Anguilla News - Local & Regional by AnguillaLNT a SMG Product : OPEN LETTER TO THE GOVERNMENT & PEOPLE OF ANGUILLA OPEN LETTER TO THE GOVERNMENT & PEOPLE OF ANGUILLA ================================================================================ admin on 03/10/2010 20:06:00 Etc/GMT+1 10 March 2010 - Mr. Sheridan Smith (The Valley Anguilla) - The following letter was written by Mr. Sheridan Smith, CEO, SHERIVA, Luxury Boutique Villa Hotel. Dear fellow Anguillians: As we step into a new era of government, we must first acknowledge and congratulate them as our leaders and pledge to work collaboratively for the betterment of Anguilla. My current observation centers on the fact that we have a serious real estate debacle on this island and many people seem to be oblivious of this fact. As of summer 2009, Anguilla had a minimum of 150 sale properties, ranging from private homes to commercial villas. By end of year 2009, approximately only five closings occurred. With an overloaded supply and a lack of demand, the market is essentially illiquid. While the transfer tax on Anguilla has been reduced from 17.5% to 11.25%, it is still one of the highest real estate taxes in the region. This is not making us any more attractive to potential investors. Currently, there are many homes for sale on Anguilla that were purchased years ago. These original investors to the island may now be a lot older, cannot afford a second or third home, and simply need to sell for financial reasons. Whatever their purpose, the fact remains that we have a large number of unsold homes and unfinished projects (i.e. Temenos/Flag Luxury), with more and more coming on stream (i.e. Viceroy). This makes for an obvious lack of liquidity and new buyers will choose to invest elsewhere. So what can we do about this? I have outlined a 6-point summary of facts and suggestions to address this: 1) We must realize and understand that a common-sense approach may be the only option because a restricted, unworkable vision is not what this country needs at this crucial time. 2) In my humble opinion, the first thing we need to do is to change the term "alien land holding" to a more inclusive and appealing term. The connotation of the word "alien" immediately makes one feel like some unknown creature from outer space. No qualifying investor wants to be associated with that term. I am firm on this matter only because my opinion stems from prior conversations with potential buyers. 3) We are in an inner tropical conversion zone of a 70-mile radius. Our main competition is St. John, US Virgin Islands and St. Barths. Presently there is no sales tax on St. John, but there is a yearly property tax. On St. Barths, however, there is a sale tax of zero to 6 percent depending on the circumstances. 4) The deal that was implemented for Temenos/Flag Luxury homeowners is a very admirable and interesting one. These homeowners were to pay a yearly property tax on a per square foot basis. In my opinion, this was an incentive to close sales because the buyer did not have to dish out 17 ½ percent upfront. 5) The transferring of real estate from one entity to another is an integral part of our economy - particularly when it comes to the alienization of existing buildings. Statistics show that people purchase second homes for various reasons. Especially if they come from the North America region. It is equally proven that others sell for different reasons. 6) I believe that all reasonable measures should be carefully considered and implemented. While this may be an arduous journey, it is possible. The fact that this nation is on life support, we need an urgent infusion of fresh ideas. It cannot and should not be business as usual. The people of Anguilla are collectively in debt of one billion six hundred million dollars, with approximately one billion eight hundred million in real estate on the market and the government is in the red of approximately two hundred million. In my opinion, the government can jumpstart this rabid economy with just a few intuitive approaches. For example, as a real estate incentive, our government should consider offering limited residence status to all qualifying buyers or anyone who wants to lease existing real estate. We must find a way to make this economy appealing again and at the same time make the visitors and investors to this island feel welcome and special. With absolute careful consideration, a policy of fractionalization of native born-owned quality projects should be introduced whereas, one-eighth or one-twelfth ownership of such properties should be implemented. This would ease the burden of the indigenous real estate business owners in these extraordinary times. This concept is extremely successful in other countries. We should likewise adapt feasible policies that would benefit the people of Anguilla. Fellow Anguillans, all we have as a proud people is our 22,400 acres of mainland Anguilla and if we apply a heavy dose of common sense and manage it appropriately, there is absolutely no reason why we all should not make a decent living. No reasonable stone should be left on turn. Our government needs genuine help to stimulate this inherited chronic economy. Having an inventory of this magnitude of sale property on hand is quite disturbing. We must be creative in the way we think going forward. All of those unrealistic policies that did not and do not work should be demolished immediately and replaced with fresh, innovative ideas. Conclusion: The Flag project, it goes without saying, is a massive black eye to real estate investment and development on Anguilla. As homeowners have lost tens of millions, the bottom line is that the days of people line up waiting for a land holding permit are long gone. The market is saturated both here and the surrounding islands. We are not a country rich in natural resources such as bauxite, rice, or oil. With a less than favorable airlift situation occurring right before our very eyes, we have to question our stance on mainstream tourism. We must consider alternative economic stimuli. Buyers are scarce and we must once again make Anguilla the island of choice by being competitive and easy to do business with. We must create a new image and a new brand. Hopefully, our new government will examine some of these ideas and we can all work together so that Anguillians can once again be gainfully employed and see profits in their businesses. Sincerely, Sheridan Smith