Working Out the Alien Landholding Licence Fee on a Land Purchase

For most foreign buyers of land in Grenada, the Alien Landholding Licence fee is the largest cost after the price itself. It is commonly stated as 10% of the value of the property, and on bare land, where the purchase price is often modest compared with a finished house, it can feel like a large addition. Planning for it from the beginning prevents an unpleasant surprise at the completion stage.

The calculation looks simple, but there are practical questions: what value is used, how the fee interacts with later construction, what happens with mixed purchases of land and contents, and how it fits alongside taxes and legal fees.

This article works through those questions with examples. Fee rates and the basis of assessment are set by government and can change through budget measures, so always confirm the current position with a Grenadian attorney before relying on any figure.

The basic calculation

The fee is generally calculated as a percentage of the value of the land being acquired, with 10% being the figure commonly cited. In most straightforward purchases, the value used is the purchase price stated in the sale agreement, provided that price reflects market value.

For land, the arithmetic is usually clean, because there are no buildings or contents to separate out. A buyer paying US$80,000 for a house lot would expect a licence fee of about US$8,000. At the fixed exchange rate of EC$2.70 to US$1, that is EC$21,600 on a price of EC$216,000.

Because the fee scales directly with value, it matters most on expensive land. A waterfront plot priced at US$400,000 would carry a fee of about US$40,000, or EC$108,000. That sum is often larger than the combined total of legal fees and the buyer's share of transfer taxes, and needs to be in the budget from the day you start looking.

Worked examples

These examples use the commonly cited rate of 10% and the fixed exchange rate of EC$2.70 to US$1. They are illustrations only; your attorney will confirm the actual figure for your purchase:

• Village lot, St Andrew: price EC$120,000 (about US$44,400). Licence fee about EC$12,000 (about US$4,440).
• Subdivision lot, St David: price US$90,000 (EC$243,000). Licence fee about US$9,000 (EC$24,300).
• View lot near Grand Anse: price US$200,000 (EC$540,000). Licence fee about US$20,000 (EC$54,000).
• Inland plot, Carriacou: price US$60,000 (EC$162,000). Licence fee about US$6,000 (EC$16,200).
• Two-acre agricultural parcel, St John: price EC$300,000 (about US$111,100). Licence fee about EC$30,000 (about US$11,110).
• Joint purchase, one citizen and one non-citizen: how the fee applies depends on how the land is held between them, which your attorney should advise on before the agreement is signed.

What value is used, and why honesty matters

The agreed price, if realistic. Where buyer and seller agree a genuine market price, that price is normally the basis. Your attorney will state it in the application.

Undervaluation does not work. Recording an artificially low price to reduce the fee and taxes exposes both parties to reassessment, penalties and legal problems. The government can test values, and an understated price also affects the buyer later, when selling.

Valuations. In some cases a professional valuation may be relevant, for example where the price is unusual or the land is being transferred between related parties. Your attorney will advise.

Contents and buildings. With bare land the question rarely arises, but if a plot includes a small structure, crops or equipment, ask how they are treated in the valuation.

Currency. Where a price is stated in US dollars, the fee is calculated on that value and paid in a currency acceptable to the government. Clarify with your attorney how the conversion is handled.

Building later: does the fee grow with the house?

A common question from land buyers is whether building a house later increases the licence fee already paid. In general, the fee is assessed on the value of what is acquired at the time of the licence, which for a bare-land purchase is the land. Construction you carry out afterwards, with your own money and under planning permission, is a separate matter. Confirm this with your attorney for your case, particularly if the licence carries development conditions.

This makes buying land and building a different financial proposition from buying a finished house. A foreign buyer of a US$500,000 villa pays the fee on the whole value; a foreign buyer of a US$100,000 lot who then builds pays it on the lot. That is one reason some buyers prefer to build rather than buy finished property, although construction brings its own costs, risks and timelines.

The flip side is that when you sell, a foreign buyer of your finished house would pay their own licence fee on the full value. That does not affect you directly, but it can influence how quickly a property sells to the foreign market.

Putting the fee in the full budget

The licence fee sits alongside other transaction costs: the buyer's share of stamp duty and transfer taxes, attorney fees for the conveyance and the licence application, survey and valuation fees, and bank charges. Your attorney will set these out in a completion statement; ask for a draft early, so you can see the total before committing.

Then add the cost of making the land usable: clearing, access, utilities, retaining walls and planning drawings. For a foreign buyer of a modest plot, the licence fee and other transaction costs together can add well above 10% to the price before a single block is laid.

Make sure the money for the fee is in Grenada and cleared before approval is expected. The fee is paid after the licence is approved and before completion. Delays in getting funds through international compliance checks are a common reason completion slips after the licence arrives.

Fee mistakes to avoid

These are the most common ways buyers get caught out by the licence fee:

• Leaving the fee out of the budget entirely, or assuming it is a small administrative charge.
• Using an old figure from a friend's purchase or an outdated website without checking the current rate.
• Underdeclaring the price to save on the fee and taxes.
• Not clarifying how the fee applies to a joint purchase with a Grenadian spouse or partner.
• Having funds stuck in transit when the licence is approved, delaying completion.
• Forgetting that the fee is generally not refunded once the licence is granted, even if plans later change.
• Overlooking bank charges and exchange costs on moving the fee into Grenada, which add up on large sums.
• Assuming an exemption applies, such as a citizenship by investment route, without written confirmation from an attorney.

Comparing the fee with the cost of becoming a citizen

Some foreign buyers, particularly those planning a large purchase or several over time, weigh the licence fee against the alternative of obtaining Grenadian citizenship first. For people entitled to citizenship by descent, the comparison can be striking: the cost of an application is usually small compared with a 10% fee on a substantial purchase, though the process takes time and requires documentary proof of the family link.

The citizenship by investment programme is a very different calculation, involving a significant investment, due diligence and government fees of its own. It suits people who want citizenship for wider reasons, such as travel or family planning, rather than simply to avoid a licence fee on one plot. Comparing the two purely on licence savings rarely makes sense for a modest land purchase.

Whatever the route, the decision has legal, tax and personal implications well beyond land. Take advice from a Grenadian attorney, and where relevant a tax adviser in your home country, before choosing between paying the fee and pursuing citizenship.

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