- September 30th, 2009
- in Yachting
The Facts – The British Virgin Islands House of Assembly has recently passed an amendment to the Non-Belongers Land Holding Regulation Act (Cap 122) (the Principal Act), designed to bolster the regulations governing the acquisition of land by non-belongers. This amendment, the Non-Belongers Land Holding License Regulation (Amendment), Act 2009, is designed to strengthen the rights of belongers while addressing a lacunae in the Principal Act through which non-belongers may acquire and hold land in the BVI without acquiring a license to do so.
Prior to the passage of this amendment, non-belongers and non-belonger companies purchasing land through a bank, in exercise of an interest in the land, such as a power of sale under a mortgage, or auction, were excluded from the necessity of obtaining a Non-Belongers Land Holding License (NBLHL) from the government.
This Amendment brings uniformity to the process of acquisition of land by non-belongers. With this amendment, non-belongers desirous of acquiring properties from commercial banks through foreclosures or auctions will now be required to obtain a NBLHL.
This move is designed to give the government greater control over landholdings by non-belongers while allowing for better and more accurate monitoring and regulation. The measure was also touted as being designed to safeguard and buttress the rights of BVIslanders and their interests in their property.
Potential landholders, individuals and bodies corporate are distinguished by reference to whether they are a belonger or non-belonger. Based on this categorization, landholders are accorded different privileges and obligations. As such, there are certain rights enjoyed by belongers in acquiring real estate.
The Virgin Islands Constitution Order 2007 (the Constitution) defines a person who belongs to the British Virgin Islands. This includes, among others, any person born in the BVI of a mother or father, who is a British overseas territories citizen (BOTC) by virtue of birth, naturalization or by virtue of descent from a parent born in the BVI, a person who is or was born in the BVI of a father or mother who belongs to the Virgin Islands, whereas a belonger company would be a company incorporated within the jurisdiction which falls outside the ambit of Section 6 of the Non-Belonger Land Holdings Regulation Act which defines non-belonger companies.
Some of the rights and privileges enjoyed by belongers include:
Land Holding Licence. Whereas non-belongers are required to first obtain a license in order to acquire and hold land in the BVI, belongers enjoy unhindered freedom in acquiring and holding real estate. This extends to undeveloped property.
First choice in the purchase of any property for sale in the BVI. Current regulations dictate that potential vendors first advertise the sale of their property for four consecutive weeks in a local newspaper. This is done to give belongers adequate notice of the intended sale of the property and an opportunity to make an offer for the purchase of the property. It is only in the event that no belonger purchaser consummates an agreement with the vendor that a vendor may proceed to enter an agreement with any non-belonger who desires to purchase the property. In this event, the non-belonger would be required to obtain a NBLHL, where proof of the advertisements must be present as part of the application process.
In order to prevent speculation by non-belongers in undeveloped property, licenses are usually issued with attached time-bound developmental commitments. Failure to meet these requirements could attract a pecuniary penalty of up to forty percent of the sale price should a non-belonger proprietor decide to sell the property. Additionally, the vendor would be required to seek the permission of Cabinet. However, belongers face no such hurdle as there are no time-bound requirements for any development of the property nor does the landowner face a penalty in the event of a sale of the undeveloped property. Thus a belonger can acquire and hold undeveloped property for later development or resale thus benefitting from any capital appreciation that may occur on the property.
Taxes. The assessment of Stamp Duty and property taxes is also determined based on the landholder’s status. Belongers enjoy a reduced rate of four percent (4%) for the payment of Stamp Duty versus twelve percent (12%) applicable to non-belongers. The same treatment applies in respect of property taxes where belongers are assessed at a rate of $10 per acre plus $3 for each additional acre of land or any part thereof while non-belongers are taxed at a rate of $50 for the first one-half acre; above one-half acres to one acre $150 plus $50 for each additional acre or part thereof.
The property market within the BVI is dynamic and represents an attractive investment option. With the new amendment and the added advantages enjoyed by belongers, property ownership should be considered as a worthwhile investment.