Banking, Insurance & Property

Banking

Many of the world’s banks are now returning to profit and Antigua’s banks are no exception.  Banks in Antigua dealing with private individuals and businesses (as opposed to offshore banks) suffered less than elsewhere in the world partly due the number which are Canadian controlled and partly to the more cautious  lending policy of many Caribbean banks. The banking regulations of Antigua & Barbuda are stricter than many other countries.  Although designed to balance enterprise against risk even some of the most heavily regulated countries were unable to avoid occasional  illegal irregularities by some financial institutions.

Antigua & Barbuda has strict regulations governing both local and offshore banking not unlike the U.S. and many other countries worldwide.  As was proved in Europe, the U.S. and the Far East, regulations may not always be enough to prevent these collapses particularly during a global financial crisis such as the one recently experienced. However, as a result of also having to comply with Canada’s strict regulatory authorities in addition to those of Antigua & Barbuda there has been little or no risk of loss with these banks.  With a stable government and adequate regulation, Antigua & Barbuda remains a sound investment for both overseas funds and property. 

Antigua’s banks are as modern as any you will find throughout the world however, for the convenience of sailors during high activity periods such as Antigua Sailing Week a converted double decker London bus can be found in the English Harbour area  

Offshore Banking 


Offshore banking is generally perceived to be the province of the very wealthy but that is not the case.  The 'comfortably' well off can benefit just as much as the very wealthy from offshore banking.

In recent years the role a bank plays in an individual’s life has changed and deteriorated.   Relationships with clients and customer service are things of the past, banks choose instead to service their customers with overseas call centres and computer generated correspondence, however, there are alternatives.  Private bank accounts from leading institutions in favourable jurisdictions such as the Caribbean island of Antigua can make all the difference.  Offshore banking in Antigua is protected by strict privacy laws and it is a criminal offence to reveal any confidential information relating to an individual’s banking or business activity with crimes severely punishable. Naturally enough these laws do not protect those involved in criminal activity and Antigua and Barbuda adhere to international anti-money laundering rules.An offshore IBC established in Antigua and Barbuda can enjoy a tax exemption period of 50 years. This makes the twin island state incredibly popular with those looking for a secure, well legislated offshore jurisdiction.

The International Business Corporations Act establishes the legal framework for the operation of offshore banking business within Antigua and Barbuda. A banking license must first be obtained from the Supervisor of banking and Trust Corporations before commencing banking operations.  An offshore bank may engage in any generally acceptable banking activities from within Antigua and Barbuda and elsewhere, but it shall not knowingly accept deposits in the legal tender of a country of the Caricom region. 

Offshore banking is the business of receiving foreign funds through acceptance of foreign money deposits payable upon demand or after a fixed period or after notice, sale or placement of foreign bonds, certificates, notes or other debt obligation or other foreign money securities, or any similar activity involving foreign money or foreign securities using foreign funds acquired as above to finance loans, advances and investments or the activities of the person carrying on the business

A minimum paid up capital of US$5,000,000 is required. These funds must be paid into a bank in Antigua or major international bank overseas prior to the authorities issuing an international banking licensing.  An offshore bank is not subject to any reserve requirements as specified under the Banking Act which regulates the operation of local banks.

For all those engaged in legitimate offshore business, Antigua has many features that make it a popular haven.  Firstly the island state has a stable and secure democratic political environment, it has highly advanced communications and infrastructure, Antigua has tax free trade and processing zones as well as tax exemption periods for IBCs; the International Financial Sector Authority and International Business Corporations Department carefully control and protect the offshore sector and all those who open offshore bank accounts in Antigua or who establish their offshore operations in Antigua can feel secure in a jurisdiction that makes it its business to protect its investors and offshore clients.

A number of international banks have established operations in Antigua such as the Royal Bank of Canada and First Canadian Imperial Back under the name First Caribbean International Bank.  There are also a number of private banks in Antigua that offer accounts and services to high net worth individuals such as Global Bank of Commerce.  The applicability of Antigua as an offshore destination for an individual’s banking, trust, company or general offshore needs is something that should be determined with the assistance of an independent financial specialist.

