About the British Virgin Islands

The British Overseas Territory of the Virgin Islands, commonly called the "British Virgin Islands", is located about 60 miles east of Puerto Rico and which along with its largest trading partner, the U.S. Virgin Islands, forms part of the Virgin Islands archipelago. There are 36 islands and cays with almost as many rocks and islets totaling some 153 km2 (59 sq. mi.). There is a total population of about 27,000 (2005 est.), the majority of which live on the largest and central island of Tortola where the capital, Road Town, is located, and about 14 other inhabited islands with the other main islands being Anegada, Virgin Gorda and Jost Van Dyke. There is a pristine tropical climate moderated by the North East Trade Winds belt rising to an average of 32oC (89.6oF) and annual rainfall averaging about 1,150 mm (45.3 in.).

The main airport, the Terrance B. Lettsome International Airport (EIS), is located on Beef Island which is connected to the eastern end of Tortola by a modern bridge completed in 2002. The airport has a 4,300 m2 (46,000 sq. ft.) terminal building with a 1,415 m (4,642 ft.) runway facilitating international connecting flights through Puerto Rico, Antigua and Saint Maarten, although anyone may fly into the BVI privately by paying landing and parking fees to the Airports Authority. There are also regular ferry services between the main islands, as well as to and from St. Thomas in the U.S. Virgin Islands where larger aircrafts and jets fly direct from the United States and several private resorts have their own private boats for guests that compliment one of the largest charter yacht industries in the Caribbean.

There is generally good telephone and internet service connected via submarine cable to Bermuda with the Eastern Caribbean Fiber System (ECFS) submarine cable providing connectivity to the other countries and territories in the Eastern Caribbean. A single cable television service provides multi-channel television and about 6 privately owned radio stations operate on the island with access to several other regional stations. As of 2007, approximately 45 million kWh of electricity was produced while approximately 41.85 kWh was consumed with moderate interruption and resumption rates. While only certain parts of Tortola have access to a public water supply those areas also use private cisterns required by the Building Code to ensure catchment and access to a steady supply of safe drinking water.

A First Step: The Hazard Vulnerability Assessment

Since the terrain of the islands are largely mountainous and the islands are prone to tropical weather patterns which can cause various natural hazards, it is important to always obtain a Hazard Vulnerability Assessment (HVA) from the Department of Disaster Management, especially when purchasing undeveloped land to begin construction. Purchasing land without an HVA may result in the land being subsequently determined unsafe for certain construction due to the type of soil composition in the area or other factors.

The Cadastral Map

All land in the British Virgin Islands has been officially surveyed since the 1970s creating a Cadastral Map that enabled the registered land system. It is, therefore, important to get a copy of the Cadastral Map for the parcel of land for which you intend to purchase. Where there is a building or other structure on the land it is also recommended to obtain an "As Built" Survey. A contact list of recommended surveyors can be provided upon request.

The Appraisal

Appreciating that the purchase price for land in the British Virgin Islands is determined by several factors, it becomes necessary to ensure that the market price is determined by an independent appraiser who has experience and knowledge of the market. A contact list of recommended appraisers can be provided upon request.

The Agreement for Sale

The agreement or contract for sale normally contains certain provisions required by the Conveyancing and Law of Property Act (Cap. 220). However, the parties can, and sometimes actually do, exclude some of these provisions, which apply only if and so far as a contrary intention is not expressed in the agreement of sale. The contract is usually subject to financing and the approval of the relevant government authorities, so that the deposit (usually 10% of the purchase price) is refunded to the proposed purchaser in the event that financing or approval is not obtained. There is no legal obligation on either the buyer or seller until the agreement is duly executed, although a Letter of Intent and the payment of deposit may indicate an intention to incur legal obligations.

