Beginning in October, the Central Bank of The Bahamas (CBOB) will liberalize exchange controls on the purchase and sale of residential property for non-residents, relinquishing its monopoly on exchange control approvals for real estate transactions.
CBOB said in a statement on its website that commercial banks will be now be authorized to “sell foreign currency for repatriation of residential real estate proceeds on evidence that the beneficial owner of the sold property is non-resident”.
The bank explained that the changes to these transactions will apply whether they are through an entity or an investment vehicle owned by a non-resident.
“Commercial real estate investments will still require exchange control approval, but only at the development stage. Subsequent sales of subdivided residential units or constructed dwellings (whether attached or detached) would not need approval,” CBOB stated.
“Under existing policies, non-resident entities must be designated as ‘resident’ to be eligible to hold real estate in The Bahamas. The bank will designate this status automatically during the conveyance process, along with ‘approved investment status’.
“This would not confer any entitlement beyond ownership of the property. While non-residents would continue to be able to open and operate Bahamian dollar deposit facilities, to cover property maintenance expenses, they would remain prohibited from financing acquisitions of property with Bahamian dollar credit. Non-residents would also remain subject to all of the permit and approval requirements of the International Persons Land Holding Act, 1993.”
The CBOB statement noted that these reforms depart from existing policy, which typically required central bank approvals on real estate transactions involving non-residents “and for the conversion out of Bahamian dollar proceeds on sales by non-resident to residents”.
“It extends the process of gradual liberalization, to improve administrative processes and relax controls in ways that still preserve the sustainability of the Bahamian dollar fixed exchange rate,” the bank noted.