A new law aimed at ensuring foreigners do not elbow Bermudians out of the housing market is penalising Islanders married to expatriates, according to lawyers and realtors.

The Bermuda Immigration and Protection Amendment Act 2007 — which became law last month — requires Bermudians and their foreign spouses to obtain a licence in order to buy a piece of the rock if the spouse benefits at all from the property or contributes towards its purchase.

Lawyers are also interpreting the legislation to mean that Bermudians married to expatriates are barred from owning more than one property.

It is not clear if the Act is retrospective but those who flout it face imprisonment of up to five years or a fine of up to $1 million — penalties which critics describe as draconian.

Real estate agents and conveyancing attorneys say the legislation — aimed at outlawing the practice of “fronting”, whereby non-Bermudians gain land or property here using a Bermudian “front” — is badly worded and confusing and is causing major headaches.

One realtor, who asked not to be named, told The Royal Gazette that Bermudians with spouses from overseas were losing the chance to get on the property ladder because sellers won’t wait the four to six months it can take to get a licence. “Are we seeing this on a regular basis? Yes. You go to the vendor, the person selling the property, and—the vendor is going to say: ‘I can’t wait four to six months. I have a full Bermudian couple who will buy this and I can close in 30 days’.

“I don’t think that the person who drafted this legislation thought this was going to happen. I just don’t think they thought it through.”

The realtor described the penalties as harsh and said the law targeted bona fide Bermudian families in need of housing simply because one member was non-Bermudian.

“It’s unfair, absolutely and unequivocally unfair.”

Conveyancing and property lawyer Harry Kessaram explained that the new law introduced the concept of appropriation — prohibiting any “restricted person” (i.e. without Bermudian status) from deriving any benefit from Bermudian property or land or contributing towards its purchase without permission.

“If you are married to a foreigner and you want to buy a house just in your name but with the financial help of your spouse, the Government has to approve it,” said Mr. Kessaram.

“Having a non-Bermudian spouse assist with household finances could be construed as financial assistance which could require the home-owning, mortgage-paying Bermudian spouse to have a licence .

“You seemingly can’t even save up with your foreign spouse to acquire a house in just the Bermudian’s name without being required to pay Government for a licence for the privilege.

“I think there may quite frankly be a human rights issue here, not under our Human Rights Act but possibly under the European Convention on Human Rights which extends to Bermuda. The Act treats Bermudians married to foreigners in a different class. It is saying: ‘Your property rights are limited’.”

Buddy Rego, from Rego Sotheby’s International Realty, said he did not support the Act. “I don’t think it accomplishes what it’s trying to accomplish. The biggest problem is that it inhibits those Bermudians who are married to non-Bermudians from doing what Bermudians who are married to Bermudians enjoy.

“The effect on the real estate industry is that it has certainly limited the number of transactions that otherwise would have taken place. There are certainly more hoops to go through in order to purchase property.”

Housing Minister David Burch said he would not be drawn into the debate regarding the Act. “I am confident that the Ministry of Labour and Immigration will adequately address any grievances being expressed by some sectors of our community about the Immigration and Protection Amendment Act,” he said. “Our key focus at the Ministry of Public Safety and Housing is ensuring that Bermudians in need are housed and those on the Bermuda Housing Corporation list are a top priority.”

The Department of Immigration did not respond to requests for clarification on the law or comment. This newspaper understands that immigration officials are working to reduce the processing time for a licence to about a month.