Anti‐Money Laundering Compliance

Every purchaser of land in the British Virgin Islands is required to complete due diligence information for your solicitor, your real estate agent and your lending institution in accordance with the anti-money laundering legislation. Failure to do so may render you liable to investigation and may generally cause liability issues for your attorney, real estate agent and your lending institution ultimately delaying or frustrating the sale.

After the Agreement is Signed

Once the agreement is signed various searches, applications, drafting, execution, stamping and registering will be made. The land searches are conducted at the Registry of Lands on Tortola where the system of registered land facilitates the rapid turnaround of information within approximately 3 business days. Additionally, searches are done on the cause list and files at the High Court Registry since a judgment against the seller operates as a charge upon all the land of the seller in the BVI and may affect the purchaser if the judgment creditor obtains an order for the sale of the land in satisfaction of the judgment debt. Additional searches are done at the Inland Revenue Department to determine if all property taxes have been paid by the seller since no transfer will proceed without all outstanding taxes having first been paid.

Land Holding License

Any person who does not "belong" to the BVI, which is roughly the equivalent of citizenship, or a company controlled by non-belongers, must obtain a license to purchase and hold land in the BVI. To discourage land speculation, the application to purchase undeveloped land must outline the intended use and attach a plan of the development. The plan must be approved by the Department of Town and Country Planning prior to any construction works. An application fee of $75.00 must be paid to obtain the building permit. A contact list of recommended architects can be provided upon request. The land must be developed in accordance with the approved plan within a specified timeframe, usually three years, otherwise a penalty of up to 40% of the purchase price may be incurred. A contact list of recommended contractors can be provided upon request. Prior to the deadline it is advised that an application for extension of time, up to 1 year, should be made. Also, if any design changes are to be made an application to amend the license is required setting out the nature of the intended changes in design. The more complicated the development the more time it will take for the relevant authorities to scrutinize the application, but generally a 12 month window should be provided in the agreement for sale to allow for the license approval as a condition precedent. The application form and additional information for the license can be provided upon request.

Incentives for Purchasing Land

  1. RESIDENCY. While owning land does not in itself provide residency status under the Immigration and Passport Ordinance (Cap. 130), it helps to determine that a person has an intention of residing permanently in the Territory, which is a criteria for granting residency.
  2. PIONEER STATUS. A person or business interested in developing land in the BVI may be granted pioneer status which provides relief from customs duties on capital equipment as well as a tax holiday for a maximum of 10 years. The application is made to the Premier's Office in accordance with the Pioneer Services and Enterprises Ordinance (Cap. 297).
  3. HOTEL AID. A person or business interested in building a hotel or expanding an existing hotel in the BVI may be granted aid in accordance with the Hotel Aid Ordinance (Cap. 290) which provides a tax holiday for a maximum of 20 years and relief from customs duties on capital equipment.

Property Financing

To raise real estate financing you can either use security-backed debt financing or equitybased financing using a private equity fund, a joint venture or similar structure. However, you chose to finance your purchase having the monies available prior to closure will be significant and so an early start to understanding what would generally be required in loans of this nature is absolutely critical. You may obtain a mortgage loan for up to 30 years if it is residential and 20 years if it is commercial. Interest rates generally range from 0.5 - 2 base points above the U.S. Prime Rate. A contact list of all licensed lending institutions can be provided upon request. Where the loan is for the construction of new structures on the land you will be required to obtain insurance on the property. A contact list of all licensed insurance companies can be provided upon request.

Completion

Normally within 30 days after the land holding license is issued completion of the sale takes place, at which stage the balance of the purchase price becomes due and payable. It is not necessary for the purchaser or seller to be present in the BVI for completion as this can be completed through BVI Solicitors.

Taxation

The transfer of the land itself is subject to stamp duty based on the purchase price or the appraised value, whichever is higher as follows:

12% - Non-Belongers

4% - Belongers

Additionally, there is property tax based on whether or not it is developed or undeveloped and also whether the land is owned by a belonger or non-belonger, including companies controlled by either group.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.