PUBLICATION

Acquiring Property in Bermuda

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Preface

This publication has been prepared for the assistance of anyone who wishes to

acquire residential property in Bermuda. It deals in broad terms with the

requirements of Bermuda law and, where applicable, the policies of the Bermuda

Government. It is not intended to be exhaustive but merely to provide general

information to our clients and their professional advisers. In particular, it is not

intended to deal with acquisitions by non-Bermudians married to Bermudians, non-

Bermudians acquiring property for their Bermudian children or grandchildren or by

corporations since, in each case, special rules apply.

We recommend that our clients seek legal advice in Bermuda on their specific

proposals before taking any steps to implement them.

Conyers Dill & Pearman

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TABLE OF CONTENTS

1. ABOUT BERMUDA

2. ACQUIRING PROPERTY

3. LICENCE TO ACQUIRE PROPERTY

4. LICENCE FEE

5. ACQUISITION OF A HOUSE

6. ACQUISITION OF APARTMENTS OR CONDOMINIUMS

7. ACQUISITION OF TOURIST ACCOMMODATION OR HOTEL RESIDENCES

8. ACQUISITION OF UNDEVELOPED LAND

9. LETTING OF PROPERTY

10. ACQUISITION BY WAY OF INHERITANCE, VOLUNTARY CONVEYANCE

ETC.

11. TITLE TO PROPERTY

12. TAXES

13. CONCLUSION

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1. ABOUT BERMUDA

A solitary outpost of beauty and civility in the mid-north-Atlantic, Bermuda enjoys a

delightful sub-tropical climate entirely incongruous with its northerly latitude. The

proximity of the Gulf Stream accounts for the mild temperatures which, combined

with fertile soil, have produced a verdant island, ablaze with the colours of ever-

present flowers and shrubs.

Abundant natural beauty has been equally matched by astonishing economic success

so that Bermuda can also boast a highly educated and professional work-force,

backed by a sophisticated infrastructure of support services, which have combined to

transform what was once merely an idyllic holiday retreat into a dynamic centre for

international offshore business.

First settled in 1609, Bermuda has its own democratically elected Parliament dating

from 1620, the oldest in the British Commonwealth outside the United Kingdom. As

Britain’s oldest existing colony, Bermuda has close ties with the United Kingdom

which is responsible for the foreign and defence affairs of the island and provides a

valuable frame of reference for the local legal system. While the latter is independent,

English cases are of strong persuasive authority before the Bermuda Courts and,

indeed, final appeal lies to the Judicial Committee of the Privy Council.

The eastern seaboard of the United States is two hours flying time from Bermuda with

daily flights to major cities. There are flights to London of approximately seven

hours’ duration most days each week. Ease of access is complemented by efficiency

and comfort on arrival. First rate hotels and restaurants and easily available water

and land sports afford enjoyment and relaxation to the visiting business people

already attracted by the exceptional communications and commercial expertise of the

Island.

2. ACQUIRING PROPERTY

The Islands of Bermuda comprise an area of approximately 24 square miles,

measuring some 21 miles in length with an approximate maximum width of 1 mile.

The physical constraints on residential property will therefore be apparent and the

stated intention of the relevant legislation is to preserve the majority of the housing

stock and undeveloped residential land for Bermudian ownership. However, the

Government recognises that there is a limited Bermudian market for the higher priced

properties and it is these properties, together with others that are linked to hotel

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developments, that may be acquired by non-Bermudians for their private residential

use.

3. LICENCE TO ACQUIRE PROPERTY

A non-Bermudian wishing to acquire property in Bermuda must obtain a licence from

the Minister responsible for Immigration. Applicants must complete the prescribed

form and are required to supply a banker’s reference and two personal references

from people who have known them for at least three years. The referees need not be

Bermudian, although this is preferable. Evidence must also be given to show that

Bermudians have been given a fair opportunity to acquire the property. Copies of

advertisements appearing in local newspapers are currently satisfactory evidence.

