The House of Assembly passed a bill designed to clamp down on “fronting” — the scam where trusts are used to buy property for foreigners who are not legally entitled to own it.

Labour and Immigration Minister Derrick Burgess said the problem had been around for decades but the need for action was urgent to ensure Bermudians are not elbowed out of the housing market.

He said: “The Government is painfully aware it has become increasingly difficult for Bermudians to achieve their dream of acquiring a piece of their rock.

“It has become clear that Bermudians are under attack and face unfair competition from non-Bermudians who believe it is their right to own a piece of the rock.”

He said non-Bermudians already held legal ownership of 37 percent of land zoned for housing.

Government believes that the vast majority of land trusts are innocent said Mr. Burgess, but its also thought around 200 properties were being held by trusts fronting for non-Bermudians.

In some cases they were used to avoid fees — in other cases it was to allow non-Bermudians to buy houses in lower price ranges normally barred to them.

“This practice must be one of the most poorly-kept secrets in Bermuda. I have been advised that non-Bermudians can go to any cocktail party, business gathering or tennis club in Bermuda and ask ‘how can I buy a house in Bermuda?’.”

From there buyers could quickly be put in touch with people to put up a fronting trust to purchase illegal property and avoid fees.

One indication of the scale of the problem said Mr. Burgess was the decline in licence fees during the housing boom of 1998 to 2004.

An attempted court case to stop a suspected fronting trust had been lost when a judge ruled documents could not be seized unless the law was changed.

“If we do not act swiftly and with conviction Bermudians will soon be tenants not owners — guests in their own country.”

Mr. Burgess said the Bermuda Immigration and Protection Amendment Act 2007 would enhance the powers of the Chief Immigration Officer to require people to produce documents relating to land trusts.

The maximum penalty for a law breaker would be $1million in fines, five years imprisonment or both.

A version of the Bill had been tabled in the last session of Parliament but was withdrawn when it was realised a proposed register of land trusts could damage the Island’s trust business.

Mr. Burgess said the revised law had seen widespread consultation with stakeholders here while leading international trust law lawyers from Britain and Jamaica had also helped with the drafting.

Shadow Labour and Immigration Minister Trevor Moniz said he had been well aware of the problem through his time in the Bar Association where he had heard lawyers make allegations that some were helping set up the fronting trusts.

He said he had been urging Government to clamp down on the problem for years and now something was finally being done.

And now that there is a revised law written Mr. Moniz is concerned about how it will impact non-Bermudians who are married to Bermudians.

His colleague Shadow Minister of Justice John Barritt said the law potentially over pursued non-Bermudian spouses instead of “going after people who are violating the spirit of the law, perhaps even the letter of the law”.

In his remarks Mr. Barritt revealed he is married to a non-Bermudian and suggested he was not the only Member of the House similarly attached.

“I don’t fully understand the impact of what we’re doing here today. I’m not confessing to ignorance; I’m confessing to difficulty. If I, with 20 years of Bar experience am having trouble, God help members of the public.

“It is a significant piece of legislation and we don’t want to adversely affect Bermudians married to non-Bermudians.”

Opposition MP Maxwell Burgess, who was formerly responsible for Immigration matters, was equally concerned.

He said: “It seems we’re trying to be harder on half-Bermudians than on foreigners.

“I’m asking the question: how restrictive do we intend to be on the non-Bermudian spouse? I’m more interested in getting the would-be entrepreneur — we’re coming after you and won’t let up until we get you. And when we get you, we won’t let go.”

For non-Bermudian spouses to obtain full Bermudian property rights they will have to be wed for ten years, with at least seven years of aggregate residence in Bermuda. The last two of those years must involve continuous residency.

Junior Minister of Justice Michael Scott told members of the Opposition: “I believe the pessimism just expressed will be proven unfounded.”

He said: “The impact is simple. We’re going to stop people from circumventing our law. This is the entire thrust, the entire purpose of our Act.”

Minister Burgess echoed that stance when he said: “This law puts no restrictions on Bermudians, only non-Bermudians.”

For example, qualified non-Bermudians will be capped at 2,000 acres island wide and no more than 400 acres per parish.

Mr. Barritt said it might be time for those limits to be adjusted because the same numbers have been on the books for 80 years.

As the bill passed, Mr. Barritt told the Speaker of the House he had objections to parts of the new legislation.

Under the Bermuda Immigration and Protection Amendment Bill, Bermudians married to a non-Bermudian will only be allowed to own one property — and will have just three years to sell any other homes they have.

Mr. Barritt asked whether the definition of a trustee included a non-Bermudian spouse.

Mr. Burgess said: “It includes the interest of the spouse whether they are a guarantor or a contributor to the mortgage payments.”

The Government’s amendment to section 78 of the Bill provoked discussion on the prevention of ‘restricted persons’ from appropriating land in Bermuda.

Mr. Barritt asked whether a Bermudian and his spouse would be able to own more than one property if the spouse was non-Bermudian.

“Say then you have the same couple three years down the line and there’s a windfall in the way of an inheritance and they see another opportunity to buy another property on Bermuda.

“Would the Bermudian get a licence in that case so he could own two properties or are those sorts of licences going to be prohibited?”

Patricia Gordon-Pamplin, Shadow Finance Minister, then asked what would happen if the couple already owned more than one property.

“Say they want to purchase four properties. Are you saying that this is not likely to be allowed under this?”

Mr. Burgess said: “The spouse and the Bermudian can only own one property together.”

He then added: “If you have an existing situation where you have a Bermudian and non-Bermudian spouse with more than one property, they have three years to get that cleaned out. They can only have one licence.”

Mrs. Gordon-Pamplin said: “The Minister I believe has just opened a can of worms.”

“Let us look at the rights of a Bermudian. Let us say I marry a Bermudian and we’re allowed one property between us and have three or four we’ve got to get rid of.

“What about a Bermudian couple, say they buy six or seven properties, and have less children. Something has got to be wrong with that picture from a constitutional perspective.

“You can’t put Bermudians at a disadvantage because of whom they marry. This is absolutely opening a can of worms.”

Mr. Burgess said: “A non-Bermudian can only own one property. That is all.”

But Mr. Barritt then said: “We are changing the law here in Bermuda today. You are disadvantaging Bermudians married to non-Bermudians.”

Mr. Burgess replied: “The Bermudian can own four houses as long as the non-Bermudian spouse is not on the deeds. That’s the present law. Under the new law you only have one licence.”

He added: “A Bermudian can own as many houses as long as the non-Bermudian does not own the land. There can’t be many of those cases because of the over-ten year Bermudian status.”

Mr. Barritt said: “The Bermudian spouse is now deemed a trustee under this legislation.

“I think the Minister is saying he or she is not going to be given a licence for that second home. Is the Government saying Bermudians who marry non-Bermudians have got to be stopped?

“Is that what we are doing here or is it just collateral damage as in going to war? This is what the people of this country need to know.”

Mr. Burgess said: “The answer is yes, you can only have one licence.”

Referring to the crackdown on ‘fronting’, he said: “Non-Bermudians are to be prevented from owning more properties.

“Bermudians can own as many licences as they want. Non-Bermudians can only own one property.

“The intent is that the non-Bermudian spouse should have no interest in the second home or any other home. They can only own one. The Bermudians can buy as many homes as they want.

“The non-Bermudian cannot own more than one home. We must preserve this land for Bermudians.”