New Bill: Companies & Residential Real Estate
[Updated with video] Education & Economic Development Minister Dr Grant Gibbons spoke today [Mar 17] about a recently tabled Bill which will allow for local and exempt companies to purchase specific residential properties.
On March 7th, Dr. Gibbons introduced the Companies Amendment Act 2014 [PDF] in the House of Assembly, and he said he anticipates it will be debated this coming Friday [Mar 21].
The Minister said, “I wish to make it very clear that our approach toward corporate landholding is one of caution. Our land is a scarce resource. It is precious.
“We are very careful to balance this fact with the need to stimulate our economy. With this in mind we have crafted the Policy to ensure that restrictions remain on the capacity of companies to acquire and hold land. The Policy is appropriate and robust.
“The main change between the previous situation and the new Policy is that now local and exempt companies will be allowed to purchase residential property.
“Let me be clear here. The residential properties they will be allowed to purchase are very specific and are the properties that are already available to ‘restricted persons’.
Dr. Gibbons continued, “This restricted person category is a designation that the Department of Immigration uses for foreign nationals or persons who do not possess Bermudian status.
“Residential properties with an Annual Rental Value, or ARV, of $177,000 and above are the properties available to restricted persons. There are about 250 high end residential properties in this category, as well as a number of condos that are similarly designated.
“The Policy will prevent companies from renting these properties in the market,” added Dr. Gibbons.
“The proposed policy changes will also allow, within certain criteria and restrictions, exempt companies to hold commercial property if it is used for the specific purposes of their business. Similar provisions will apply to local businesses.
“We believe that with passage of this Bill, several properties that are currently on the market will be acquired. This will produce revenue for the government via stamp duty.
“And, most importantly, this will produce jobs in the construction sector. Many of the properties, once acquired, will undergo renovation and redevelopment.”
Dr. Gibbons’ full statement follows below:
Good day everyone,
On Friday, March 7th I introduced a Bill in the House of Assembly entitled the Companies Amendment Act 2014. This Bill proposes a number of important changes to the ability of both local and exempt companies to acquire and hold land in Bermuda under the Companies Act 1981.
The Bill also refers to a new written Policy that will guide decision making for corporate landholding. Earlier today, I tabled this Policy in the House.
I anticipate that the Bill and the associated Policy will be debated this coming Friday, March 21st.
There are a number of reasons for introducing these changes and they include:
- To provide, for the first time, a clear and transparent written policy on corporate landholding in an otherwise cloudy area of law and practice.
- To stimulate turnover in the real estate market and create jobs in the construction sector, and
- To make Bermuda a more attractive and competitive jurisdiction and to further strengthen the bond that exempt companies and their senior executives have with Bermuda.
Over a number of years, the policy, process and procedures used by the Minister to provide consent for companies to hold land has been chopped and changed as a result of changes to the Act. These policy changes were apparently not written down, nor was there adequate consultation or consistency in application. This has led to years of confusion and problems in practice.
It has also led to some companies being unable to pass on clean ownership title to their property when they wished to sell. The Ministry is aware of at least 10 such cases that have been brought to its attention over the last couple of years. There may be many more, as some companies will not realize there is a problem until they attempt to sell their property.
The Bill addresses this “title” issue. If adopted, the Minister will be able to provide rectification to situations where, if a company can prove that they should have had proper ministerial consent, they will be able to receive it. This consent will then put them in a position to pass on clean title to prospective buyers.
Another feature that has been missing up until now, is a clearly articulated, written policy to guide decision-making on ministerial consent for companies to hold land. The Bill and Policy combined will finally provide written clarity on the law and the process for companies to acquire land in Bermuda.
However, I wish to make it very clear that our approach toward corporate landholding is one of caution. Our land is a scarce resource. It is precious. We are very careful to balance this fact with the need to stimulate our economy. With this in mind we have crafted the Policy to ensure that restrictions remain on the capacity of companies to acquire and hold land. The Policy is appropriate and robust.
The main change between the previous situation and the new Policy is that now local and exempt companies will be allowed to purchase residential property.
Let me be clear here. The residential properties they will be allowed to purchase are very specific and are the properties that are already available to “restricted persons”. This restricted person category is a designation that the Department of Immigration uses for foreign nationals or persons who do not possess Bermudian status. Residential properties with an Annual Rental Value, or ARV, of $177,000 and above are the properties available to restricted persons. There are about 250 high end residential properties in this category, as well as a number of condos that are similarly designated.
The Policy will prevent companies from renting these properties in the market.
