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Expatriate Rental Right Developments

In the ongoing (and thus far seemingly endless) saga of expatriate villa rental rights, there is some new information to report—information that is still “unofficial” as it hasn’t been formally announced or published as yet, but information that seems to be quite reliable. In fact, a new Alien Land Holding License Application has already been created to reflect the new policy--in the new application a clear distinction is made between “private homes” (i.e. houses not to be rented) and “villas” (i.e. houses to be rented). This change to the application form itself is significant in that the new rental policy discussed below fundamentally impacts new expatriate purchasers—most existing alien homeowners are not impacted by the new policy (however, they have a separate set of concerns).

Fortunately, the new policy strikes me as being fair and civilized—enabling the expatriate villa rental industry (an industry that I believe is crucial to Anguilla’s economic well being) to grow. Essentially the new rental policy will require expatriates to pay an annual license fee of US$2500 for the right to rent, plus US 50 cents per square foot under roof for every square foot after the first 2000, plus US 25 cents per square foot for every square foot of uncovered deck space, with the requirement that all expatriates who rent their villa retain the services of a Government approved property manager. For most new purchasers, such a policy should be viable.

The matter gets a bit more interesting and a bit more complex when the new policy is considered in light of existing licenses—to that end I’ve been advised that the conditions on licenses already issued will be grand fathered (as they should be) so that those license holders with the right to rent with no annual payments or those with the right to rent with US$1200 annual license fee requirements will be protected. However when those license holders sell their property their grand fathered conditions cannot be transferred to the new owners--the new owners will be subject to the new policy (as seems equitable). Furthermore, those license holders that do not have the right to rent stipulated in their licenses will be able to apply to Government for such rental rights and will be subject to the new policy—which also seems sensible.

An interesting wrinkle to the above is the fact that Government has recently mailed letters to many (perhaps to most, perhaps to all) expatriate home owners on island advising them that they must pay US$1200 per year to Government for each year since they received their license (less any annual fees previously paid). This letter apparently took no notice of the fact that in most cases (if not in all cases) the US$1200 annual fee was not an automatic yearly charge but was due only if the homeowner rented their home that that year. Current indications are that these letters were sent out erroneously and the US$1200 fee is in arrears only if rental activity occurred during that given year--however I don’t doubt this will continue to be a contentious issue as disputes will inevitably arise as to how many years a given expat did rent their home without paying their appropriate annual fee (and given the fact that many expats tried to pay their fees over the years in question but were apparently told by Treasury that they didn’t have to do so, further complicates the matter).

Underlying all of the above is the matter of trust between Government and the individual alien investor—with the fundamental question “Am I wanted here?” being more and more openly asked by expats. From the initially unannounced issuance of new land holding licenses with specific refusal to allow rental (and the corresponding refusal to grant rental rights upon further application) to the letters recently mailed, the issue of real estate investment protection for aliens has become a real concern for them—a concern which negatively impacts the real estate market on island and which, therefore, negatively impacts the well being of all of us who live on Anguilla.

Whereas I truly understand (and sympathize with) Government’s desire to ensure that annual rental fees (and concomitant accommodation taxes) are properly paid, their efforts to ensure such compliance have not been (in my opinion) been properly focused to date—thus far their efforts have resulted in general confusion and concern (as well as economic slowdown) without addressing the fundamental issues at hand. Given the fact that I do believe the Government does care, and cares very deeply, about raising revenue equitably between the Belonger and non-Belonger, for the protection of the real estate market Government should be more openly aware of the economic contributions of foreign investors as they attempt to ensure that they pay their fair share.

With the above in mind, and given the concerns that are now so entrenched with regard to the policies of the last eighteen months, Government should quickly take some proactive steps to restore the faith of expats in Anguilla’s real estate market to ensure that they continue to view Anguilla as a viable place to invest. One such way of being more proactive (and there are many) would be to grant Provisional Permits of Permanent Residence to all existing and all future alien land owners…such permits would, I believe, go a long way to answer the very troubling question “Am I wanted here?” I believe a Provisional Permit of Permanent Residence should be available to all expat landowners for as long as they hold a valid land holding license under the same conditions (and the same fees) as the Permit of Permanent Residence now available

Without the infusion of foreign capital, Anguilla will be in a precarious position—and it is very dangerous to depend on a few “mega-projects” for that infusion…the smaller, independent, high net worth individual investor should be valued (and courted). It is now very important to convince those foreign investors that the confusing steps of the last year and a half were innocent and not intended to be punitive —revenue collection is always a sensitive issue…one must always be aware of both the golden egg and the goose.

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