Buying a property in the Cayman Islands has many advantages, not least that if you are staying for some time, mortgages tend to work out cheaper than rents over a three to five-year period.
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There are no restrictions on foreign ownership of real estate if the property is for personal use and there are no annual property or capital gains taxes. If the property is rented out as an investment, then no tourist tax is payable if the property is rented to residents (although, if more than two properties are owned for rental, there will be additional licences required, namely a Trade and Business and Local Companies (Control) Law Licence).
Cayman’s Land Registry office enables transfers to be relatively quick and simple. Every piece of property is registered under a unique block and parcel number, which means every owner is registered and the Government guarantees the accuracy of the entries recorded at Lands. A potential purchaser may examine the records regarding any piece of property to check whether there are any liens, charges or restrictions on it. Unless stipulated within the covenants for a particular development, there are no time deadlines for building on raw land. The land can be held undeveloped indefinitely and many families are land banking for future generations. Planning approvals are valid for five years following the grant of planning permission.
Much like a big city, each neighbourhood and borough in Cayman has it’s unique qualities, quirks and characteristics. Read on for an explanation of residential areas not only in Grand Cayman, but in the Sister Islands too.Read More
If you prefer to conduct your real estate enquires and searches independently, there are online resources that you can use to find real estate listings as well as useful information about purchasing property in Cayman. You can also search the listings on Cayman’s Realtors websites. Look for real estate and land for sale as well as rental properties that are available.
When buying a property, it’s more productive to work with one real estate agent. As mentioned before, the Islands’ MLS is run by CIREBA and it ensures the best market coverage to view every property on all three Islands.
Online Property Search
If you prefer to conduct your real estate enquires and searches independently, there are online resources that you can use to find real estate listings as well as useful information about purchasing property in Cayman.
Know Your Client/Customer (KYC)
Please keep in mind that the sale or purchase of real estate in the Cayman Islands constitutes as Relevant Financial Business for the purposes of Cayman's anti money laundering measures.
As part of the Know Your Client/Customer (KYC) requirement, your real estate agent or any professional acting in relation to a real estate transaction are required by the Cayman Islands Government to collect your identification details such as passport or drivers license numbers and source of funds (by way of a bank statement) as well as other relevant information to finalise the transaction.
If you require further information about this requirement, please contact a legal conveyancing professional found on the Legal Conveyancing page.
Stamp duty, which is payable on all real estate transfers and purchases (other than those between close family, aka ‘by love and affection’), is 7.5%. However, a first time Caymanian buyer will pay no stamp duty if the property is below CI$300,000 (2% if it is over CI$300k but does not exceed CI$400k) and is going to be owner occupied.
Stamp duty on bare land purchases by first time Caymanian buyers are set at 2% for land that is valued above CI$100k but does not exceed CI$150,000. There are some zoning exceptions. Stamp Duty is paid by the buyer on the purchase price or market value, whichever is higher (as assessed by the Lands and Survey Department), but NOT on chattels purchased with the property. The Duty must be paid within 45 days of a contract being signed.
Other typical charges associated with purchasing are described below:
- 1% charged on mortgages of less than CI$300,000 and 1.5% on mortgages of CI$300,000 or higher. You should budget up to 1% for legal and registration fees.
- When you build a house, there are building permit fees which are charged according to the square footage of the property being built.
- When purchasing with bank financing, the bank will require a report on the ‘Market Value’ of the property. Each lender has its own rules but the report will usually need to be prepared by an approved firm of professional valuation surveyors. Aim to pay in the region of CI$400 for this report.
Furniture Exempt from Stamp Duty
Note that furnishings (officially known as chattels) are deducted form the sale price of a property before the stamp duty is calculated. Work with your real estate agent to deduct these from sales price before calculating stamp duty.
Otherwise, call the Lands and Survey Department on (345) 244 3420 or visit their website and they will be happy to discuss your situation and calculate the value of your potential property.
Residential property in Cayman is often sold as part of a strata plan if it is in a condominium or apartment complex. Most countries have the concept of freehold property, where the owner has ownership and responsibility for the land they own and all buildings on it.
Strata ownership is less familiar to many people, but very common in Cayman. The following is an explanation of how it works:
- If you buy a property which is part of a strata plan, you will have the registered title of the house or apartment that is situated within the property in the plan. You will also own a share and have voting rights in the ‘strata corporation’ which owns all the land in the strata plan including estate roads, communal gardens, shared pools, etc.
- The strata corporation has an obligation to insure the strata property and maintain it for the benefit of the owners, along with the right to recover the costs of doing so from them. There will be rules and regulations governing how the strata company is run (known as strata by-laws) and an annually elected committee that is authorised to run the corporation. Examples of monthly strata fees you might expect to pay are: CI$375 for an inland two bedroom townhouse; CI$650 per month for a three-bedroom inland apartment; and for properties on the water, especially along Seven Mile Beach, you could easily pay between CI$800–CI$1,200 (CI$400 maintenance, CI$350 insurance and CI$65 sewage charge). Your realtor will be able to find the exact strata fees for you.
Most banks and financial institutions in Cayman offer mortgage packages. Interest rates are quoted based on the KYD and USD prime rate published in the Cayman Islands by the retail banks.