A licence, when granted, will contain a number of conditions including:

(a) that the property is used for the private residential use of the licence

holder and his household only;

(b) that the property shall not be developed or altered in such a way so as

to add to the number of potential dwelling units;

(c) that the property may only be rented out or used for profit in

accordance with the specific permission of the Minister (Note: this

restriction does not apply to licences to hold hotel residences or tourist

accommodation or any licences granted to non-Bermudians who have

Permanent Resident’s Certificates);

(d) that the property may not be subdivided and its boundaries may not

be changed; and

(e) if the licence holder holds (whether directly or indirectly) more than

one other property in Bermuda then he must, within 12 months of the

date of approval of the new licence (or such period not exceeding three

years as the Minister may allow), divest himself of such other property.

4. LICENCE FEE

The fees for the grant of a licence issued by the Minister responsible for Immigration

to a non-Bermudian to acquire property in Bermuda are currently:

 Purchase of a freehold house – 12.5% of the value of the property

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 Purchase of a leasehold condo - 8% of the value of the property

 Purchase of tourist accommodation or hotel residence with election to keep for

private use - 6.5% of the value of the property or interest

 Purchase of tourist accommodation or hotel residence with election to place in

hotel inventory - 0% of the value of the property or interest

 Purchase of either a freehold house or a leasehold condo by a permanent

resident’s certificate holder – 6% of the value of the property

 Purchase of any other type of land not mentioned above however acquired - 5% of

the value of the property or interest

5. ACQUISITION OF A HOUSE

In order for a freehold house to qualify for purchase by a non-Bermudian (other than

one with a Permanent Resident’s Certificate), it must have an Annual Rental Value

(“A.R.V.”) at least equivalent to the minimum established by the Government from

time to time. Currently the minimum A.R.V. is set at $126,000.00, ensuring that only

the higher valued properties are available for non-Bermudian purchase. (It should be

noted that the A.R.V. is established by the Land Valuation Office from time to time

and the amount of Land Tax payable is calculated as a percentage of the A.R.V; the

A.R.V. is a notional value and does not indicate the amount of rent a property would

achieve if let on the open market).

Further restrictions exist to prohibit non-Bermudians from acquiring multi-unit

dwellings, except those which are already owned by non-Bermudians and subject to

one of the units having an A.R.V. of, or in excess of, $126,000.00. Non-Bermudians are

not permitted to own more than two residential properties (whether a house,

apartment or condominium) at any one time, with the only exception being that a

non-Bermudian will be permitted to purchase a third property on condition that the

individual disposes of the original property within twelve months (or such longer

period up to a maximum of three years as the Minister may approve) of the issuance

of the licence for the third property.

In general, non-Bermudians will not be allowed to sub-divide land and will be

required to sell the property as a whole single unit. An exception may be made where

the property has more than one dwelling and the sub-division would result in the

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non-Bermudian retaining a dwelling with an A.R.V. in excess of the minimum and the

portion divided for sale being sold to a Bermudian.

6. ACQUISITION OF APARTMENTS OR CONDOMINIUMS

Certain non-Bermudians (being Permanent Resident Certificate holders, holders of

residential certificates and individuals with a close Bermuda “nexus” (such as the

non-Bermudian parent or child of a Bermudian)) may be permitted to acquire any

condominium regardless of its A.R.V. Prior to changes to the Immigration Act made

in 2015, all other non-Bermudians were eligible for licences to acquire condos with

A.R.V.’s over a specified minimum level. We understand that the restrictions recently

introduced were not intentional and anticipate further legislation in the near future to

allow all non-Bermudians to acquire condominiums with A.R.V.’s of $25,800.00 or

more.

7. ACQUISITION OF TOURIST ACCOMMMODATION OR HOTEL

RESIDENCES

A non-Bermudian may be permitted to acquire a “hotel residence” which is property

intended for private residential use that was constructed as part of a hotel

development.

A non-Bermudian may also be permitted to acquire tourist accommodation. Tourist

accommodation is accommodation within the grounds of a hotel such as a hotel room

or suite or fractionally owned unit. Where the non-Bermudian is an individual, the

tourist accommodation may only be occupied by the licence holder, his family and

guests who are staying with him or his family or, if the tourist accommodation is

being managed by a property management company, paying transient guests. Where

the non-Bermudian is an exempted company, the tourist accommodation may only be

occupied by a tenant pursuant to a rental agreement which has been approved by

Government, to a paying transient guest if the tourist accommodation is being

managed by a property management company, or a transient guest with the

permission of the exempted company.

