• Increase transaction completion time by 4-6x
• Property taxes and subdivisions are the latest hurdles
• The permitted mortgage loan term is doubled.
Written by Neil Hartnell
tribune business editor
nhartnell@tribunemedia.net
Prominent real estate agents say the time it takes to close a real estate transaction has increased four to six times and that “doing business has never been easier in the Bahamas.”
Mike Lightborn, a principal at Coldwell Banker Lightborn Realty, told Tribune Business that his firm has been doing real estate transactions for two years and has been involved in issues such as the Department of Internal Revenue (DIR). He said he was still trying to complete the transaction because “the whole system has slowed down.” Severe valuation for VAT and property tax purposes.
“The biggest problem is ease of doing business. We don't have anything like that in the Bahamas,” he said bitterly, echoing what most people in the private sector often lament. He said, “It is almost impossible to complete a real estate transaction within a reasonable time.
“We have to get a number for each transit agency, and every time we take it to the IRS, it's fully backed up. Our business has been in business for almost two years now.” Lightbourn said the IRS is a value-add It said it was concerned that deals were undervalued for tax avoidance purposes, disputed agreed sales prices and frequently delayed closing deals. Mr Lightbourne added that as tax authorities use property tax assessments to detect suspicious transactions: The house is on the market for $2 million. No value is more than 2 years old and has been on sale for at least a year.
“Why would you have to reason with something like that? Stuff like that slows down the whole system. It's found everywhere. There's nothing easier to do business in.” Real Estate in the Bahamas The industry has benefited greatly from pent-up demand and a post-COVID-19 boom with wealthy buyers seeking more secluded and private locations in stable jurisdictions close to territories such as the United States. .
However, Lightbourne and others say the economic impact on the Bahamas could have been even greater if the real estate transaction could have been processed and completed more quickly in terms of document delivery, tax payments, approvals and other necessary requirements. he suggested. Mortgage financing must be met. Delays will also hit government revenue and cash flow.
David Morley, president of Morley Realty, told Tribune Business that closing Bahamas-based real estate deals currently requires “some additional hurdles” for buyers and agents to overcome. “There are delays and delays,” he said.
Comparing the number of days it takes to close a deal now to when he first started in the real estate industry, he says, “There are so many boxes that need to be filled that things go from 30 days to “four to six months if we're lucky.'' It added that it had increased to. Tick-tock.”
“It's difficult to buy property in this country, whether you're a Bahamian or a foreigner,” Morley said. “Look at what you have to do under property tax. The government requires that shipments have a property tax assessment number.
“You need to get a tax return and make sure your assets are taxed and paid on time. I know it helps collect late fees, but this It is one of two additional steps in real estate transactions. The other big challenge is an even bigger one, and it goes back to the Planning and Zoning Act and the Privy Council decisions.
“You need to make sure the property you buy is part of an approved subdivision or has been approved for subdivision. It becomes a nuisance.
Especially if the buyer has secured financing from a bank, their solicitor will have to submit a letter to the Physical Planning Authority requesting confirmation that it is an approved subdivision,” Morley said. explained.
“Depending on the circumstances, turnaround times may not always be quick. Buyers needing a mortgage must check a number of boxes, and some banks require that the property be located in an approved subdivision. It is mandatory to find out whether or not the split has been approved. If the lawyer does not provide that proof, the bank will not provide the funds.”
To ease the burden associated with this, the Morley Realty principal added: “The government should provide a list of approved parcels somewhere and allow lawyers to search online and approve them themselves.”
Whereas before, real estate transactions were more advanced.
Morley said the country's anti-money laundering regime's know-your-customer (KYC) requirements are in addition to the actual title, after lawyers were satisfied that the title was good and marketable and that there were no liens on the subject property. He said it meant further coercion. Property taxes and subdivision hurdles.
“You have to onboard the client first before doing a transaction, and with KYC it can take two to three weeks for the client to get their information. Then you throw in the planning and zoning work, On top of that is the property tax job. This creates even more time and delays in getting real estate transactions done and closed,” he told Tribune Business.
“I remember when I started working, most lawyers' deadlines were in 30 days. You'd be lucky if it was in 4-6 months. Anyone looking.
As for financing, previously the contract was conditional on the buyer receiving financing within 21 days. Currently, banks are suggesting a minimum of 45 days.
“Transferring property is not easy these days. It takes a lot of patience and a few more hoops to jump through, but keep moving forward. If they [the Government] Just find ways to improve the system. No one is asking them to abolish this system. We're asking them to improve it, and with today's technology they can do something about it. ”
Despite the struggles, two real estate agents are predicting another strong year for Bahamian real estate. “I think it's going to be another good year. It's not going to be as good as the last two years. There was pent-up demand, but it's tapering off,” Lightbourn said.
“It’s always a problem for Bahamians to shop.”
Because of financing. You can hardly blame the lending institutions. They want the loan to happen, but many don't. I still think this year will be a good year. There are only a few days left until 2023. ”
Mr Morley added: “I believe the real estate market will go in a good direction. And when I say good, it will be 2023 or a little better. I think 2024 will be a good year. You can't sit around and wait for things to happen. I don't think you can.
“If you look at the United States, they are in the process of hopefully starting to lower interest rates. This will free up a little more cash flow for people to invest in vacation homes in the Bahamas. Why is the market down? There are a lot of indicators that say there isn't. We might see a continuation of what was a good year for us in 2023.”
