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Call for changes to regulations on second home ownership

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Published On:Wednesday, March 10, 2010

By NOELLE NICOLLS

Tribune Staff Reporter

nnicolls@tribunemedia.net

LAND developers are calling for changes to the regulations governing second-home ownership in The Bahamas.

The call is the latest move in a tug-o-war between those advocating more strict regulations, and those arguing for a relaxation.

Real estate developer Paul Moss said the minimum threshold for investing in the real estate market should be increased for those seeking accelerated consideration for permanent residency. Currently the threshold is $500,000.

"The threshold ought to be increased to perhaps $1.2 or $2 million. Half a million is typical for what you will pay for a house anywhere in New Providence. Even in government subdivisions the appraised value of some homes is over $200,000, so $500,000 is clearly inadequate for someone coming to spend money on a home seeking permanent residency."

When the programme started in 1993 under the previous Free National Movement administration, the threshold was $250,000, according to Mr Moss.

Second-home owners, are typically issued a home owner's card, which allows them to reside in their local home for about nine months. Permanent residency status allows them to live and work unrestricted.

"With the high cost of energy and building material, the average home for a Bahamian is reaching (the threshold) and those who want to come in and take full advantage of what the Bahamas has to offer ought to pay more," he said.

The most significant economic contribution from the second-home market is perhaps government fees, such as the 10 per cent stamp duty, which is a one time payment calculated as a percentage of the value of the sales transaction, and the annual real property tax, which is calculated based on the percentage scheme.

Under the Progressive Liberal Party government there was a cap on real property tax at $35,000, according to George Smith, Realtor and former Exuma Member of Parliament. This was lifted by the current government. Both fees contribute significantly to the public purse.

"We have to appreciate we are in the global market. To gain some advantage and competitive edge we have to look at what the world is doing, and review legislation to make sure it keeps you in the market and keeps you viable. Whatever happens in the Bahamas successfully in tourism, many countries have copied and they have been able to build upon what we did," said Obie Wilchcombe, opposition spokesman on tourism.

Mr Smith is arguing for the cap to be reinstated. He also has little sympathy for critics of foreign land ownership, arguing that there is no shortage of land in the Bahamas, contrary to popular opinion, and second-home developments do create jobs, just of a different kind to up and down resort developments.

"Yes, you do want in certain areas to build hotel rooms because they are more labour intensive, but the people who get jobs working in Lyford Cay and other such places in a long term way they become greater beneficiaries because of the relationships that are formed over time. It is not a question of either or it is a question of both and location," said Mr Smith.

One of the latest developments exposing itself to criticism along this line is Serenity Point, a planned high-end 40-acre gated residential community, targeting second-home owners. It is comprised of 24 beach-front lots, hilltop sites and elevated estates on the five-mile long Schooner Bay Beach, in Great Abaco.

When asked to respond to critics of the development, Alex Nihon II, president of the development company, Anco Lands, said: "The (Abaco) coastline is 130 miles long. We are only using 850 feet here. Need I say more."

Some developers argue, on islands where there is not a heavy concentration of population, like Eleuthera, Exuma, Andros, quality jobs are more important to large numbers of jobs. In areas, such as Cable Beach, New Providence, many rooms and many jobs are more important.

Real estate developer, Mr Moss said: "I am not against it, but I am against it being cheapened and it has been cheapened.

"Half a million for any wealthy person in the US to acquire is not significant. A major deal to put money into the economy is $2 million. That is going to put real money into the professionals involved. That makes more sense."

Reader Comments - 6 Total

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Posted By: bright side of life On: 3/11/2010

Title: one time fee?

If you target wealthy pensioners, statistically, this property will be sold many times.
If you count the back flow of investors that after years leave again, you sell again.
Check why they leave and work out that problem. Get to analyze the reasons why even Bahamians leave the nation and solve this first. I agree with most of the comments that a second home owner helps create jobs, but rather temporary. It might work for a while, but needs to be replaced with steady long term jobs. Big brother US even attracts with better investment proposals for foreigners. A government can give guidelines but the spirit of investors must be in the hands of the individual. Flies you catch with honey,... no vinegar

Posted By: the other side On: 3/11/2010

Title: Stop fooling with the future please

Mr. Moss what are you marketing? Sunshine? Homeowners are one type of investors and NOT giving the right to work makes a bad selection for the nation. Who can afford this? Be real instead of real estated. You want a club of frustrated homeowners, beginning with the wives and children? You want the cream of mob into the islands?
This country needs a solid economic and political basis for real investors and also a win perspective, other than words. The islands need production in whatever form and that you get through incentives and benefits. If you want to play like "other nations" do what other nations set up. I think the Bahamas is "the" place in the world with the highest pay for work permits. Stop brainwashing the people with fairy tales and check reality. Go and live abroad and when you want to come back, I am sure you will revisit your dreams. The island needs solid job creation and not everything just working opposite to it. Creating a paradise on a grave yard is difficult.

Posted By: Stanley Jackson Sr. On: 3/11/2010

Title:

Why are we still bickering and playing guessing games over this issue? All one needs to do is compare what investments other jurisdictions in the region require for permanent residence and make sure we remain competitive. Bahamian politicians have perfected the art of wasting time while accomplishing nothing. The Bahamas has English laws on its books well over 100 years old and "changes" the PLP and Mr. Pindling were supposed to "free" us from under the then UBP were never realized i.e. the land quieting act, generation property etc. still remain today. The vast majority of ill's and problems in this Nation can be solved almost overnight simply by copying how these same problems were solved in other Countries. There is no need for Bahamian politicians to pretend to debate or reinvent the wheel! Stop TALKING AND START WORKING!!!

Posted By: Erasmus Folly On: 3/11/2010

Title: BS in BS

Moss is not smart on this one. At all! We are starving for more foreign investment as it is and he wants to make it harder. Permanent residency does not confer the right to vote or the right to work, so, please, think things through a bit more before doing the cheap old PLP dance with the natives to score silly points with silly people. Go shuffle elsewhere!

Posted By: Dwayne Wallas On: 3/11/2010

Title: Incorrect statement

The permanent residency that a foreign national receives by investing $500k or more in this country DOES NOT INCLUDE THE RIGHT TO WORK.
Mr. Moss is just trying to score politcal brownie points. The majority of the condos in this country are owned by foreigners, and a large number of them are in the $500k to $700k range. If the minimum investment was raised, all of these condo projects would stall and the country would lose out on tons of construction jobs. Construction is one of the major economic pillars in this country, and if the limit was raised it would deal a heavy blow to this sector. Not an opportune time considering many construction companies and workers are out of a job right now.
Further, the family islands typically have lower prices points that those in Nassau. Again the argument comes up regarding applying principals that work only in the big city to all of the rural areas of this country.
We need business persons running the country not pontificating lawyers...

Posted By: concerned citizen On: 3/11/2010

Title: second homes

This is exactly what happens when we get to Greedy! Nonsense, look around and you wil find the Bahamas has never made the list of "Best places to Retire", why because we are too dam over priced and expensive, everything!!! is out of reach, beaucracy, etc. Even places like Georgia are putting out ads to attract Foreign Investments. It is all about making your selection wisely. I do understand his economics for doing so, but believe the current 500,000 requirement is fine, because thee are others who invest beyond that, and it has not changed a thing! The Bahamas should be looking at common sense ways to reduce the bottleneck and backwardness in our systems, so that we can begin to prosper as a nation..not go backwards!

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