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Press Release

Restrictive rental markets in the Caribbean

May 22, 2007


The Caribbean is a playground of the rich and famous. It is also seen as business-friendly. Perhaps surprising, then, that some Caribbean countries have strongly restrictive almost socialist-style housing market systems, with strict rent controls, and strong security for tenants.

In a study, the Global Property Guide (http://www.globalpropertyguide.com) examines the landlord and tenant systems of 19 Caribbean countries and territories in terms of rent control, security deposits and tenant eviction. With contributions from local law firms, each economy is rated as strongly pro-tenant, pro-tenant, neutral, pro-landlord or strongly pro-landlord.

The study notes that, against popular notions, a “pro-tenant” rental market is actually harmful to tenants in the long run. It discourages landlords from investing in new rental units, leading to less supply. As demand for rental units increases with population growth, shortages develop. Landlords lose the incentive to maintain and upgrade their rental units. The quality of the existing rental housing stock deteriorates.

The most restrictive rent control law in the Caribbean is enforced in the US Virgin Islands. For housing accommodations, the maximum rent ceiling is the rent in force and in effect on July 1, 1947. For buildings created and/or rented after July 1, 1947, the maximum rent allowed is the first rent charged for the unit.

In Jamaica, the Rent Assessment Board sets the rental for all commercial and residential premises. The annual rent ceiling is 7.5% of the assessed value of the premises.

In the Dominican Republic, there is universal rent control with the maximum monthly rent fixed at 1% of the value of the rental property, in effect, 12% annual rental returns.

Evicting tenants is a serious problem in some parts of the Caribbean. In the Dominican Republic, tenants get more or less perpetual security, notes law firm Guzman Ariza. Rental agreements normally last for three to six months. However, even if the contract has already expired, the tenant can continue living in the unit as long as rent is paid. If the landlord refuses to accept the rent, the tenant can simply deposit the amount Banco Agricola. The bank will hold the amount for the landlord and the tenant can stay in perpetuity.

The law in St. Vincent and the Grenadines also generously protects the tenant. Prior to eviction, the tenant is given at least six months to look for an alternative dwelling, according to law firm Knights Chambers.

The Global Property Guide’s view is that free rental markets, with adequate incentives for landlords, tend best to encourage the supply of rental housing. In the Caribbean, most housing projects focus on the direct provision of housing units with limited and, at times, dismal results. The misplaced focus on direct housing provision, long ago abandoned in Europe, is still in force in several countries.

By removing restrictions, most notably in the Dominican Republic and the US Virgin Islands, the rental market for local tenants could be developed, improving living standards.

Table 1. LANDLORD - TENANT RELATIONS

COUNTRY RATING * RENT CONTROL SECURITY DEPOSIT
Anguilla Pro-Landlord None (unenforced) 1 month's rent
Aruba Pro-Tenant Yes; but not followed in practice no legal limit
Bahamas Pro-Landlord Yes; but almost ineffectual normally 2 months' rent
Barbados Neutral None no legal limit
Belize Pro-Landlord Yes, rent increase limited to 10% 2 months' rent
Bermuda Pro-Landlord Yes, for units with ARV below BM$16,000 for rent controlled units: 2 weeks rent or BM$100, whichever is higher
Cayman Is. Pro-Landlord None 1 month security deposit; 1 month advance rent
Dominica Pro-Landlord Yes, for units with monthly rent below EC$800 (US$300) normally 1 - 3 months' rent
Dominican Republic Strongly Pro-Tenant Yes, monthly rent fixed at 1% of property value
Grenada Neutral Yes, but largely unused no legal limit
Guadeloupe Strongly Pro-Tenant Yes, rent adjustment is tied to the INSEE construction cost index 2 months' rent
Jamaica Pro-Tenant Yes, annual rent is 7.5% of assessed value illegal to collect
Netherlands Antilles Pro-Tenant None normally 1 - 2 months' rent for rental of 1 year
Puerto Rico Pro-Tenant None usually 1 month's rent
St. Kitts & Nevis Pro-Landlord None 1 month security deposit
St. Vincent & Grenadines Strongly Pro-Tenant None usually 1 month's rent
Trinidad and Tobago Pro-Tenant Yes, rent adjustment is subject to approval of government no legal limit
Turks & Caicos Is. Pro-Landlord None normally 1 - 3 months' rent
US Virgin Is. Pro-Tenant Yes, rents frozen to 1947 level or to the first rent charged 1 month security deposit; 2 months advance rent
* Click here for a more detailed discussion of our Landlord-Tenant Rating System.
Source: Global Property Guide, Contributing Law Firms

References:
Description:
The Global Property Guide is an on-line property research house. On-line newspapers, magazines, etc which use material from this release MUST provide a clickable link to www.globalpropertyguide.com. Sites found not providing the link will be removed from our press list.

Terms of Use:
On-line newspapers, magazines, sites, etc wishing to use material from this press release MUST provide a clickable link to www.globalpropertyguide.com Sites found not to be providing the link will be removed from our press list.


Economics Team:
Prince Christian Cruz, Senior Economist
Phone: (+632) 750 0560
Cell: (+63) 917 735 2228
Email: [email protected]

Publisher and Strategist:
Matthew Montagu-Pollock
Phone: (+632) 867 4220
Cell: (+63) 917 321 7073
Email: [email protected]

Address:
Global Property Guide
http://www.globalpropertyguide.com

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