Lack of licences for foreign buyers and new property tax for overseas investment in Caribbean island
Property laws that restrict overseas buyers and the introduction of a new property tax in the Caribbean islands of Trinidad and Tobago may reduce demand from international buyers, it is feared.
The main concern is that promises from the government in Tobago to speed up a license system have so far come to nothing.
In 2007 a new law was passed requiring all foreigners to have a license to buy real estate on the island.
But since the order passed, no licenses have been issued to foreign buyers.
‘The regulators have been very slow to finalize a transparent procedure for obtaining the licenses,’ said Nicole Ferreira-Aaron, a partner at Hamel-Smith & Co, a law firm based in Port of Spain.
She also pointed out that there are restrictions on neighbouring Trinidad where international buyers can buy up to one acre of property for residential use as long as they pay in an internationally traded currency such as US dollars.
On top of this a new Property Tax Bill, due to come into effect on January 01, has changed the basis on which taxes are levied on real estate from an annual rateable value to an annual rental value and this could make owning a property on the islands more expensive.
‘Trinidad and Tobago was very popular with buyers from the UK, Canada and the US.
It seems the combination of the global slowdown, reports in violent crime and new laws have dampened the appetite from international buyers,’ said Nicholas Marr chief executive of international property portal Homesgofast.com.
Even Trinidadians are confused by the new property tax law and do not yet know what the new values will be.
There was considerable opposition to the law and it was only fully ratified yesterday.
‘Trinidad and Tobago is in competition for investment with other Caribbean islands and uncertainty is the biggest killer for investors.
Many overseas buyers who have been sitting on their hands in 2009 are looking for places to buy in 2010.
I am afraid that the new laws will put Trinidad and Tobago off the investment list if things are not sorted out soon.
Investors have a huge choice of places to put their money and it does not take much for them to be put off a particular region,’ added Marr.
The new property law is also causing worries about the seizure of property.
Under the bill, the Government has the right to seize and sell the property of delinquent property owners, in instances where the property tax is not paid for a period of five years.
Like most of the world, the real estate market in Trinidad and Tobago has seen a steep decline in prices since the middle of 2008.
The average price of three bedroom property has fallen from $151,515 to $136,523, according to figures from the Central Bank, and luxury real estate has seen a fall of 18 to 23%.