So, you are thinking of buying a property here in our Cayman Islands’ paradise. The big question is “What is it going to cost me?” Aside from the purchase price of your chosen investment, there are a few other costs to consider and budget for. The general rule of thumb is to budget 10%-12% of the purchase price but let us outline how this can break down.
Property Valuations & Appraisals
Property valuations are conducted by a registered independent valuer or a chartered surveyor who will provide you with a complete valuation report on the property you are interested in. This is customarily paid for by the buyer but can also be done by a seller to provide reassurance of the fair market value of their offering. The cost of the valuation depends on the size of the property but normally starts around CI$500 and goes up from there. If you are seeking bank financing, this will be a requirement and your banker will choose the valuation company and arrange for the valuation, which they normally keep for themselves.
A property inspection is an examination of the property including, but not limited to: - structural components, exterior finishing's and structures, interior components and finishing's, mechanical, electrical, and plumbing systems of the home. For an additional fee, they will inspect pools and pest activity. A licensed home inspector will provide a report showing all areas inspected and explain their findings, what is required for any remediation needed for unsatisfactory findings and may also include estimated cost to remedy these issues. Just like the valuation, a property inspection fee is based on the square footage of the property and can range anywhere from CI$500 to approximately CI$1500.
Stamp duty is a one-time 7.5% fee payable to the Cayman Islands Government for all real estate transactions. This fee is based on the purchase price or fair market value of the property, whichever is greater. There are circumstances for reductions or even full exemptions of the stamp duty. All buildings sold with chattels (furnishings) are given a reduction whereby the fair market value of these chattels is added up and then deducted from the purchase price of the property. Stamp duty is then calculated on the remaining balance. Many people ask,“What is considered a chattel?” and our rule of thumb is, if you turn the property upside down, anything that falls out is a chattel and anything that remains is not. There are also reductions depending on a purchase price threshold which is offered by the Cayman Islands’ Government for first time Caymanian buyers.
Stamp Duty on a Mortgage
If you are seeking bank financing, there will be an additional 1%-1.5% stamp duty payable to the Cayman Islands Government and calculated on the amount borrowed.
Legal Conveyancing & Registration Fees
In general terms, this is where an attorney will prepare all required completion documents required to transfer the property from Vendor to Purchaser. This can involve property searches and enquiries, notary services, obtaining required Discharge of Charge documents to name a few of their services. Your attorney will provide a completion statement breaking down each of these financial aspects and register documents necessary for the transfer of property after closing. They provide these valuable services and charges are in the range of 0.5%-1% of the purchase price. There will be additional fees for disbursements including Government Registration filing fees that range from CI$50-CI$100 payable to the Cayman Islands Government.
Strata Fees or Home-Owners Association Fees
Condominium projects in Cayman are registered as Strata Ownership where each owner owns their specific unit or “strata lot” as it is called, and they own a pro-rated share of the common area property based on the square footage of their unit or strata lot. A Strata Corporation ensures the buildings and common area property and often employs a manager to oversee and maintain the complex for the benefit of the owners. Each owner is charged a fee that includes the insurance covers and various maintenance costs such as pest control, landscaping, pool maintenance etc. In some cases, air conditioning and telecon services are also included. There could be a planned or unplanned “special assessment” where owners are asked to pay beyond their allotted strata fees when special property improvements are undertaken, or unexpected repairs come up. It is particularly important to ask if there are any planned special assessments when purchasing in a Strata Corporation!
If you purchase property in a subdivision that has a home-owners association (HOA), you will be asked or required to become a member of the Association. They’re similar to Strata Corporations, in that you will be required to pay monthly dues that go towards maintaining communal areas, landscaping, or to pay for security for example. This can be priced as a flat rate per parcel or priced per square foot of the property pro-rated over the annual expenses.
Costs Associated with Bank Financing
If you are seeking bank financing, there will be additional fees such as the banks’ “commitment fee” which is standardly 1% of the borrowed funds, and many times you will be required to have a life insurance policy that is assigned to the Bank for further security.
Other Costs to Keep in Mind
You will need to consider how much it will cost from month to month for your utilities and general maintenance. This includes water bills, electric bills, telecon, pest control, AC servicing, property insurance, and landscaping. You can always ask your Diamond Properties’ Agent to source an approximate monthly cost break-down, so you are prepared and surprise-free as you settle into your dream property.
Most properties in Cayman come at least partially furnished, however should your property be unfurnished you will need to consider the cost to fully furnished the unit. There is a growing supply of furniture stores on Island, and a smooth supply chain to import furnishings so making your design dreams come true.
Our most valuable piece of advice is that the key to securing the best investment in your future is working with a Diamond Properties’ Agent. We will keep it all on track and be with you every step of the way!