For most people, the purchase of real estate is the largest acquisition they will ever make.
Yet how many of us really understand the laws and the language as we sign our life-changing documents?
To help break it down, we enlisted the expertise of Neil Molyneux, a senior associate in the Bermuda office of law firm Appleby, who is a property law specialist and a member of the firm’s property team.
The legal framework:
- Bermuda’s land law is based on English common law but modified by statutes and Bermuda court decisions which address Bermuda’s particular requirements. The primary legislation governing the transfer of land is the Conveyancing Act 1983 as modified by the Land Registration Act 2011.
- For unregistered land, title is demonstrated through a “chain of deeds” going back at least 20 years. After land becomes registered, title is demonstrated by obtaining a copy of the register for the property from the Land Title Registry.
Property in Bermuda is held under two distinct legal interests:
- Freehold (or fee simple), which represents ultimate ownership, with absolute rights over the land and buildings forever; or
- Leasehold, which represents an interest for a fixed time period, often 999 years for an apartment/condominium.
Co-ownership is as:
- Joint tenants, where a deceased’s interest automatically passes to the survivor; or
- Tenants in common, where each owner holds a distinct share that can be bequeathed to heirs or separately sold.
Mr Molyneux said: “Due to limited land, the Bermuda Immigration and Protection Act 1956 imposes restrictions on foreign ownership.”
The term “internationals” refers to those who are not legally Bermudians or Belongers (British Overseas Territory citizens). Permanent Resident Certificate holders are internationals for property purposes (with some concessions beyond this article’s scope).
- Licensing: internationals must apply to Government for an Acquisition Licence. This process involves vetting financial standing and character references.
- Annual rental value restrictions: internationals are restricted to high-value homes, eg, a minimum ARV of $126,000 for standalone homes.
- Inventory limits: internationals are typically prohibited from purchasing vacant land.
Mr Molyneux added: “Bermuda has no capital gains tax, but transactional costs are high.”
Payments to Government are:
- Stamp duty: calculated on the value transferred on a sliding scale, reaching up to 7.35 per cent for high-value properties.
- Licence fees: internationals pay a one-time fee for their Acquisition Licence, which ranges from zero per cent (for a hotel/resort unit placed into hotel inventory), to 12.5 per cent (for a standalone home) of the purchase price depending on the property type.
- Land tax: all property owners pay a bi-annual tax based on the property’s ARV (set by government).
Regarding zoning and planning, Mr Molyneux said: “Development and building permits are controlled by the Department of Planning. The Bermuda Plan dictates land use, conservation zones, and building heights.
“Given Bermuda’s tough environment (high humidity, salty air and being situated in ‘hurricane alley’), the building code requires features, such as concrete blocks and white-stepped limestone roofs, which allow for water catchment.”
The process involves distinct classifications:
- Planning permission (using Form DAP1): required for most development, including new buildings or material use changes. This involves public advertisement and review by the Development Applications Board.
- Building permits: with planning approved, a building permit ensures construction meets the safety standards set by Bermuda’s Building Code. Note the code is updated from time to time. Older plant and apparatus, if installed to code, is grandfathered, however modifications require retrofitting to current code.
- Permitted development permits: minor works may bypass full planning review, which the Department aims to process within five working days. This permit confirms planning permission is not required.
Planning Department applications are submitted via the online Customer Self Service portal. Fees are based on project type and square footage.
