Barbados: Overview

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Last Updated: Apr 03, 2009

Property prices
continue to rise in Barbados

Barbados’ property market remains buoyant, despite the global crisis. Property prices are still rising by about 10% to 15% a year, with bigger increases at the upper-end, according to Cluttons Barbados.

"Barbados has in the past always performed well, as more established and international markets decline - and then Barbados again benefits, as these more international markets bounce back." says Tim Morgan, managing director of Cluttons Barbados. House prices have risen steadily over the past three decades, according to local real estate agents.

Property is more expensive in Barbados than in other less developed Caribbean islands. Prices range from BB$3.95 million (US$2 million), to BB$79 million (US$40 million).

Luxury houses and villas still dominate Barbados’ property market. But in recent years the island has diversified into the mid-market. Apartments and condominium units under BB$1.98 million (US$1 million) are common.

There are no restrictions on foreigners buying property. Non-residents need only obtain permission from the Barbados Central Bank before the purchase, which is a formality.

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RENTAL YIELDS

Last Updated: Dec 05, 2008

Expensive villas in Barbados

There is insufficient data on properties for rent since most rentals are for a short-term basis only. It seems though, that property prices are still very high in Barbados. Beachfront villas, with five bedrooms or more, sell for over $4M in St. James. Three and four-bedroom villas sell for at least 1M.

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TAXES AND COSTS

Last Updated: Nov 25, 2008

Rental income tax is high in Barbados

Rental Income: Rental income is taxed at a special flat rate of 15%.

Capital Gains: There are no capital gains or inheritance taxes.

Inheritance: Inheritance is not taxed in Barbados but transfers of property in Barbados is subject to property transfer tax.

Residents: Residents are taxed on their worldwide income at progressive rates.

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BUYING GUIDE

Last Updated: Apr 16, 2007

Barbados' roundtrip
transaction costs are now moderate

With transfer taxes reduced from 7.5% to 2.5% in 2008, roundtrip transcation costs in Barbados are now moderate. Total costs for property sale and purchase range from 11% to 13.85%. The seller pays for a significant portion of the cost including the transfer tax, real estate agent's commission (5% + 15% VAT) and stamp duty (1%).

Buyer and seller pay for their own lawyer (legal fees are at 1.5% - 2%, plus 15% VAT).

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LANDLORD AND TENANT

Last Updated: Jun 06, 2006

The law is neutral in Barbados

Rent: Rent and rent increases can be freely negotiated.

Tenant Eviction: The landlord cannot evict a tenant without a court order under any circumstances, even when the tenant has not paid the rent for six months. It takes an average of 92 days to evict a tenant.

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ECONOMIC GROWTH

Last Updated: Apr 03, 2009

Catching up in tourism and development

Barbados (pop 280,000, GDP/cap US$12,500), a former British colony, is blessed with sandy beaches, limestone caverns and a warm climate tempered by trade winds.

The economy contracted in 2001 and 2002, with an annual GDP change of -2.6% and 0.5% respectively, mainly due to a decline in tourism caused by the 9-11 attacks in the US. Barbados has since recovered, with an average annual GDP growth rate of 3.5% from 2003 to 2007. However, economic growth slowed to 1.7% in 2008 due to declines in tourism, construction and manufacturing.

Inflation soared to 9% in 2008, up from 4% in 2007, driven by sharp increases of food and fuel prices in the world market and the reduction of government subsidies for gas and diesel in April 2008.

The country’s economy is highly dependent on tourism, making it vulnerable to the fluctuations in the world economy. The number of visitors increased 8% in 2007, to a total of 1,190,887, of which 574,533 stayed over. As of September 2008, visitor arrivals totaled 909,588.

RESIDENTIAL PROPERTY AROUND THE WORLD

Europe
Housing market in France slowing substantially

Asia & Pacific
Looming housing slump in China

America & Caribbean
The great U.S. housing market crash

Middle East and Africa
Oil fuels Saudi real estate market boom

Neutral tenancy laws
No CGT and inheritance tax

Generally low yields
High rental income tax
High transaction costs
Tourism dependent economy

RESIDENTIAL PROPERTY FACTS
Price (sq.m): $5,767 For a 200 sq. m. property, usually an apartment.	Rental Yield: 4.37% For a 200 sq. m. property, usually an apartment.
Rent/month: $4,202 For a 200 sq. m. property.	Income Tax: 20.00% Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income.
Roundtrip Cost: 12.1% The total cost of buying and then reselling an apartment. Includes: * all transaction taxes and charges: * lawyers' and notaries' fees * agents' fees Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000.	Cap Gains Tax: 0.0 Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation.
Landlord & Tenant Law: Neutral Rating is based on a detailed study of each country’s law and practice.