In the case of fractionally owned tourist accommodation, licence holders must agree

on a defined reservation schedule for use of the unit during the year.

An application for a licence to acquire or hold tourist accommodation or a hotel

residence must include an election as to whether the applicant will place the

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accommodation or residence in the hotel inventory or keep the accommodation or

residence for his private use including, in the case of a hotel residence, renting it out

privately. The land-holding charge will be calculated according to this election (0%

where the accommodation is placed in the hotel inventory and otherwise 6%). If,

following an election to put the accommodation or residence in the hotel inventory,

the applicant wishes to keep it for private use only, the Minister must be notified and

the applicant will be required to pay the licence fee at the rate applicable for private

use.

8. ACQUISITION OF UNDEVELOPED LAND

Save in limited circumstances (generally where the non-Bermudian has a Bermudian

nexus (Bermudian spouse/parent/child) the sale of undeveloped residential land to

non-Bermudians is prohibited.

9. LETTING OF PROPERTY

A non-Bermudian (other than one who holds a Permanent Resident’s Certificate who

may let without restriction) who owns a house or a condominium must obtain the

permission of the Minister responsible for Immigration in order to let the same.

Permission will seldom, if ever, be granted for a period in excess of twelve months in

the first instance and renewal of permission will be considered on its merits at the

time. Further, permission will not normally be given if the owner intends to reside in

Bermuda during the rental period. In addition, a non-Bermudian who owns a house

(but not a condominium) may, with permission, rent to non-Bermudian visitors in

which case a Government tax (currently 7.25% of the rent paid or $72.50 whichever is

greater) will be payable. No tax is payable on rentals to Bermudians or bona fide

residents of Bermuda.

A non-Bermudian who owns a hotel residence may allow it to be occupied by tenants

who either are Bermudian or who have permission to reside in Bermuda (such as

those with a work permit or residential certificate) without any requirement to obtain

Ministerial consent.

A non-Bermudian who owns tourist accommodation may rent it to paying transient

guests provided that this is done by placing it in the hotel inventory.

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10. ACQUISITION BY WAY OF INHERITANCE, VOLUNTARY CONVEYANCE

ETC.

Generally a non-Bermudian will not be granted a licence to hold real estate in

Bermuda as a result of voluntary conveyance, deed of gift, devise, inheritance,

purchase, lease in excess of five years or any other means of acquisition unless the

property is one that is available for purchase by non-Bermudians (i.e. is over the

requisite A.R.V.). However, special rules apply in the case of non-Bermudian spouses

where the property is owned by the other spouse and non-Bermudian children of a

Bermudian where the property is owned by the Bermudian parent.

11. TITLE TO PROPERTY

Generally a non-Bermudian who is granted a licence to acquire property in Bermuda

will be required, under the terms of that licence, to hold the property in his individual

name and will not be permitted to hold title through a company or a trust. This is

intended to prevent property from remaining in non-Bermudian ownership

indefinitely. A limited exception exists whereby a property may be held in a trust for

a limited time period not exceeding the life of the named beneficiary or surviving

beneficiary where there is more than one. An application for a licence permitting

such ownership structure will be considered on a case by case basis.

12. TAXES

There is no income or profits tax, withholding tax, capital gains tax, capital transfer

tax, estate duty or inheritance tax payable by persons ordinarily resident in Bermuda.

As previously mentioned, Land Tax is payable by a property owner and is calculated

as a percentage of the A.R.V. Certain deeds, for example, conveyances of freehold

and leasehold property and mortgages, attract ad valorem stamp duty. Further, ad

valorem stamp duty is payable on the Affidavit of Value of the estate of a person who

dies owning property in Bermuda, but only upon the value of the Bermuda asset.

13. CONCLUSION

This publication is intended to cover the general aspects of acquiring property in

Bermuda. For further clarification or more detailed information please contact our

Real Property Department.

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This publication should not be construed as legal advice and is not intended to be relied upon

in relation to any specific matter. It deals in broad terms only and is intended merely to

provide a brief overview and give general information.

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