Property sales and rentals in the British Virgin Islands in the midst of the COVID-19 pandemic
In the midst of the COVID-19 pandemic, many property owners in the BVI may now be strategising on how best to maximise their property investment in a bear market.
With the global tourism market in crisis, persons with vacation/short term rentals should be considering moving to a long term rental strategy of at least six months to a year until a better assessment can be made as regards settlement in the market. Some landlords may need to consider rent holidays (rent freezes) for affected tenants and may need to look at revisions to lease agreements in order to adequately provide for these circumstances. If a rental property is attached to a mortgage and risks running into trouble with rental income, owners might need to consider taking advantage of the moratoriums currently being offered by the various financial institutions and/or restructuring the entire mortgage.
Persons entering into new leases and new purchase and sale agreements should ensure these agreements contain robust terms dealing with standard acts of God, force majeure and/or material adverse changes and perhaps even include pandemic specific clauses to cover closing delays and disruptions, rental income delays or possible termination in extreme circumstances. Persons should also ensure they obtain legal advice before signing any new lease agreements or sale and purchase agreements for property, or before proceeding to continue toward closing on any property transaction, in order to ensure they have adequate protection in the midst of the current global crisis.
Property sale or purchase
We know that some property owners may be considering selling. However, we advise property owners not to be too quick to look to sell their properties (in response solely to the existing pandemic) unless each owner has fully considered all the circumstances and available options. In the BVI, property is a good value retainer and will perhaps be the last type of asset to give up value, even in a global crisis.
The good news for those wanting to sell however, is that existing purchasers are following through on purchasing property and new purchasers continue to express interest.
It's a buyers’ market
Now would be as good a time as any for purchasers to acquire property in the BVI. In fact, it might be a better time to do so, as negotiation power is in favour of purchasers in a bear market. Bank rates are at the lowest they have been since 2008 and new transactions which are financed can attract more favourable interest rates now than in pre-COVID-19 circumstances.
If you need assistance in any of the above areas or further clarification, please feel free to contact Ayana Hull, Head of our BVI Private Wealth practice or your usual Harneys contact for further assistance.