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Apr 03, 2013

Buying costs are very high


How high are realtors’ and lawyers’ fees in St. Lucia? What about other property purchase costs?

Transaction Costs

Who Pays?
Alien Landholding License 0.50% - 1% buyer
Stamp Duty 2% buyer
Legal Fee 0.5% - 2.50% buyer
Vendor’s Tax 2.50% - 10.00% seller
Real estate agent´s commission 6% seller
Costs paid by buyer 3% - 5.50%
Costs paid by seller 8.50% - 16.00%
ROUNDTRIP TRANSACTION COSTS 11.50% - 21.50%
See Footnotes
Source: Global Property Guide

How difficult is the property purchase process in St. Lucia?

St lucia beachfront propertiesDevelopment and investment is encouraged by the government through tax incentives and exemptions. Foreign individuals need to procure a landholding license to be able to acquire property freehold. The process of obtaining an Alien Land Holding License can take around 6-8 weeks.

Certain sectors in the economy are reserved only for nationals including real estate and rental agencies for homes, villas, and apartments. Likewise, the operation of guest houses of less than 10 rooms is not open to foreigners.

The procedure for buying property in Saint Lucia is similar to that in the United Kingdom.

Buyers are expected to pay a deposit of 10% during the contract signing, as a standard clause in St. Lucia’s property sale contracts to prevent either party from being ripped off. If the buyer backs out from the transaction, the 10% deposit cannot be refunded. If the buyer’s application for an Alien Land Holding License is denied, the buyer can refund the 10% deposit. If in case the seller backs out, the deposit is doubled and paid back to the buyer.

It is necessary to employ the services of a lawyer in order to register the Alien Landholding License – a process which usually takes six to eight weeks. After the contract of sale has been signed, the lawyer will forward the License application to the Ministry of Agriculture and Lands. Keep in mind that these Licenses are permanent, non-transferable, and property-specific. While waiting for the License to be released, the property survey and conveyance process can begin.

St lucia homes for saleAfter the License has been granted, the actual transfer takes place. Any outstanding balance on the sale will be settled. The last step is to register the transfer and pay any remaining government duties.

If purchasing property is done through a company, the 10% Future Tax Liability will be taken off from the costs. It takes around six weeks to form a company and costs ECD3,200 (US$1,185).

If the buyer purchases land only, the buyer is required by the Government to develop or build on the land within 2-3 years from the date of purchase.



Footnotes to Transaction Costs Table


The round trip transaction costs include all costs of buying and then re-selling a property – lawyers’ fees, notaries’ fees, registration fees, taxes, agents’ fees, etc..

Currency:
St. Lucia uses the East Caribbean Dollar (XCD) which is pegged to the US Dollar (USD) at USD1 = XCD2.70.

Alien Landholding License (ALL):
All foreigners (except for citizens of Barbados, Dominica, and St. Vincent and the Grenadines) must obtain an Alien Landholding License from the government to be able to buy landed property. The lawyer who conveys the property can also apply the license in your behalf. The license fee is ECD5,000 (US$1,852) for properties measuring less than one acre and ECD10,020 (US$3,711) if the property is more than one acre. There is also a non-refundable license application fee of ECD1,500 (US$556).

Stamp Duty:
Stamp Duty on registration of the deed of sale is 2% of property value, typically paid by the buyer.

Legal Fee:
Legal fees are a flat fee of ECD100 (US$37), plus a percentage of the property value according to the following scale:

LEGAL FEE
PROPERTY VALUE, ECD (US$) TAX RATE
Up to 50,000 (US$18,519) 2.5%
50,000 – 100,000 (US$37,037) 1.50%
100,000 – 850,000 (US$314,815) 1.00%
Over 850,000 (US$314,815) 0.50%

Vendor´s Tax:
Foreigners who intend to sell their St. Lucian real estate are charged 10% Vendor´s Tax. Residents of St. Lucia pay much lower vendor´s tax.

VENDOR´S TAX

PROPERTY VALUE ,ECD (US$) TAX RATE
Up to 50,000 (US$18,519) 0%
50,000 – 75,000 (US$27,778) 2.5%
75,000 – 150,000 (US$55,556) 3.5%
Over 150,000 (US$55,556) 5%

Real Estate Agent´s Fee:
Agent´s commission is negotiable, but most agents charge 6%.






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