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Tax, Compliance Woes Put Realtor Into ‘Back Seat’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

An Abaco-based realtor says he is “taking semi-retirement” from the industry due to the combination of tax hikes and an increased regulatory compliance burden.

James Rees, broker/owner of Abaco Island Properties, told Tribune Business that the ever-rising real property taxes and bureaucracy were continuing to frustrate the “ease of doing business” when it came to closing real estate deals.

And he blamed the enhanced client due diligence demands imposed by reforms to the Financial Transactions Reporting Act (FTRA) for turning real estate brokers and agents into the equivalent of “banks” and policemen.

“I’m kind of taking a back seat to real estate because of this and the new compliance requirements. I’m taking semi-retirement,” Mr Rees told

Tribune Business.

“It’s a combination of all sorts of things: Tax compliance, and they’re treating us just like a bank. You have to have a compliance officer and all sorts of controls.”

Giving his verdict on what he sees as a bleak future for small realtors, Mr Rees added: “We used to be able to close a transaction in 90 days, and now it takes six months.

“It’s very annoying to the buyer. In the US, they close in two weeks. It’s back to the ease of doing business.

“I don’t see it going anywhere positive in the meantime. The younger people in the business are going to be fighting their way, struggling to make money. “

Peter Dupuch, president of Nassau-based ERA Dupuch Real Estate, joked to Tribune Business of the enhanced Know Your Customer (KYC) requirements: “I remember when we used to sell real estate.”

He confirmed that the Bahamian real estate industry was “going through a lot of changes with the Compliance Commission”, the anti-financial crime regulator for many non-financial services industries, and the FTRA’s demands for realtors to conduct Know Your Customer (KYC) due diligence on their clients.

Mr Dupuch, echoing the views of the Bahamas Real Estate Association’s (BREA) current and past presidents (see other article on Page 1B), said the imposition of such requirements was unnecessary because realtors did not hold funds – such as deposits and purchase price payments – belonging to clients in property deals.

“Realtors don’t accept money like everyone else; the lawyers accept the money,” he argued. “Yet they’re treating us as if we do. We have to register as a financial institution, hire a compliance officer, and make reports.

“I remember when I used to sell real estate. Now I’m running a website and doing a lot more paperwork with the KYC and compliance changing a lot in the next couple of years. It’s crazy.

“I worry about the small one man band guys that work for themselves, and who now have to hire a compliance officer when it’s only them in their business. If affects us, we have to hire someone, but we can do that whereas many can’t.”

Mike Lightbourn, Coldwell Banker Lightbourn Realty’s president, told Tribune Business: “I don’t know how all this KYC stuff came upon us. We have to verify the client now before we sell them anything.

“You’ve got to verify a customer about four to five times’. It’s the agent, the lawyer, the bank, and the Investments Board. And each office has to have a compliance officer.”

He added: “At one point every person licensed as a real estate broker had to sign up and have your name registered, putting yourself in the firing line.

“Now I think it’s the main broker in every office that has to sign up, and the deadline is tomorrow [today]. We’re financial institutions, and developers fall into the same lines.

“We’ve been told places like Turks & Caicos, Bermuda and Cayman have less difficulty because they’re part of the UK. I don’t think their issues right now are as severe as ours.”

Comments

ThisIsOurs 8 months, 1 week ago

Well you're suffering because real estate is the number one means to launder money. Would be interesting to compare the requirements in the member states embossing the new requirements though.

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DWW 8 months ago

If you believe that, you are sorely uninformed. To buy real estate you have to provide proof of funds (ie prove it is legit) to: (1) the buyer's lawyer, (2) teh buyer's lawyer's bank, (3) Foreign Investment Board, (4) Central Bank, (5) the sellers lawyer and finally (6) the seller's lawyers bank. And the Bahamas claims we are improving the ease of doing business...

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DWW 8 months ago

You would think that instead of wasting everyone's times, the Bahamas Government might expend more energy in improving land tenure and creating a proper reliable land registry. I hear hthe registry has lost an untold number of people's papers... But no, we have to provide a copy of 3 ID's and a utility bill (which the post office can't deliver) whenever we want to use the bathroom. Bravo Well Done Beaurocrats of the Bahamas. I say well done. you have succeeded in securing your cushy government jobs for the rest of your awful lives.

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