Property Purchase in Bermuda
Finding the Property
Bermuda real estate agents network and share listings readily therefore if you find an agent you are happy with they will search on your behalf through properties available island-wide that fit your criteria.
Bermudian or Non Bermudian?
See the
guidelines and explanations on the page property
purchase rules and regulations.
Funding the Purchase
Financing can be finalised once an offer is made, however it will help to have built a relationship with a loan officer and have a clear understanding of the financial ceilings that you may have to consider. This is often referred to as pre-approval and may be granted for a specific period say 3 months. This will allow you to act swiftly once you find the property to purchase.
A variety of institutions in Bermuda provide funds and these include:
It may also be advisable to consider the lawyer you will elect to use for conveyance purposes.
Making your Offer
Your agent will usually conduct negotiations on
your behalf and it may be helpful to specify your wishes in writing to ease
communications.
Building Inspection v Appraisal
You will probably have to have the property valued
by an independent professional appraiser who will provide a qualified written
opinion of market value for loan purposes. The fee for such a service is in the
region of $500.00.
Bermuda sales contracts contain a clause stating
the purchaser is presumed to have satisfied himself as to the condition of the
building(s) on the property. The Appraisal does not constitute a building
inspection and should you wish to assess the structure and condition of the
building prior to entering into a contract, you should specify this in your
offer. Such an inspection and report by a Building Surveyor or such like may be
in the region of $1000.00.
Offer Agreement
As soon as an agreement of price and essential
terms is reached it is recommended that it is documented in the form of a
signed Offer Agreement 'subject to contract' by your agent on a standard form
or by a simple exchange of faxes.
The Vendor will draft a sales agreement, which will
take no more than a few days. The Vendor will agree that the contract reflects
the terms and then you will receive a copy. It is advisable to have your lawyer
review it before you sign. This agreement summarises instructions for handling
the actual conveyance.
Plans for Developing the Property
If you have development plans drawings can be
produced and submitted to the Department of Planning prior to the closing date
and included as a condition to the contract .
Bermuda's Department of Planning ultimately
determines what can and cannot be done by way of development, however their
guidelines are set out in written form. The Bermuda Plan 1992 - Planning
Statement contains the details of allowable site coverage, set backs, etc. The
potential for subdivision will be governed by the zoning of the area.
Residential properties are typically zoned either Residential 1 or Residential
2. Residential 1 is higher density than Residential 2.
The process from submission to approval takes around 4
months. An architect will provide a comprehensive professional service from
design consultation to drawings and construction at approximately 10% of the
building cost. For example for a two bedroom/two bathroom home with a studio
apartment comprising 2000 square feet:
2000 square
feet @ say $250.00 per square foot =$500,000
Architect Fees etc @ say 10% =$50,000.00.
Closing the Sale
Sales contracts usually specify that the closing
take place within a set time and a sale can close as fast as 28 days. If a
License to Acquire Property is required it will typically take about 3 months
to process. Other clauses inserted in the contract may also affect the date of
closing.
Closing Costs
In Bermuda the price quoted is normally 'gross'
price and implies that the vendor and purchaser will split half of the stamp
duty and half of the conveyance cost. (Add 2.5% to “guestimate” costs.) There
are occasionally variations such as variations 'net' price whereby the
purchaser assumes a higher percentage or proportion of costs (add 10% to
“guestimate” costs.) These will be clarified by the agent prior to the Offer
Agreement and included in the documented terms.
A couple of examples are attached to illustrate how
these costs add up and what may be included.
See our table of examples
Conveyance costs are on a decreasing sliding-scale
and any extra legal fees incurred by either party for any reason, will be paid
directly.
Taxes On Property
Land Tax is currently the only property tax in
Bermuda. It is relatively low by world standards and based on the ARV
(government-assessed 'Annual Rental Value'), not the 'value' of the property.
Land tax is paid biannually and calculated annually on a sliding scale.
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