Sluggish Apartment Sales Spark Confrontation – The Royal Gazette

Realtors and the government remain at odds in a seven-year battle after what the industry believed were the unintended consequences of 2015 changes that scrapped the ability of business permit holders to purchase condominiums outside of hotel/tourism projects. (See the Real Estate Business column, p. 11).

But government officials object that additional legislative changes in the same section of the Immigration and Protection Act amendment leave the door open to more apartment purchases by permanent resident certificate holders.

At the heart of the controversy are the slow sales of condominiums.

Apartments were first built in Bermuda in the last century as a response to the housing shortage and as an investment opportunity for Bermudians.

Realtors and the government agree that the market has long faced a very low turnover of sales and landlords have reported sharp price drops of as much as 30 to 35 percent since the global market crash in 2008.

It also seems clear that what the industry believes are unintended consequences in restrictions on apartment purchases are in fact exactly what the government has been pursuing.

The government considers that deliberate restrictions on apartment purchases by non-Bermudians allow more young Bermudians the opportunity to purchase their first home.

Today, the only way non-Bermudians can buy an apartment is with a PRC or residential certificate.

Politics did not come without its complications, as explained by Penny McIntyre, head of real estate at the Chamber of Commerce.

She said: “In 2015, the government change eliminated the ability of work permit holders to purchase housing units outside of the (more expensive) hotel/tourism projects.

In 2021, only international buyers can purchase condominiums within hotel/tourism projects, unless the buyer already has a residence certificate.

“This has reduced the buying audience to Bermudians only for any non-tourist private condominium development owners for sale, going forward.

Meanwhile, the Economic Investment Certification was launched, at a time when resort housing units were already in demand, as local and international buyers sought new units during the pandemic. This has resulted in far fewer stock options for sale for resort-ready condominiums.

By the last quarter of 2021, foreign investors/resident owners had a total of three apartment complexes to choose from, island-wide.

“Only new developments with any stock remaining are St. Regis Bermuda and Azura. The next stock for these developments in the pipeline is either pre-sold or not available for up to another 18 to 24 months.”

Realtors have had the opportunity to present their case to the authorities in at least a few meetings, but the government is resisting any change.

Their view is that with PRCs allowed to buy, the condo market will eventually be much larger.

when approached Royal GazetteA spokesperson for the Ministry of Economy and Labor advised: “In the 21 years under the previous residence certificate policy, which expired in 2019, purchases of condominiums outside of hotels and tourist accommodations have been restricted.

“As it stands now, this law has not changed, and there is no evidence to suggest that a significant number of housing certificate holders have purchased apartments. (Government figures only show an average of 14 housing certificates until they were issued over the past 20 years).

“The potential for the new policy to negatively affect apartment sales is negligible.

“Moreover, the government met with the real estate division of the Chamber of Commerce and requested more statistical data on the matter. No information has been received to support the need to remove the restriction on residential purchases for non-residents.

“Conversely, the recent law change (November) to allow long-term residents to acquire the PRC will significantly increase the pool of individuals with the ability to purchase condominiums in Bermuda (effective March 1, 2022).

Brokers say the market will benefit if the government returns the apartment owner’s option to sell their (non-shelter) condominium to work permit holders and international buyers.

McIntyre said the benefits would include:

1, Introducing much-needed turnkey and renovation condominium inventory opportunities that current pipelines and the next two years are struggling to provide to buyers;

2, reopening to a wider, previously successful buying audience who are still interested in Bermuda and encouraging work permit holders to invest more in an economy where the government is already chasing foreign investors as it is;

3, stimulate more stamp duty for our cash-strapped economy and government;

4, Possibility to drive more business into our local economy for architects, planning department, general contractors, electricians/plumbers, designers, furniture companies, movers, local hardware stores, attorneys, real estate agencies, etc;

5, Improves old/old condominiums, especially sellers who are less likely to reinvest when they struggle with depreciation;

6, helps Bermudians and non-Bermudian owners to finally exit an asset that they may have had in the market for years without previous reasonable interest;

7, helps stop the bleeding of the elderly, the sale of private development condominiums.

Ms McIntyre said: “The government’s EIC initiative could continue in tandem with these corrections/reintroduction of recommended buy-and-hold rights and may bring further success to Bermuda by offering broader stock options that foreign investors in competitive markets elsewhere find readily available.”

With the new policy, international buyers are forced to obtain an EIC, so it usually takes five years for the next step to obtain the residential certification needed for non-hotel apartment purchase rights. This is the path, the delegated process.

But a government source said that along with the November rulings, the changes not only expanded the property sales market, but served to protect Bermuda’s interests.

He said the changes in November presented an opportunity to allow an additional 400 to 500 non-Bermudians eligible for PRC status, some of whom might be interested in an apartment.

He said the EIC is creating a pathway for the wealthy to bring investment here, start the economy, and in return get a residency certificate.

The EIC’s alleged success was recently highlighted in a social media campaign, in which the government said the 14 EICs had covered 32 people with their families and pumped $260.6 million into the economy.

It consisted of about $46 million in real estate and about $209 million in new business.

She also said that the total investment in the EIC pipeline is about $110 million, adding that current and future investments in Bermuda indicate the high level of confidence of people on the island.

A spokesperson for the Ministry of Economy and Labor said Royal Gazette Last month, of the $260.6 million under the EIC that included certificates issued from March 1, 2021 through February 28, 2022, approximately $30.4 million in investments were made after January 2021, and approximately $230.2 million in investments were made before January 2021. , including previously made significant commercial investments.

Moreover, it has been the government’s longstanding position that previous residency certificates have sought to attract retirees globally. But there was no way to trace the material they had brought to the island.

The new policy provides the government with a way to track and measure overall program success, with the initial EIC contribution of $2.5 million leading to certification of residency.

Benny McIntyre, Head of Real Estate, Chamber of Commerce; Partner at Rego Sotheby’s International Realty (photo attached)

Condominiums at the St. Regis in St. George, Bermuda

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