The proposed policy changes will also allow, within certain criteria and restrictions, exempt companies to hold commercial property if it is used for the specific purposes of their business. Similar provisions will apply to local businesses.
Without getting too deeply into the legislative complexities (we will do this on Friday in the House) I will simply advise that the previous situation was unnecessarily complex and contradictory. That’s why we are seeking to clarify it by modifying the law, and producing a clear policy. Consultation with the Bermuda Bar Association and the Chamber of Commerce on the proposed amendments has taken place over the past year.
It is important to note that these proposed revisions to the Companies Act do not impact on the Bermuda Immigration and Protection Act. The decision making of the Minister of Home Affairs with regard to Immigration consent still applies on landholding.
We believe that with passage of this Bill, several properties that are currently on the market will be acquired. This will produce revenue for the government via stamp duty. And, most importantly, this will produce jobs in the construction sector. Many of the properties, once acquired, will undergo renovation and redevelopment.
Let me close by saying this is a forward-thinking Bill and Policy and one which we believe will move the real estate, construction and conveyancing sectors in a positive direction.
Thank You.
-
Update 2.20pm: The Corporate Landholding Policy is below [PDF here]
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No. And that’s the end of it.
We don’t have a choice thanks to the PLP which gave us over $1.2bn in debt when they got booted out. The gift that keeps on giving! The money to pay off that debt has to come from somewhere.
Laughable comment. ACE and XL both were afforded exemptions from the law forbidding companies from owning land, but NO one has complained about the thousands of jobs these businesses have produced over the years.
Exactly! You should see the property that ACE have in Paget for their visiting staff. I can assure you that no one that I hold dear as friend or relative could ever afford this property without winning the lottery:)
And yes they were granted exemptions under the previous Government and not one of these posters ranted and raved about giving away land (that no middle class Bermudian could ever afford) to foreigners.
On top of that look at what these companies gave provided since their presence. Umpteen jobs and opportunities to Bermudians. Promoting and financing numerous local events and charities as well as providing scholarships to locals that wouldn’t be available if it weren’t for their presence on our shores. Not too mention annual fees and taxes to both the regulator and Government.
We got all this while they got about 0.3 acre of Bermuda land on which they developed the property extensively providing construction work as well as continuous caretaker and maintenance jobs. Everyone from the painters to the maids and pool boy is employed at some point to look after the property and ensure it remains maintained. They use taxis for their pick ups and drop offs of staff and clients alike.
They are not just houses they produce income into the economy especially as there is no homeowner per se to do all the maintenance work. This has to be outsourced to local companies and businesses.
These are properties that the vast majority of Bermudians could not afford and can be easily seen by the pay data for locals. That is why previous governments established that particular ARV. As they are small in number, cannot be used to compete in the rental market and pump money into the economy I don’t see the problem. But understand why some do.
I was specifically talking about the granting of land to XL and ACE—the former site of the Bermudiana hotel—, both of which were $150M projects each, and created thousands of jobs, and which NO one complained about when the PLP granted the land—but your point about the auxiliary homes these companies bought makes the point even stronger.
Get your story straight when you step up to defend your can-do-no-wrong government. ACE properties are owned by the ACE Foundation, a non-profit organization chaired by Bermudians. Similar situation for XL. You would defend the OBA even when it is blatantly obvious to YOU (in all your bias) that they are selling out this island to high bidding foreign interests. OBA supporters look more delusional with each new policy the party tables!
Not true. I suggest you brush up on your legislative history before your try to impugn me as a “blind supporter.” Page 40, third paragraph down in this article: http://iaste.berkeley.edu/pdfs/17.2d-Spr06shorto-sml.pdf
“ACE Limited and XL Capital Limited together decided to
buy the former Bermudiana Hotel block in 1997. Bermudian
law had previously limited foreign ownership of a commercial
property site to 40 percent, but a special act of Parliament
allowing ACE and XL 100 percent land ownership provided
an incentive to build.”
For specifics pursuant to this act, see the Bermudiana Site Rehabilitation Act. The land was very much “granted” to ACE and XL.
When did the PLP become government 1997?
The UBP were in government in 1997
So I believe the fact remains the UBP had to have voted for this in order for it to pass
… but it was the PLP that introduced and supported the Bill in 1997. Research, mate!
It’s less “Do no wrong” and more “Attacked at every turn for every single thing they do with some of the nastiest, vilest, misinformation and lies and personal attacks Bermuda’s ever seen, so it’s almost impossible to agree with these demagogues and propaganda merchants the VERY few times they actually DO have a point.”
