SINT MAARTEN (COMMENTARY – By: Arun Jagtiani) – I would like to applaud the Ministers of VROMI and Finance for the press release I read in the Daily Herald this morning suggesting they are taking proactive measures to ensure all Government Long Lease Land fees are paid up to date. I fully endorse this initiative and believe it is of great importance that everyone pays their fair share. This being said, I do think further clarity is needed about their plans to reclaim government long lease land from individuals or entities who remain in default and “put the land to good use” (as stated in the article)?
There is a growing concern within the real estate sector related to government long lease land, which needs to be addressed ASAP or it will cause major hardships to many local families. If you own a property on Government Long Lease Land, when it comes time to renew your long lease rights, the government is going to charge you almost 5% of the estimated market value of the land and also whatever is built on the land in order for you to renew your long lease land rights! Please re-read that last sentence very carefully.
Here is a generic example of how this is going to impact local families. Let’s say you have a retired family who has spent the last few decades paying off their mortgage. They now live on a fixed income and enjoying life in their home that is paid off. This family is probably paying +/- US$500 per year in long lease fees to the government. Let’s assume their home is valued at US$500,000. In a few years from now, when they go to the government to renew their long lease land rights, they are going to be invoiced almost US$25,000 to have their long lease rights renewed! What will happen to this family if they can’t pay the bill? Will their property also be reclaimed by the government and “put to good use?”
There are many properties on the island that are just a few years away from having their long lease land rights expire. If a proper policy is not put in place ASAP to address how long lease rights are renewed, this unjust burden will fall onto the property owners, most of whom are local families. Within a few years we are going to have waves of tragic experiences similar to the generic example I have described in the paragraph above.
Some of the neighborhoods that will be most impacted include: Point Blanche, Simpson Bay, Philipsburg, Beacon Hill, Little Bay, and a few others. If you own property in these areas, you should be very concerned about this issue. Hopefully the Ministers of VROMI and Finance will extend their proactiveness initiatives as it relates to government long lease land and create a proper and fair policy for how to renew long lease land rights without causing major financial hardships to these property owners.
My personal opinion there should be no charge to renew government long lease land rights (maybe just an administration fee), provided the owners of the land lease rights have been in good standing with their annual obligations. I can also agree that the annual fees should be adjusted for inflation, but there should be some transparent and fair guidelines for how this is calculated.
I truly hope my understanding of this matter is not correct, and property owners will not be subjected to these outrageous fees simply to renew their land lease rights in the near future. But assuming my understanding is accurate, I hope our leaders will take the appropriate actions now to prevent this unjust scenario from burdening property owners in the coming years.
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