Insurance

Whether travelling to or living in Antigua insurance is always a consideration.  Not being an area subject to tropical diseases the health risks in Antigua are no different from many of the more temperate countries however, travel insurance is always advisable as there are limited state medical facilities and the private hospitals are not cheap.  Medical insurance is available in Antigua from a number of specialist companies, however, it is advisable to arrange travel insurance in advance.  


As with any relatively sophisticated country, every form of insurance is obtainable in Antigua either through local companies or through the affiliates of internationally renown insurers.  Most general insurers such as ABIB,  Anjo or Brysons will cover everything from household through vehicles to yachts either placed with Lloyds of London or other major insurers.  Both property and vehicle insurance is quite expensive.  

Due to the island being in the hurricane belt and suffering, rarely, the occasional small earthquake, property risks are quite high, however, by telephoning around as much as 25% can be saved on premiums and, if you are insuring a property, having hurricane shutters can often save you more in one year’s premuims than the cost of the shutters unless, of course, you chose to instal electically operated shutters.

Antigua’s drivers are not known for their driving skills and although the speed limits are quite low, accidents are not uncommon which pushes up premiums for vehicles.  Again, shopping around does produce more competitive rates.

Being an island best known as a yachting centre Antigua has been trying to attract boats to stay throughout the year but, in the past, insurers have been reluctant to cover boats in hurricane areas.  Today, both U.K. and Antiguan insurers will insure boats both in the water and properly stored ashore  Pressure is beginning to be applied to ensure that all yachts visiting ports and harbours in the Caribbean carry at least US$2 million in third party insurance.


Property

Over the last years Antigua has become one of the favourite destinations in the Caribbean for people looking for second or retirement homes.   Antigua offers a wide variety in villas and land for sale from managed resorts to individually built homes and vacant building plots  

The worldwide economic downturn has also affected Antigua.   After years of increasing sales and sales prices the market has slowed down since the autumn of 2008 and prices have come down to levels which were seen a few years ago. The property market has not collapsed like in many other markets. There are a few reasons for this. Most property owners have a large equity share in their property. Prices were not inflated and are reasonable compared to more developed islands like Barbados, the Bahamas, St Martin and St Barths. Britian’s Daily Telegraph rated Antigua as the world’s sixth best retirement country.

The banks  in Antigua have been very conservative in their lending and investment policies and remain in good shape.  Antigua does not have a large inventory of properties that are offered for sale. Antigua is expected to bounce back quickly when the world emerges from this crisis. With the current reduced price levels, 2009 and 2010 may offers excellent opportunities for  purchasers

Renting Villas

There are many fine apartments, homes and villas for rent. The range is from a basic condo at US$ 100 per night to a lush fully staffed villa at several thousand US$ per night. Villa rentals can be a great alternative to staying in hotels. Renting a self contained villa is a different and special way to experience island living. Most of these rental villas have swimming pools and close proximity to one of Antigua’s great beaches. Villa rental also provides a great opportunity for second home owners to get an income from their second homes while they are not using it.

Property Sales

There is a wide choice of locations and developments in Antigua and also a wide price range. Completed homes start at small condos at around US$ 200.000 at one end of the scale and large villas on large parcels with extensive gardens of US$ 20 million and more at the other end of the scale.  The oldest development in Antigua is Mill Reef Club on the eastern, Atlantic, coast.  It was established in the late 1940’s as an exclusive vacation resort for a group of wealthy American families. Other east coast developments include NonSuch Bay, a newly built high-end managed community, Emerald Cove and The Peninsula.