You want to talk delusional? Look to your own side, “Ian”.
This government is just giving away the farm.
GOING, GOING, GOING, GONE to the highest bidder!!!!!!!!!!!!!!!!
Wrong, the PLP gave it away 10 years ago !! The OBA are trying to get it back !
List the things the OBA has done to directly benefit foreign interests and the wealthy over the past 14 months. Then look in the mirror and read the last line of your comment and realize how foolish you sound and look.
A simple question Ian. If a company is persuaded to set up or stay here, does that benefit the Bermudians who are employed by that company? Yes or no?
Foreigners own over 1.2 billion dollars worth of Bermuda – that seems like alot to me.
Selling Bermuda…one roof slate at a time….
These are a few restricted properties that are already available for non Bermudian ownership. It’s a measure that might help persuade a company to invest here, or to stay here. It’s a good idea.
omg , Ben Dover and DarkSideOfTheMoon comments show that they obviously either didn’t read the article or didn’t understand the article.
This higher end property thing is good for Bermuda if it can be stimulated.
You can’t handle the truth dislikers . WOW
You do know your talking to Dumb and Dumber right .
I’m not sure how this will help residential sales really. Property above the ARV is already available to non Bermudians and would include those who own Exempted companies. Local owners of companies can buy from the entire market, not just the expensive ones and their non Bermudian partners, if it’s a 60/40 company can buy any property in the higher ARV level. In fact if you buy your residential property through this new bill, you will just limit your options as it will prevent you from renting it out. As it stands as a non Bermudian you can rent your home out for a year at a time with a license from Government.
Yes we r indeed selling out Bermuda one brick at time this new bill is nothing but selling out those who say different r lying
Explain how the bill changes the number of properties currently available to foreign purchasers.
SO we get foreign investment in a market segment where most Bermudians cant afford to play. The only ones who would possibly be hurt are the wealthy Bermudians who now have to compete for the top of the market homes….and even they win at resale time with a larger consumer market. I don’t see a problem with this.
They are not giving away the farm,fear mongers at it again.
More then likely, 90% or more of regular working class Bermudians would not be able to afford these properties anyway, many stand idle and unoccupied.
Get the wealthy here and they will spend money and hire plumbers,electricians,painters,gardeners,pool,architectural,construction,
supply companies,etc to build,renovate and maintain properties.
Money will flow down the food chain to all parts of the population.
Real estate has always been a main stay part of our economy.
I see that the army of paid PLP web trolls are at it again.
Poo Pooing anything that makes sense from the current Gov,with their thumbs down campaign.
Had the PLP put forth this Bill during their reign,I would have agreed with them as well for the betterment of Bda.
Imagine.. a troll calling someone else a troll
lmfao
And for those of you dependent on rents from Exempt Companies and now local companies to include the Gibbons Group of companies, say bye bye to your lofty lifestyles and ability to pay your sky high mortgages…
This comment makes absolutely no sense.
Why do we still have this anti-Bermudian in Government.He ruined the school system,now he wants to sell off our properties to FOREIGNERS!!!!!!BOTTOM LINE! Enjoy your one term Gibbons.
So you are anti-Grant……why do you hate him?
What did he do to you?
anti bermudian for sure lmfao….stfu you sound like a moron. his employees are ALL bermudian ya dummy.
Right on OBA,, MUCH MORE OF THIS PLEASE AND GET THIS ISLAND BUZZING AGAIN ..
It would be so easy to sum up your profile based on your comments. But then I would be called a racist, xenophobe and anti foreigner…
The only time you’ve been called that is when you have been a racist and a xenophobe.
Guess all these posters that are disagreeing are the 1%ers who can afford to buy properties with a minimum ARV of $177k or rent them at a minimum of $15k a month.
And guess what these properties are already permitted to be sold to non-residents/status holder or ‘restricted persons’ as determined by previous Governments. So why now are you all on here fear mongering again since this policy has been in place for years? On top of that the new policy will not allow for these properties to be entered onto the real estate market which is a positive for the middle class of the island.
But I have no doubt that the actual policy specifics will be ignored and the misinformation and hate will spread.
Unbelievable the level of absolute ignorance out there??? As was mentioned above, obviously the plp paid bloggers who don’t read things they only write what is scripted for them!!! This fear mongering is absolutely another tool used by the plp and their nonsense machine for holding us back!!!! The only ones that have ever taken some back to the plantation needs to understand it was the plp that did it to you!!!
Congrats Min Gibbons for tabling this and continue to ignore the flock!!!!!
