Trinidad and Tobago's property market continues to recover
Last Updated: June 25, 2015
House prices in the islands range from around TT$1.5 million (US$240,000) to TT$8 million (US$1.26 million), depending on size, location and amenities - though of course there are super-luxurious and also low-end houses that fall well outside this range.
At The Crossings, located on the outskirts of the bustling town of Arima in Trinidad, three bedroom houses are currently being offered for around TT$1.78 million (US$280,000). On the other hand, residential land in The Crossings sells for less than TT$120.5 (US$19) per square foot (sq. ft.).
The housing market is expected to continuously improve this year, despite weak economic growth. The economy is projected to grow by 1.2%, after real GDP growth rates of 1.1% in 2014, 1.7% in 2013, 1.4% in 2012, and 0.01% in 2011, according to the International Monetary Fund (IMF).
In Trinidad, foreign real estate buyers can buy up to one acre of property for residential use without a license. In Tobago, by contrast, no license have been issued to foreign buyers since a requirement for licenses was introduced in October 2007.
Buyers are required to pay 5% to 10% stamp duty, plus legal fees.
Landlords of Jamaican residential rental property unhappy
During 2010 rents fell quite dramatically in Trinidad. Rents are now in some cases half what was offered only 1 year ago. To take a couple of examples, rents now average US$1,000 for 120 square metre apartments, and US$1,800 for 300 square metre apartments – nice for tenants, disappointing for landlords. Gross rental yields levels are lower than ever seen in Jamaica, during 6 year history of data-gathering at the Global Property Guide.
Rental income tax is very high
Rental Income: Rental income is taxed at a flat rate of 25%.
Property: For residential properties, real property tax is levied at 3% of the property’s market value.
Capital Gains: Generally, no capital gains tax is levied, except on properties sold within one year of acquisition which is taxed at a flat rate of 25%.
Inheritance: There are no inheritance taxes in the islands.
Residents: Residents are taxed on worldwide income at a flat rate of 25%.
Buying costs range from moderate to high in Trinidad and Tobago
Roundtrip transaction costs range from 9% to 18.5% of the property's value. The wide variation is mainly due to stamp duty at 5% to 10% with the first TTD450,000 (US$70,094) tax-exempt. The realtor’s fee is around 3% to 5% paid by the seller.
Buyer and seller pay for their own lawyer. Legal fees are at 0.5% to 1.5%, plus 15% VAT.
In Trinidad and Tobago, law is pro-tenant
Rent Control: Rents can be freely agreed, except for very small rentals covered by the Rent Restriction Act.
Tenant Security: The landlord needs an eviction notice from the courts to evict a tenant. It takes an average of 192 days to evict a tenant in Trinidad and Tobago, according the the Lex Mundi project.
Slow economic growthTrinidad and Tobago is one of the Caribbean's richer nations. The island of Trinidad is world-famous for the Trinidad Carnival, but unlike many of its Caribbean neighbours which rely on tourism, Trinidad depends heavily on oil and gas production. The energy sector accounts for more than 40% of GDP and 85% of merchandise exports. Its sister island Tobago, which has a wealth of secluded beaches and rainforests, benefits from the larger island’s prosperity.
However wealth does not bring immunity from recession. In 2009 Trinidad and Tobago’s GDP contracted by 4.4%, followed by a 0.1% contraction in 2010. There was recovery in 2012 with 1.4% GDP growth, 1.7% growth in 2013, and 1.1% growth in 2014. The economy is projected to grow by 1.2% this year, according to the International Monetary Fund (IMF).
In March 2015, the country’s overall inflation rate stood at 6.6%, according to the Central Statistics Office. Inflation stood at 7% last year, from 5.2% in 2014, 9.3% in 2013, 5.1% in 2012 and 10.5% in 2011, according to the IMF. Inflation is expected to be 7.3% this year.
After a period of decline during the global economic crisis, the construction industry is getting a boost from the government’s development plan “Vision 2020”, which consists mainly of construction projects.
In the past several years, the government has prioritized economic diversification, focusing its efforts not just in the energy sector, but also in the non-energy sector and services sector.
Challenge for new government - fighting corruption, reducing crime
Mrs Kamla Persad-Bissessar, a former lawyer and education minister, became the country’s first woman Prime Minister in 2010. She called her new government the “People’s Partnership”, emphasizing openness and political accountability – in contrast to the previous government of Patrick Manning, who was accused of using government funds to finance his lavish lifestyle.
While many local residents in Trinidad and Tobago are prosperous, 17% of the population live below the poverty line. Crime involving drugs, guns, and gangs remains a challenge particularly in Trinidad, with murders and kidnappings topping the list.
The next elections were scheduled for September 7, 2015, political analysts expect a tight race between the ruling People’s Partnership and the People’s National Movement.