Real Estate In The Turks & Caicos Islands

The TCI Real Estate market is one of the hottest markets in the Caribbean. Since 1996 property prices on Grace Bay beach have increased by 15 - 25% per annum. This has been driven by the world class beaches, low crime rate, and tax haven benefits. In addition TCI is a stable economic environment with the support of the British government and uses the US Dollar as currency. The real estate industry has been driven by the condominium Hotel, a unique property ownership opportunity.

Condominium Hotels or Condotels offer the benefits of suite ownership combined with the convenience of an experienced management staff and the amenities of a luxury Hotel. The suites are sold to individual investors exactly as if it were a regular condominium development. The management team markets the development as a resort hotel and each owner receives a percentage from the rental revenue of their condominium.

• Management team pays all of the monthly expenses for the suite, i.e. utility bills, strata fees etc. Monthly or quarterly statements are then sent out to owners showing the rental proceeds minus the expenses.
• Some Condotels have a joint rental pool where the revenue from all similar suites are joined together in a large pool and distributed equally between the owners.
• Some Condotels are suite specific where each suite is treated as a separate entity and the owner receives the revenue from the rental of there specific suite only.
• Some Condotels limit the number of days annually the owner may use the suite.
• Some give the option to be in the rental program while others make it mandatory.
• Revenue splits between the owner and the management differ but are generally 50% to the owner and 50% to the management company, or the more recently popular model of 40% to the owner and 60% to the management company.

When buying a Condominium or condotel in the islands the best way to leverage your investment is to purchase one that is in the preconstruction stage.

• The preconstruction prices are typically set below market value to increase the incentive for people to buy in the early stages.
• As more suites are sold prices are increased.
• During the construction process, as certain benchmarks of construction are certified by an engineer or architect, stage payments are made by the purchaser. Stage payments are a preset percentage of the total purchase price. The stage payments made by the purchaser are then used to fund a portion of the next stage of construction. It is important to note that there is a small level of risk associated with preconstruction condominiums.
• Stage payments vary greatly between individual developments, however here is an example from Seven Stars Phase II,
  - 10% Contract
  - 15% Commencement
  - 15% Completion of suspended ground floor slab
  - 20% Completion of ring beam
  - 15% Completion of roof
  - 25% Contract Closing/Certificate of Occupancy
• In addition to the break in pricing that most developments offer, the purchaser does get an excellent leveraged investment. The purchaser only pays a portion of the total purchase price, however receives property appreciation on the entire price of the unit. - $1,000,000 condo at 20% annual appreciation equals $200,000/year.
  - If only 50% of the $1,000,000 is invested the annual appreciation is still $200,000. However a $200,000 return on $500,000 invested is a 40% return.

As with any investment there is a level of risk associated with Preconstruction Condos. Here are some points to consider when selecting the right preconstruction condotel.

• What is the financial capacity of the developer and the track record of his team and advisors?
• What stage of construction is the development in?
• What are the payment terms?
• How many phases are proposed for the development?
• If the resort has multiple phases what amenities will be completed with the first phase?
• What are the proposed building specifications, floor plans, elevations, construction materials, fixtures and fittings, etc?
• How will the management of the finished product be handled and what will the management split be? If a rental program is offered is it optional or mandatory, and is it a rental pool or unit specific?
• What is the proposed furniture package and is it included in the purchase price?
• When is the anticipated occupancy, and if construction is ongoing have past stages been delivered on time?
• What are the proposed monthly association fees or strata fees?

The Turks and Caicos Islands also offer several other choices in real estate products. There are also existing condominiums, town homes, villas, commercial developments and land. These categories can all be further dissected into categories, beachfront, ocean view, canal front and standard. Once an investor has selected the perfect piece of real estate in the islands the transaction process is simple and straightforward.

• Purchaser makes an offer through a local agent.
• Once the offer is accepted a local attorney performs due diligence and a sales and purchase agreement is completed.
• Closing occurs and transaction is completed.
• Title is registered.
• Stamp duty is paid.

What does a lawyer do in the RE transaction?

• Advises you on the terms of the contract and whether they are reasonable and adequate for your protection.
• Due diligence checks on property title.
• Ensures compliance by each party with his obligations under the contract.
• Conducts closing and ensures timely registration of title and payment of stamp duties.
• After closing the attorney will be able to help with planning applications, building contracts, business licenses, and immigration permit applications, if necessary.

Because of the system of land registration that operates in TCI, Title Indemnity Insurance is not required.

• Based on the Torrens System, Land Registration is governed by the Land Registration Ordinance, which was introduced In the early 1970’s.
• Each island is divided into registration sections, which are then divided into blocks, which are then divided into parcels.
• Each parcel is then given an identification number, based on the section, block and parcel number. This allows it to be pinpointed by the Land Registry department i.e. Leeward going through, 60905/157.
• The registry maintains a record of all parcels in the islands together with certain information on each parcel. Information such as size, boundaries, encumbrances if any, liens if any, and the ultimate registered owner.
• Through the Land Registry Ordinance title to land is guaranteed by the British Crown. So once a purchaser has legally acquired title, it is guaranteed against challenges. This makes the registered title absolute.

Once the sale is closed Stamp Duty is payable on the Value of the land. Typically the value of the land is the purchase price. However, it is at the discretion of the Registrar of lands to set the value of the land at a higher rate if it is believed that the land was sold under market value. Stamp duty is paid on every Real Estate transaction in the Turks and Caicos Islands. The Stamp Duty is always paid by the purchaser. The rate applied for Stamp Duty depends on the price and location of the subject property.

