The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THE Central Bank’s governor yesterday said he is aiming to reduce “exchange control interference” with the approvals process for real estate deals involving foreign investors.

John Rolle, responding to Tribune Business inquiries, said: “For us one of the areas where we would like to see some reforms - possibly later this year - is the interaction between exchange control and the real estate market in terms of how we process and approve those type of transactions.

“It is a conversation that we are having with the Ministry of Finance. From a data point of view we still need to know what’s happening. There are some points in the system where improving the information collection could serve our purpose, and it could allow more of the private transactions in the real estate space to take place without as much of the exchange control interference. That’s an area where we do expect to see some developments this year. I’m talking more the residential side.”

Tribune Business reported last year the complaints from multiple realtors, attorneys and others about how exchange control “red tape” had dramatically slowed approvals for real estate deals involving foreign investors, and was threatening to undermine investor confidence in this nation.

They argued then that The Bahamas was “shooting ourselves in the foot” by causing multi-month delays that was resulting in “uncertainty and anxiety” among the foreign investor community, with many “wanting to get out” of this nation.

The requirement for a conveyance that has been lodged with the Registry of Records, and proof this has been done, as confirmation of sale was adding four to six weeks to the Central Bank approval process.

And the requirement for board minutes and resolutions was also said to have been contributing to delayed approvals, with clients and attorneys viewing this as unnecessary and possibly beyond the remit of the Exchange Control Regulations Act.

Mr Rolle, in a January 2018 interview with Tribune Business, said the Central Bank was “ceasing” its demand for proof that title has been recorded via the transaction being entered into the Registry of Records as well as the request for foreign-owned corporate entities, which are selling/purchasing Bahamian real estate, to provide Board approvals and resolutions relating to the deal.

However, another key concern raised at the time revolved around the Approved Investment Status granted to foreign investors, and how the Central Bank has changed processes and procedures in this area.

When it came to Bahamians purchasing from foreigners, the Central Bank has traditionally given exchange control approval in advance of the sale. However, it was said to have been requiring that a stamped copy of the conveyance first be produced, adding a four-six week delay on something that is outside the foreign vendor’s control.

As for deals involving foreign vendors and buyers, foreign currency sales proceeds have traditionally been remitted without prior approval provided the purchaser then seeks Approved Investment Status.

Tribune Business, though, was informed that the Central Bank was requiring the vendor to seek approval to receive these monies which, in turn, is conditioned on the purchaser gaining their approvals - again adding weeks to a deal’s closing. It is unclear whether these issues have subsequently been addressed.

Mr Rolle, meanwhile, yesterday said exchange control liberalisation should not be rushed. While acknowledging that further relaxation will be forthcoming, he added: “The only qualification is that we always want to pace the reforms alongside how well we can absorb the change.

“With what we have recently done there, Bahamians have more access to make investments aboard. We’re seeing more use of the investment currency. I can’t quote a number but it is up considerably from previous years. There is also increased use of the other facilities. Even with those we haven’t seen any interference with the net inflows to the foreign reserves.”

In February 2018, exchange control liberalisation affecting both capital investment and current account trade transactions took effect. Bahamian-owned businesses are now allowed to maintain operating deposit accounts, with up to $100,000 in foreign currency, at domestic commercial banks without Central Bank permission.

Also taking effect was the reduction in the premiums on investment currency purchases and sales to 5 per cent and 2.5 per cent, respectively, from the previous levels of 12.5 per cent and 10 per cent.

As opposed to paying with investment currency, Bahamians can now fund residential purchases abroad of up $0.5m at the official exchange rate, granted that the properties are for their direct or immediate family usage. Temporary residents, who have resided and worked in The Bahamas for at least three years, are allowed up to B$1m from B$400,000 to finance owner-occupied property.