THE BAHAMAS Law and Practice Contributed by: Alistair Chisnall and Erica Paine, Graham Thompson
on all rentals by non-Bahamians, and on rent - als above the VAT threshold of BSD100,000 by Bahamians. 10% VAT is payable on all rentals made through an online marketplace like Airbnb, HomeAway or Vrbo. There is a mandatory VAT registration requirement for foreign homeowners who intend to rent their property as a vacation home. A long-term lease (ie, a lease of property other than a dwelling for five or more years) attracts VAT at a rate of 2.5% where the value is under BSD100,000 and otherwise at 10%. In addition, VAT is payable at the rate of 10% on all periodic rent payments. A lease-to-own contract attracts VAT on each stage or interim payment. A short-term lease or tenancy agreement of property (other than a dwelling) for under five years attracts VAT of 10% on the periodic rent payments. 6.8 Costs Payable by a Tenant at the Start of a Lease At the start of a lease, the tenant would custom - arily pay the applicable VAT (see 6.7 Payment of VAT ) and a security deposit, which is usually equivalent to one month’s rent. Registrar general recording fees (USD4.50 per page) are paid if the parties opt to record the agreement, but that practice tends to be quite rare. 6.9 Payment of Maintenance and Repair Areas of a commercial premises that are used by more than one tenant are generally maintained by the landlord or their property manager, and the tenants pay a proportionate reimbursement of the cost incurred or a pre-agreed common area maintenance charge. A number of larger commercial or tourist devel - opments have been structured as multi-use
condominiums with residential and commercial elements, or have master declarations of restric - tions, covenants and conditions that contem - plate mixed-use. In such cases, common area costs would usually be apportioned and charged to tenants as condominium assessments or maintenance fees/charges. 6.10 Payment of Utilities and Telecommunications In general, utility charges would be paid by the landlord or their property manager, and a tenant would reimburse the monthly charges incurred. Where a leased area is not separately metered from other areas occupied or used by the land - lord or other tenants, it is common for a tenant to contract to pay a fixed pre-agreed monthly amount or their pro rata share of common area maintenance charges. That said, it is also often possible for a tenant to set up a tenant service account in its own name and pay utility charges directly to the service provider. 6.11 Insurance Issues While subject to contract and the agreement of the parties, it is generally the industry standard that the landlord is responsible for insuring the building and common parts and that the tenant must insure the leased area. The risks that are typically insured against include fire, earthquake, hurricane, flood and civil commotion. Business interruption insurance is very uncommon in The Bahamas, and it is exceedingly rare for a tenant to hold such a policy. 6.12 Restrictions on the Use of Real Estate It is common for a standard form of commer - cial lease to include various restrictions govern - ing the use of the leased real estate. In addi - tion, restrictive covenants and conditions to which the real estate is subject would usually
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