The following guidelines can be used:

Providenciales, Pine Cay, Parrot Cay, Water Cay, West Caicos

• Less than $25,000US Stamp Duty 0%
• $25,000US - $75,000US Stamp Duty 6.5%
• More than $75,000US Stamp Duty 9.75%

• Less than $25,000US Stamp Duty 0%
• More than $25,000US Stamp Duty 5%

An increasing number of retired professionals, investors and sun worshippers are buying Condotels, condominiums, rental properties, villas or raw land in the Turks and Caicos Islands. Turkoise Realty will be happy to asses your requirements and make suggestions as to the best way to help you realize your dreams of owning property in this tropical paradise.

The beautiful Turks and Caicos Islands are situated 575 miles Southeast of Miami and 100 miles north of the Dominican Republic. The islands consist of two groups separated by the 22 mile wide Columbus passage. Covering 193 miles of the Atlantic Ocean, the Turks and Caicos Islands (TCI) have the third largest coral reef system in the world. The reef system makes the islands one of the world’s premier diving and snorkeling destinations. TCI also enjoys 230 miles of pristine white sand beaches surrounded by clear turquoise waters. At the world travel awards in 2006, TCI was named “The Best Beach in the World”.

TCI’s slogan is “Beautiful By Nature”, as such, the government has set aside 33 specific protected areas. These protected areas include national parks, nature reserves, sanctuaries, and historic sites totaling more than 325 square miles.

The islands are made up of two large limestone plateaus. The deep trenches off the coast are frequented by a variety of large game fish such as Tuna, Mahi Mahi, Wahoo, Marlin, and all types of Sail Fish. Each year in July, the Turks and Caicos Classic is held, and is a world class sail fish tournament. The flats of the south of the islands are ideal for bone fishing. In addition the islands are a sanctuary for a variety of marine life. Eagle Rays, Manta Rays, Sea Turtles, Humpback Whales, and Dolphins are just a few of the animals that call the aquamarine waters home.

On the border of the islands plateaus are lines of coral reef and some of the most beautiful coral walls in the world. From the incredible wall diving to the historic ship wrecks of Salt Cay, the islands are quickly becoming a Mecca for the avid diver.

The salt flats and mangrove marshes also serve as excellent feeding grounds for resident birds. Great Blue Herons, Flamingos, Osprey, Pelicans, Terns, Frigates, and Egrets can all be viewed by bird watching enthusiasts. For those seeking an ecco holiday, TCI has an abundance of opportunities.

The sun almost always shines in TCI with an average of 330 days of sunshine a year. The average annual temperature is 28°C or 83°F, with the hottest months being in September and October. The temperature is moderated by the easterly trade winds which help keep the islands cool. Average annual rainfall is 30 inches per year occurring mostly in September.

The islands population is quickly growing and there is currently 38,000 permanent residents. The majority of the islands residents reside in Providenciales and Grand Turk, however North Caicos, South Caicos, Middle Caicos, Parrot Cay, Pine Cay and Salt Cay are also inhabited. In addition there are countless uninhabited cays waiting to be enjoyed by those who long for the solitude of a completely deserted beach which can be a perfect place for a romantic getaway.

TCI is a British Overseas territory (BOT). Being a BOT means that the British Government is committed to promoting the economic development of the islands and to offering assistance in an emergency, however, the British crown promotes self determination and the islands have the freedom to run their own affairs to the greatest degree possible. As such the islands have their own government and legal system that are modeled after the British system. The island of Grand Turk is the capital and is the seat of government. There are no exchange controls and there is,

• No income tax
• No inheritance tax
• No capital gains tax
• No corporate tax
• No annual real estate tax

Visitors from the western world do not require a Visa; however a Passport must be presented at entry. Visitors are granted a temporary residence permit for a maximum of 30 days and must show proof of a departure travel ticket. Those who wish to stay longer may apply for an extension not exceeding 6 months at the discretion of the immigration department.

Permanent Residence Certificates (PRC) are issued to applicants who have made the required investments in TCI. PRC’s come in two categories with the right to work and without the right to work. The “with out the right to work” category is much easier to obtain and is intended for investors or people who wish to retire in the islands. The “with the right to work” option requires the applicant to have held a work permit in the islands for at least five years. Both categories require the applicant to have invested at least $250,000 in real estate here in the islands.

Work Permits – Non Turks and Caicos Islanders require a work permit in order to engage in gainful employment. The majority of work permits are issued on a year to year basis, however, it is possible to obtain permits for 3 years and even 5 years for a self-employed person. Applications for work permits are only granted if the employer cannot find a suitably qualified Belonger for the post.

Work permit applications are generally handled by the employer, law firms or through an employment agency. Organizing, submitting and pursuing a work permit application is an involved process, and self employed persons are best served retaining professional assistance with initial applications. Government work permit fees range from US $100 per annum in the farming category to US $7500 for professionals and business managers.

Citizenship/Belongership – The grant of TCI passports falls under the British Nationality act – Whereas the discretion to grant Belongership rests with the TCI government. Belongership status entitles an individual to vote in general elections and to be considered for public offices. The possibility of acquiring Belongership status for persons not born in the TCI is generally restricted to individuals who have made a significant contribution to the islands.