On the western, Caribbean, side Jolly Harbour is the main development. It is a somewhat tired, mixed resort built in the late 80-ies although there have been some recent improvements.  Development continues but slowed by the current economic downturn.  Nearby, Sugar Ridge and other smaller developments benefit from the facilities offered by Jolly Harbour. Sugar Ridge features a Boutique Hotel, Spa, restaurant and shops. The Western side of Antigua enjoys spectacular views of the Caribbean Sea with Montserrat, St. Kitts and Nevis visible on clear days. Tamarind Hills is the newest development on this coast enjoying access to two beautiful beaches, Darkwood and Ffryes.

In the north, the residential areas of Hodges Bay, Crosbies, Paradise View, Cedar Valley and Friar’s Hill are close to the capital, the airport, Cedar Valley golf course, Woods shopping mall and other amenities. The north is especially popular with permanent residents and returning Antiguans.

Development in the south tends to be by individual plots although there are a few developments such as the the Mamora Bay development by Select Caribbean Developments.  The English and Falmouth Harbour area is a vibrant community featuring historic Nelson’s Dockyard, Shirley Heights, several marinas, the Antigua Yacht Club and Spring Hill Riding Stables. Yachting has made this area famous and in the winter months a multitude of the world’s largest and most exclusive yachts visit its marinas. English and Falmouth Harbour offer a great selection of bars, restaurants and coffee shops.

Building Plots

Some people prefer to build their own dream home. A good selection of building plots is available partly within larger managed developments and partly on separate individual locations. Building costs range between US$ 125 to US$ 300 per square foot depending on materials and structural requirements. Antigua has a choice of good professional architects, consultants, engineers, builders and contractors.

Buying a Property

Antigua welcomes investors who buy or build property. Non Antiguan’s will require a Non Citizen’s Land Holding License which takes 3-8 Months.   When planning your building, be sure that you consider the climate, prevailing winds and other weather conditions, using a local architect familiar with these elements is highly recommended.

Information on Buying, Selling and Renting Property

For non-citizens a license is required to purchase property. The cost is 5% of the value of the property.  The process has speeded up considerably in the past year but you still have a short wait for your licence. For vacant land, building must be started in compliance with the non-citizen’s license terms which usually are 2 years. Most property is fee simple or freehold. Leaseholds are rare and usually held by the Crown.  Government transfer fees are currently 2.5% for the buyer and 7.5% for the seller. Property taxes/rates are based on rental value and are low.  Legal costs for a transfer are 1% to 2% depending on the value of the transaction. 

There is no title insurance. Properties are registered at the Land Registry which is well organised. Copies of Land Certificates can be obtained for a small fee. Always obtain a Cadastral Survey of the land/property you propose to buy from the Survey Office and have a land surveyor check the dimensions.  Buyers quite often make the mistake of assuming that when a lawyer suggests a survey the lawyer is talking about a survey of the building.  He or she isn’t.  It is the land which should be surveyed as the boundaries are sometimes not where they appear to be from the fences.

Real estate agent commissions are 5% to 7%. The property management fee is usually 10%. Rental commissions are 8.33% for long term rentals and 20% for short term rental. Withholding taxes are 25% of net rental income for non-residents.  Insurance coverage is approx. 2.0% of insured risk with a deductible of 2%. Insurance includes earthquakes and named storms.  Bank financing is available but interest rates are high by US or European standards and 30% or more cash deposit will be required.  If you are looking to buy a holiday home in Antigua it may be worth considering raising a mortgage on your main residence.

Most houses are serviced by septic tank. Water cisterns are required by law.  Government electricity and water are usually connected or available nearby. Cable TV, landline telephone and broadband are available in most areas. Cellular telephone coverage is island wide.  More remote properties may be accessed by little more than a dirt track but most houses have access to adequate roads.

The Antigua Barbuda Investment Authority offers attractive fiscal incentives to developers including exemption from or reduction of payment of duty on the importation or purchase of raw materials, building materials, furniture, fixtures, fittings, appliances, machinery, plant and equipment for use in construction.

For a selection of agents see our Trades & Services Directory listed under Real Estate Sales & Rentals.