The Bahamas - The Country of 700 Islands.
F ast Facts:
- 3rd Wealthiest Country in the Western Hemisphere.
- No income taxes are payable either by residents or non-residents.
- Capital = Nassau
- Population = 323,000
- Currency = Dollar
Economic Overview
Has everyone got their Pina Coladas ready? Everyone got one of those small umbrellas? A piece of pineapple and maybe some nutmeg sprinkled on top for full affect? J Ok? Great !!!
Now, take your first sip and think 'The Bahamas ' .........and you suddenly see yourself whisked away to a turquoise sea teeming with sealife and sandy beaches that stretch for miles. You sit in your gorgeous Villa, while being served a seafood cocktail of shrimp & crayfish, while feeling the sun bronze your limbs......... So.....you wanna go?
Although, tourism is a major player in keeping the economy afloat, it is not the only thing going for this island paradise:
- No income taxes, capital gains taxes, or inheritance taxes are payable either by residents or non-residents.
- The tenant laws are pro-Landlord and only properties valued at less than B$25,000 are subject to the Rent Control Act.
- The Economic and Political Environment is stable and the GDP per capita is among the highest in the Caribbean.
- Seasonal Property Rental Yields top 10 to 12% per season.
So enough talk about facts, let's look at a few graphs on the Economy :
- Looking at the GDP per capita, there has been an increase from the early 1990's when GDB growth was a steady 3%.
- The only blight in this steady GDP per capita growth was in the early 1990's when inflation reached a high of just over 6%
- But even high inflation could not keep the tourists away as seen in Tourist Arrivals below:
Inflation has had a steady downward spiral since 1990 and this has therefore fuelled the growth of GDP.
Even though the economy relies heavily on the US Economy to ensure growth, tourist arrivals figures have remained steady since the early 1990's.
Property Market Review
So, even though the Bahamas relies heavily on the US Economy to ensure their growth, the property market is still very much in favour of investors.......
Here's why:
Foreigner restriction to buying Property?
There are no restrictions on Foreigners buying property:
The only exception is a permit from the Government before the transaction, if the property is an undeveloped land and is greater than five acres.
Are Rental Yields steady?
Yields are around 5% to 6% for properties located in the coastal areas of Nassau and other islands.
Rental yields are good in the gated communities because there are many expatriate accountants and lawyers.
Properties with seasonal rates have yields of 12% to 15% as Grand Bahamas is so close to the US , many commute backwards and forwards.
Is the Bahamas Law, Pro-Landlord or Pro-Tenant?
The Landord and Tenant act of the Bahamas is Pro-Landlord:
Rents can be freely agreed for long-term & short term tenancies.
The landlord must give the tenant proper notice of rent due and possible eviction for defaulting on rent.
If the tenant fails to pay the rent on time, the landlord can summon the local police and repossess the property.
Even though a court order is not necessary for tenant eviction, most landlords bring defaulting tenants to court and sue for uncollected rent.
How much tax will I pay on my property?
The maximum Property tax is 2% for properties worth more than US$500,000 (GBP: 250,000 , ZAR: R3,500,000)
As an investor, the only 'restriction' that the Bahamas poses is the buying costs involved in the purchasing process:
Registration Fees: The buyer must pay several fees for the property to be registered. These fees are minimal and are not expected to exceed 0.5% of property value.
Stamp Duty: Stamp Duty must be paid upon delivery of the property. Stamp Duty is typically split between buyer and seller.
- Up to 20,000
2% - 20,000.01 – 50,000
4% - 50,000.01 – 100,000
6% - 100,000.01 – 250,000
8% - Over 250,000
10%
Legal Fees: Each party pays for their own lawyer. Legal fees are determined according to the property’s value:
- First 500,000
2.5% - Next 500,000
2.0% - Next 4,000,000
1.0% - Over 5,000,000
0.5%
Real Estate Agent's Fee: The real estate agents’ fees are set by The Bahamas Real Estate Association. The fees are determined as follows:
- Undeveloped/ vacant land in all islands except Grand Bahama
10% - Improved residential properties in the Out Islands
8% - All types of property in Grand Bahama
15% - Improved residential properties (homes, condominiums) in all other islands including New Providence (location of Nassau) 6%
Conclusion
At a glance, you might see the Bahamas as an unobtainable paradise, only reserved for the Rich and Powerful. Exclusively frequented by celebrities to escape the limelight and for us mere mortals to merely watch and hope.......
But in actual fact, the Bahamas is a place that has all the elements that results in investors going cross eyed: no income tax, pro-landlord law & good rental yields :)
(Sources: www.globalpropertyguide.com , www.wikipedia.org Reuters, www.absa.co.za & Daily Telegraph)
