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Posted: Thursday 10 December, 2015 at 7:18 PM

Blood Suckers

G.A. Dwyer Astaphan

    The Citizenship by Investment Program of St. Kitts & Nevis provides two routes to citizenship, namely:

     

    (i)the SIDF contribution of a minimum of US$250,000; and(ii) the purchase of real estate in, as the relevant Regulations state, a “development which has been approved by the Cabinet as a qualified project for Citizenship by investment…” .

     

    An Approved Project is a real estate development that has been approved by the Cabinet as a qualified project for Citizenship by Investment.

    I have seen and heard of individual homes  and business premises being advertised and sold under the real estate option, although I don’t see how they can qualify as Approved Projects under the law as it presently stands.

    I’m not sure whether any of that has happened since the elections of February 16th, 2015. I hope not.

    The Regulations also state that “the minimum real estate investment required on the basis of an investment in real estate is US$400,000.00”.

    I ask you to pay special attention to that last sentence. It doesn’t say that the minimum overall investment, in order to qualify under the real estate option, is US$400,00. Instead it says that the minimum real estate investment required is US$400,000.

    That means that the real estate investment by itself has to be no less than US$400,000. It means that the Government, by the law, wants the real market value of the unit of real estate purchased under the Citizenship by Investment Program to be at least US$400,000.

    Minimum standard, minimum price for the actual real estate asset.
     
    But people have been beating the system and, in my opinion, breaking the law.

    For example, an investment in Development ‘X’ advertises its units at US$400,000. However, in its sales agreement it guarantees a one-year or two-year or even a five-year rental payment guarantee.

    So if the rent for the unit is, say, US$1,500 monthly, then over a five-year period, the buyer gets back US$90,000. He or she may even get that money up front in the form of a quick pay back right after closing.
    But that’s not all. The developer is also probably offering a sales commission of maybe 10%, and even more, of the purchase price, which means that another US$40,000, at least, comes off the US$400,000 listed sale price.

    Then there’s the stamp duty which the developer has to pay to the Government on the sale.

    So when it’s all said and done, the developer could end up with between US$200,000 and 250,000 for a unit that bore a selling price of US$400,000.

    And all of that would be okay except for the fact that the law says that the minimum actual real estate investment must be US$400,000.

    So what we are seeing are prices that are being inflated simply to meet the legal threshold.

    I don’t know of any sane developer who is going to sell a US$400,000 unit for US$200,000 or US$250,000. Do you?
     
    This raises concerns with regard to product quality, quality control, inspections, audits, and so on, little or none of which seem to have been  of much concern in bygone times.

    And the practice, if I can call it that, seems to be occurring more frequently in projects which are selling fractional ownership (which means basically that the ownership of a single unit is broken down into several parts, or fractions, with the buyer of each fraction being eligible to apply for citizenship. One such unit, with the fractions of US$400,000 each, can generate US$4 million in sales. And that can be repeated every five years. Not bad, eh! Rather, not bad for some!

    But here’s the rub. I’m hearing that in some cases these fractionals are being sold and bought for as little as US$200,000.

    That has to be as illegal as it is offensive. But is anybody investigating this sector?

    One of the things I don’t like about these fractional ownerships is that they do not stimulate sustainable construction activity and upgrading. 

    They provide an avalanche of quick money for some local persons and for their ‘handlers’ who would skip town in a heartbeat if they found a fuller ‘mango tree’ somewhere else.

    But these bloodsuckers have become so brazen that it’s alleged that they’re about to submit a proposal to the Social Security Board.

    Under that proposal, they want to have houses built at Beacon Heights. They would get the houses built and take whatever profits that accrue from materials and labour.

    The houses would be listed at US$400,000 to meet the Citizenship by Investment threshold.
     
    The applicant would pay the US$400,000, but the Social Security Board would only get US$280,000.The blood suckers would get the remaining US$120,000 per house.

    But that’s not all. Out of the US$280,000, the Social Security Board would have to pay the blood suckers a sales commission of 15% of the US$280,000, which would bring the Social Security Board down now to US$ 238,000 and it would have to pay them for the furniture which they would procure and install (more profit for them), bringing the Social Security Board to about US$180,000-190,000.

    For a house that was ‘sold’ for US$400,000! All you look trouble!!

    Now it’s bad enough that these blood suckers are gaming the system, breaking the law and not being punished severely for it. It’s bad enough their actions and these practices are capable of rendering the restoration of our Citizenship by investment Program an even more challenging.

    But, as William Shakespeare might’ve said, “the most unkindest cut of all” is that they want to use the Social Security Board, they want to  use our money, our sickness benefits money, our maternity benefits money, our death benefits money, and our retirement benefits money, to further enrich themselves and to implicate the Social Security Board in the breaking of the laws of this land and the deprivation of our patrimony.

    This must never be allowed to happen. And a full investigation, a following of the money in these real estate projects, needs to be undertaken, and all law breakers need to be punished.

    Our good name has already taken a terrible beating under the former regime. We cannot allow it to continue under this new one.

    Disclaimer

     

    This article was posted in its entirety as received by SKNVibes.com. This media house does not  correct any spelling or grammatical error within press releases and commentaries. The views expressed therein are not necessarily those of SKNVibes.com, its sponsors or advertisers. 

     

     

     

     

     

     
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