PLP bloggers dont read things?? only what is scripted for them?? No offense to the the entire OBA because I do think they have some competent people, but for a OBA supporter to say that with a leader such as the one that you currently have, you sir have alot of nerve.
And yet none of you will… or can… provide ANY evidence of these claims.
And you wonder why people question you…
I hope that all the partisans registering their complaints in this article are essentially railing against a PLP imposed policy.
The ARV threshold of $177 thousand was implemented by the previous Government as a means to permit non-residents to purchase properties that are out of reach for the average Bermudian. . This threshold was determined to be the point at which the requirements would ultimately protect the housing market which is more affordable for the average Bermudian.
I am not aware of the above posters’ financial conditions but I can say that none of my family and/or extended family make anywhere near $177 thousand (even with spousal incomes combined) annually and therefore couldn’t even afford to dream of renting or purchasing these exclusive properties.
The funny thing about these complainers is that when this restriction was put in place they cheered it as one that ‘stood strong for Bermudians’ and one that protected our limited land for future Bermudians. However, despite the new Government maintaining the exact same ARV threshold and changing the policy to prohibit the rental of these properties and the type of buyer permitted to partake, it is now policy aimed solely at enriching the already rich and giving away ‘our land’ according to these same supporters and political zealots.
I do realize the hatred and disdain you all have for this Government, but at some point you have to realize that if you are saying this ‘restricted person(s)’ policy is akin to giving land away to foreigners then you must please explain why your moral outrage wasn’t present when the previous administration put this into place firstly.
There are minimal differences in the proposed changes and as far as I am aware the so called ‘average Bermudian’ that so many go on about still cannot afford to purchase or rent any property that retains a minimum ARV of $177 thousand and thus the more affordable properties remain protected for Bermudians.
There goes my revenue stream and assistance with paying my mortgage. They don’t have to rent from me n e more! Thanks a lot OBA! Continue to alienate Bermudians! You will truly have one term now!
More total nonsense from a plp idiot!!! Unless you own a house that has an ARV value of over $177.000.00 it does not effect you!!!! And if you do ( which I highly doubt ) then shame on you for needing help with your mortgage!!!! Nice try plp blogger!!! This nonsense from your type needs to stop!! You are only harming yourselves, IDIOTS!!!!?
You are right Kangocar.
These idiots are following the same dogma that Jim Jones spewed to his followers and look where that got them.
I am afraid Bda does not have a chance of moving forward and competing in this global economy with this sort of mentality dragging down Bermuda.Especially now,in this age of complete Internet connectivity.
You are totally correct, their nonsense continues to keep them poor and they are to stupid to know it???
UMM, Isnt a bit far fetched to liken people who don’t agree with this policy to the people that drank poison and killed themselves believing in the words of a man.. That is very far fetched.. In Reality, who is the one agreeing with everything that the current OBA Government are doing?? I am not saying that you are wrong to take your stand on this particular matter, but the biased political view works both ways sir.. Take a step back and reflect.
I tend to lean toward the plp, but I have don’t agree with everything they say or do as I like to think for myself.. Now I ask you, is their any policy or legislation or comment made by the OBA in the last 15 months that you don’t agree with?? Or are you going to sit there and tell me that everything this government has done has met your absolute approval? Lets see who the real Jim Jones followers are.. cheesh
I have disagreed with a couple of things the OBA have done and said it over and over!! Jet gate is one of them, in fact I blasted them on it at the time, even using terms that they were looking like the plp and I did not vote for that!!, and has been a few other items as well!! But can I ask you if you have seen the likes of betty, mazumbo, Ian, coffee ( who also is a liar ) and Frank and the other plper’s ever say anything against their plp???
I am not the only OBA supporter that has blasted the OBA when they do stupid things either. That is the difference!!,
Like I said ……..only one term of this none sense from the OBA!
Oh stop your nonsense!!, I did note, you did not challenge me on your big lies about your mortgage???? Did Alaska hall not tell you what to wright?? Your stupidity topped with your lies is nothing short of idiotic and you deserve all the suffering you have coming to you!!!!
So, how can you tell that someone owns a certain kind of house? And you wonder why this country is so divided? There’s a name for people like you….
Ess Ess Dee’s comment is nonsensical, and made all the more ridiculous by his assertion that he will lose his “revenue stream”. He is lying.
Here we go again, Captain Kangoocar calling people idiots..
If he’s talking about Ess Ess Dee, he is right.
And don’t forget, I called you a liar which is the more important one!!! I have nothing but disdain for liars, they in fact are dangerous people and should be treated that way!!! I have no problem with somebody that argues their point honestly, but you are one of the many that don’t from your side of the political divide!!
