Bermuda can kick-start its real estate market in the post Covid-19 world — but it must be prepared to rip up the rulebook and embrace immigration reform.
Mathew Kelly, a director and head of real estate at law firm Chancery Legal in Hamilton, said the disruption caused by the coronavirus crisis “is the perfect opportunity to bring fundamental change to kick-start the market”.
He added that the “real game-changer” would be immigration reform.
Mr Kelly said: “With greater numbers of residents, the demand to rent or buy properties increases and the flow of money from outside sources begins.
“For years the population of Bermuda has been shrinking and, in turn, so has the economy.”
But he emphasised it would not be a case of opening the immigration floodgates.
Mr Kelly said: “Rather, it is by reducing restrictions for the right immigration model so you encourage job makers and investors to return to our shores”.
Mr Kelly added that changes to immigration rules could be reversed if required.
Mr Kelly said: “The case could be made for a three to five-year trial in an effort to get Bermuda’s real estate and general economy moving again so we can compete with our competitors on a level playing field.”
He added there were other areas that should be considered to help create the changes needed to boost the sector.
Mr Kelly highlighted the real estate market accounted for 15 per cent of Bermuda’s gross domestic product, and was a key indicator of economic health.
But he said the sector had struggled since the financial crisis and recession of the late 2000s, while other places, such as the Cayman Islands, had seen increased activity in commercial and residential real estate.
Mr Kelly added that Cayman had lifted restrictions on property ownership and its economy had been boosted.
He said it was time for Bermuda to act and among his suggestions was the elimination of the “alien licence” application process for non-Bermudian buyers.
Mr Kelly explained licences can take up to six months to be issued and delays caused some buyers to pull out of purchases.
Among Mr Kelly’s other ideas were that Bermudians should be exempted from stamp duty on the first $750,000 of a property purchase price.
He said there was also scope to lower the annual rental value level that restricted non-Bermudians from buying houses and condominiums below a certain price threshold.
Mr Kelly said this would help Bermudians who struggled to sell their homes.
He added that people on work permits should be allowed to buy condos. Mr Kelly said it would also be helpful to the market if the banks reduced mortgage interest rates.
He added: “Bermuda’s real estate market is at a crossroads. We can choose to continue along the road of inaction or we can tear up the rulebook and take the road to recovery.”