The prime rate in Cayman normally fluctuates in accordance with changes in the United States Government Federal Reserve rate, also referred to as the “New York Prime Rate”. Banks usually ask for deposits of between 10%–35% as a contribution towards the purchase price or construction cost. Long term interest-only mortgages do not exist in Cayman. Mortgage amortisation terms are normally offered from 15-30 years, but typically not exceeding retirement age.
It is worth comparing what kind of deal the different banks will give you, as a variance of 1% or even 0.5% on your interest rate will make an enormous difference. Banks will usually charge between 1-3% above the prime rate, giving the lower percentage rate to those with the greater deposit. Banks also charge a commitment fee of up to 1% of the loan amount and some charge an early repayment penalty. Establish a meeting with your chosen bank to determine the best possible rate and terms that can be offered. Cayman banks have historically been very cautious when lending money.
Life Insurance Requirements
Not many people know that you must have Life Insurance before purchasing a home in the Cayman Islands, so that, plus home insurance (and hurricane insurance) are things that can affect your finances when purchasing a home. A Property Insurance Policy collaterally assigned to the bank is required for all mortgages and many banks will also require a Life Insurance Policy so the mortgage can be repaid in the event of death, but is not required if the property is 100% privately owned. Your loan officer will advise on their bank’s specific requirements. Numerous providers offer life insurance in Cayman. With life insurance, as with any product of this nature, it is definitely worth your while to shop around and check quotes, coverage terms, reputation and customer service strengths of several providers. Visit our Life Insurance section for more information.
In the UK, it is common practice to have a Chartered Building Survey completed before purchasing a property, whereas in the US you would most likely have a Full Home Inspection done by a licensed home inspector. There are companies that provide both services in the Cayman Islands and it is highly recommended that you have one done when purchasing a home.
Whether applying for a mortgage, or purchasing or selling a property it is customary to instruct an independent valuation surveyor who is a registered valuer, chartered surveyor and member of the RICS (Royal Institute of Chartered Surveyors) to carry out a valuation report.
Conveyancing is the technical word that is used to describe the way that a property is legally transferred from one person to another. Technically, you can do the conveyancing yourself, but if the property is being bought with a mortgage, your lender will insist that you use a lawyer to confirm that the property is free from any liens or other encumbrances and to draft the appropriate charge documents.
A few law firms in Cayman have departments that specialise in conveyancing. Their job will be to prepare the paperwork for your mortgage and property transfer. They check that there are no encumbrances such as a mortgage lien, outstanding strata payments or old and unpaid water bills. They usually charge 1% of the property value unless a different figure has been negotiated.
A typical simple transfer of land takes no more than three to four weeks, with registration of the new proprietor at the Land and Survey Department taking place four to six weeks after that.Read More
Pitfalls to Avoid
Below are the various pitfalls you will want to avoid when buying a property in Cayman. Many, such as unpaid strata fees by the previous owner, will be caught by a conveyancing lawyer during title checks.
However, there are other pitfalls which are less obvious but equally easy to avoid:
- Water Bills: Make sure the final water bill on the property has been paid by the previous owner. Water companies are under no obligation to reconnect water supply to accounts that have been disconnected due to non-payment and still have unpaid, past-due charges. Renters are also encouraged to ensure previous water bills have been paid for by the landlord or previous tenant prior to moving in.
- Air Conditioner Servicing: Check whether the property owner has been regularly servicing the A/C units. A lack of regular maintenance will greatly reduce the life expectancy of air conditioning condensers and new systems can cost thousands of dollars. As a condition of the sale, request that the seller have the property’s units serviced and provide a report on their condition.
- Pest Control: Find out if the previous owners had the property sprayed regularly for ants, roaches, termites and other pests. Failing to have done so could put you at risk for an infestation problem. If you are buying a wooden house, get the house checked for termites before you buy the property.
- MEP Report, Home Inspections and Site Surveys: As a condition of purchase, it is very important that you get a Home Inspection and/or a MEP report (Mechanical, Electrical, Plumbing) done on the property before you finalise the sale. Significant problems can reduce the value of the property. If you are purchasing raw land, then a Conditions Site Survey is recommended by a qualified engineer who will assess, among other things, whether your new house will need to be built with pilings, thus hugely increasing the cost of building. More information on what the technician does, and why it is important, is listed in the next section of this chapter.
- Planned Special Assessments: If you are buying a condo, a good realtor will request a report from the strata’s property management company that confirms whether any special assessments are planned on the apartment complex. Special assessments may involve considerable costs and you might well be able to get the existing owner to pay for them (or have them deduct it from the sale price).
- Hidden Costs: Ask your realtor to request a breakdown of the monthly costs of running the property in the summer and in the winter months. It is not uncommon for a four-bedroom house on a 1/3 acre (particularly in a windy position) to have an average water bill of CI$650 per month and an average monthly electricity bill in the region of CI$1,000-CI$1,500+ depending on the month of the year, size of the house and whether the property has been well insulated (if the house has Icynene spray foam insulation in the attic, it will not only significantly reduce your electricity bills but help hold your roof together in the event of a major hurricane).