New legislation allowing non-Bermudians and exempt companies to buy residential units on hotel properties could devastate Bermuda's local housing market, according to Opposition MPs.

They accused Government yesterday of not thinking through the Bermuda Immigration and Protection Amendment (No. 2) Act and of bringing forward a bill which contravenes its own policy of restricting the sale of land to foreigners.

Shadow Attorney General Trevor Moniz said the amendment to the law and associated regulations — all of which passed in the House of Assembly — meant "throwing the barn doors wide open".

"Not only are non-Bermudians being invited to purchase condominiums but all sorts of new procedures are being created so non-Bermudians can purchase all sorts of units within hotel developments," he said.

He criticised Government for abolishing land holding charges on such units if the owners agree to them staying on the hotel inventory and being used for short-term accommodation. The fee would normally be ten percent of the property's value.

"No Bermudian is allowed to do that," argued Mr. Moniz. "What we are doing is making Bermudians second-class citizens in their own country. It's going to damage Bermudians."

He said the zero charge would be open to "easy abuse" because many hotels would not have guests to stay in the units anyway.

The deputy Opposition leader said the legislation and reduced land holding charges for other units — from 18 percent to 6.5 percent — would encourage non-Bermudians to buy units on hotel properties rather than invest in local development projects, such as Cloverdale.

"What is this going to do to the Bermuda housing market?" he asked. "It's going to cause the local housing market, which is already in recession, to go into a far deeper recession. I don't see this as a positive for the local housing market."

He added: "What I also see here is a reduction in government revenue."

Mr. Moniz claimed the amendment to the original 1956 Act was in "complete contradiction" to Government's policy regarding foreign ownership of land in Bermuda.

Shadow Education Minister Grant Gibbons said he believed hotel owners were generally in favour of the bill as it removed or reduced the impediment to selling units of hefty land holding charges.

But he too voiced concern about the impact on the local housing market. "This type of legislation requires the Government to look at the economic impact," he said. "What about landlords that have tenants that have moved out of apartments? They may be getting a lot less than before.

"This is now allowing another market to open up here that normally would have come to those Bermudian landlords. Basically, this seems to me to be tearing the bottom out of the local housing market."

Walter Roban, Junior Minister for Housing and Immigration, presented the bill and three sets of regulations — on tourist accommodation and hotel residences; land holding charges; and rental and use — to the House.

He explained that it would allow hotel properties to be bought by "restricted persons" i.e. foreigners and let Bermudians who bought such units to sell them to non-Bermudians.

He said the market for residences on hotel sites was growing and Bermuda needed to be able to compete, adding that the bill would give exempt companies — who can purchase up to four units — a new way "to house their staff while streamlining their costs".

The Minister said a review of Bermuda's land holding charges revealed they were almost double those in the next highest jurisdiction and triple those in most other countries.

Mr. Roban said he listened to the Opposition criticism with "great sadness" at the lack of understanding about the bill's intent — to increase tourism investment and development.

He added that the effect on the local housing market would not be significant because the hotel property units were for the "upper market".

Minister without Portfolio Zane DeSilva disagreed with the Opposition criticism and claimed the changes would "help our Bermudian people".

"This is an initiative that can only enhance Bermuda. We may have a reduction in revenue on one side but what about the increase on the other side?" He said those who purchased the units would spend plenty of money on the Island.

"Think of the revenue for Mr. and Mrs. Bermuda," said Mr. DeSilva.