This was directed @es ess dee
Then don’t be stupid or arrogant enough to buy a house beyond your means….
It is clear from some of the comments that that there are Bermudians who are simply not intelligent enough to see that this is good for Bermuda.
Yet they are allowed to vote (PLP of course).
Very very scary!!!
And all OBA supporters are unbiased, objectively thinking intellects right??
yeah apparently, they don’t ever make mistakes, they are right about everything and anyone who doesn’t agree with them are from another planet, cheesh
No one said anything like this.
But well done proving his initial premise correct… at least in two instances.
Bermudian realty is artificially valued to an extent. Much of the appreciation over the years on residential values seems to have been a phenomena tied to a single industry that will probably never see the best years it had experienced pre-2008 again. And that industry (reinsurance) continues changing significantly in a way that has mostly meant new, unwelcomed dynamics for the traditional players. It’s hard to see how this policy will lead to much new interest in real estate purchases over the next three to four years. Which means its a move that could spell political suicide for the government. Could be wrong of course.
But if it encourages a company to invest here and locate here, that will create jobs. Which is what we all want, right?
I dont know why people come on a news website and can’t read properly! Read the article and comprehend it that easy!
Part of the new amendment will allow the OBA cabinet to lower the ARV
Please read the fine print
That would make sense given that property and rental values have dropped so much since the initial level was established. In fact, all ARV’s should be lowered.
You lot don’t get it do you.
This is a classic example of the wealthy feathering their own beds.
You are being fooled into thinking otherwise, as you are all being micro managed.
Can’t you see it is different strokes for different folks.
I do not agree with any law , what ever the intent, that caters to one group over another, having a big house with a big ARV and the world is your stage.
This real estate law caters to the rich and famous who have the opportunity to trade their real estate on the international market, they can’t loose .
The working man is constantly being faced with restrictions , I told you that Bermuda is the island of “NO” .
To all you home owners out there it is time to re value your real estate, think CURRENT REPLACEMENT VALUE including the land , or a million per bedroom. The recession is over.
You folks should really not feed the trolls on here, the PLP strategy is clear as day:
Most assume (but some will not admit) that the OBA is doing all the right things to save the economy, their messaging might suck but the principles behind the policies are sound.
The PLP is sitting in a sweet spot, change comes gradually – it took 12 years before their policies showed to be detrimental to the economy, therefore they can assume it will take a min of 5 years for the OBA policies to right the ship. The PLP has always had a clear strategy with their core voters; first – create the idea that the only real Bermudian is a black Bermudian, then alienate this population through the race card to cause an emotional ‘need’ to vote PLP. regardless of what the OBA will do, for the next four years the PLP will brand it anti Bermudian and play the race card, then if they win the next election (as we will only just be seeing results of the OBA policies and they will claim it was all a failure) they will change none of these policies (as they actually know the policies are essential) but when the real turn around begins, they will claim them as their own.
This strategy will fail if:
We see a large investment in the hotel industry – new resort, casino etc. if this begins in the next two years then the PLP strategy is sunk as many of their core voters work in the labor and hotel trades and as such will benefit directly from policies of the OBA government. Why do you think the PLP wants referendums? to slow the process down so that we will not see actual development until much later in the OBA term.
If you do not know the value of your real estate you may need to take a second and third look.
Know all your property assets and maintain its desirability by keeping up with maintenance.
REAL ESTATE VALUE IS THAT CURRENT VALUE THAT A PRUDENT MAN OF BUSINESS WOULD BE PREPARED TO PAY .
Current market value varies depending on who is doing the valuation.
The Bank
Your Realtor on commission.
The Real estate Flip artist.
The Real Estate trader.
Comparable values in your area.
The Land tax / valuation office.
The Insurance company.
The Divorce lawyer.
Sentimental value.
The Estate Executor.
Your Neighbor.
The bargain hunter.
The Auctioneer.
An experienced real estate appraiser.
They all can not be right !
It all boils down to what is the fair current day market value of Real Estate depending on if it is Commercial or Residential there are hundreds of criteria which need to be taken into consideration, it is all about supply and demand.
If you truly want to know the value of a Bermuda home all you have to do is build one with your bare hands, then keep the sharks away from your door.
Is a cottage in a pretty garden worth more than a mansion next to city dump ?
Bermuda is running out of land and we are giving it away ! Don’t you all know you are living in piece of heaven.
This Recession was the direct result of the inability of banks to correctly determine Real Estate value and their inability to determine affordability.