Banks resume $200 million in real estate transactions

Commercial banks here have resumed real estate-related transactions after some of their concerns relating to the issuance of tax clearance certificates were addressed by the state’s revenue collection agency.

However, the lending institutions said some troublesome matters continued to worry the real estate industry.

The bankers had said in late May that they had suspended over 300 real estate-related transactions estimated at $211 million due to a “lack of clarity” on the processes involved in the issuance of tax clearance certificates by the Barbados Revenue Authority (BRA).

And President of the Barbados Bankers’ Association (BBA) Donna Wellington had warned that until there was clarification, the financial institutions would not be in a position to close any real estate-related transactions or disburse monies associated with those deals.

In an update this week the BBA told Barbados TODAY the tax clearance certificates were now being issued and the banks had begun to disburse and register securities, one of their major concerns at the time.

However, the association was “still in discussions with the BRA as there are still outstanding matters”.

Barbados TODAY understands that the BRA is currently reviewing a number of recommendations put forward by the bankers and is expected to get back to them soon with a verdict.

Under the amended Barbados Revenue Authority Act, individuals and corporations are required to be fully paid up to all branches of the state before being able to obtain a tax clearance certificate, which is needed to conduct real estate transactions, among other business.

The bankers were concerned the measure would hamper their ability to recover mortgages if a borrower who defaulted or attempted to sell owed taxes.

With banks already having binding contracts with those clients, the current situation is proving to be an additional risk to the banks’ mortgage portfolios.

President of the Barbados Estate Agents and Valuers Association Paul Alleyne, who last month expressed concern that the hold up could send the sector back into recession, told Barbados TODAY while he welcomed any movement, the continued lack of clarity in some instances was “not good for the industry”.

“It is a positive thing as long as what is being said is the case that there is some movement,” he said.

“I think what they [the commercial banks] are still trying to get is clarity. I don’t think it is good for the industry because what you have is a new measure that needs clarification so that business can continue as normal,” Alleyne said.

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