some new builds after the 10% reservation deposit there will be a series of stage payments made through the construction period typically amounting to 85%, with 5% retention for completion of the property.
Property ownership can be in an individual's name, through a local or foreign company, a trust or other entity. In the case of a non-Barbadian it is common practice to make a purchase through a newly-formed offshore company outside Barbados that is registered to do business on the island.
Your lawyer and banker should be instructed to register any funds brought in from overseas to be registered with the Exchange Control Division of the Central Bank of Barbados to facilitate repatriation of these funds at a later date, should you sell the property or land. If the property is owned by an offshore company, then this is not relevant as all transferring of funds is done overseas.
Annual Property Tax
An annual tax is levied on the improved value of the property, which is revised every three year by the Land Tax Valuation Department. Ask your lawyer to get a copy of the latest Land Tax invoice. At present the figures are:
|Type of Property/Land||Value (Bds$)||Fee (%)|
|Residence||Up to 350,000||0.1|
|350,000 - 850,000||0.65|
|Hotel||50% rebate with Certificate from the Barbados Tourism Authority||0.65|
|Villa||25% rebate with Certificate from the Barbados Tourism Authority||0.65|
1% - which the vendor pays
Property Transfer Tax
2.5% - which the vendor pays (made up of 2.5% on the excess after Bds$125,000, or just 2.5% on Land alone.
No fixed sum, will depend on the value of the property and when it is sold.
Capital Gains, Inheritance and Gift Tax
There is no capital gains tax, inheritance tax or gift tax on Barbados.
Legal fees average out at around 1.5 - 2% of the purchase price. VAT is applied at 15%.
Agents' fees are usually 5% of the purchase price plus VAT at 15%.
Land Surveyor's Fee (Vendor)
Approximately Bds$1,500.00. Can be higher depending on the size of the property and whether a new Boundary Plan is required in order to complete the sale.
You might consider insuring your newly purchased property, which would come in at roughly:
0.4% for residences
0.6% for commercial buildings;
0.9% for hotels
Clearly this depends on the size of the property, area of land and other characteristics such as location, value and rental exposure.
Out of pocket expenses are approximately US$300 for the Vendor.
As a non-domicile of Barbados you must get permission to buy a property on the island from the Central Bank of Barbados under the Exchange Control Act. Your lawyer will do this for you. This is just a formality.
Mortgages are available for non-nationals at around 50%-70% of the property value, with a maximum term of 15 years, and must be approved by an offshore financial institution. You must be able to prove you can make the repayments exclusively from personal funds and not connected to any expected rental income. We are happy to provide reliable contacts for financial advice and mortgage providers.
Planning approval is required for all new construction work as well as for any extensive alterations to a building. Regulations to consider include being set back from the road, beach or cliff top as well as the height and density of the building. Our agent on Barbados will advise you as required.
Planning approval is usually granted within six to eight months depending on the nature of the Application.
Barbados is an island blessed with a thriving rental market for both long-term and holiday rentals. If you choose your property and management company well, rental returns will cover your running costs and give you a couple of free holidays a year. We do not recommend buying a property in the Caribbean for the rental income, but for the enjoyment of it and the increase in capital value which can be significant year on year. We will advise you on the rental agents that provide the best property management services. Their services will include seeing to routine maintenance, checking utilities and paying bills in return for an agreed fee, usually between Bds$500-1,000 per month, depending on the size of the property, the number of staff and the extent of the services required. All management services are subject to 15% VAT.
Banking is easy on Barbados with a broad range of currencies available to convert to either Bds or US dollars on island. You can use most credit or debit cards to get cash from the ATM's. However, with exchange rates and consumer confidence in constant flux it can be a good idea to use currency exchange specialists to arrange the transfer of funds to your local bank account or lawyer. In any event, you will always get a better rate of exchange from a specialist company and there will be no banking charges for the money transfers.
When you purchase your property in Barbados you will need to transfer money abroad. The common currency quoted for Caribbean property is the US Dollar. If you are buying foreign currency, it is certainly worth considering different options for the exchange because your bank will rarely offer the best rates and service when it comes to large currency transactions.
For the past ten years we have recommended a couple of highly reputable currency specialists who are able to offer commercial rates to private purchasers, subject to a minimum of £2000. If you would like our assistance to save your time and money, please give us a call on 00 44 (0)7949 615 628.
About Caribbean Property International
We at Caribbean Property International are Caribbean property specialists working in partnership with the most established and reliable Caribbean real estate agents around the islands. We have affiliate offices in Antigua, Barbados, Grenada, Nevis, Tobago and St Lucia.
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Our team has had over 35 years experience in the Caribbean and over 25 years experience dealing with Caribbean property sales and rentals. If you are looking for a Caribbean property investment come to us and we will help you to achieve your goals.
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