Legislation allowing exempt companies to purchase property in Bermuda, branded a “sell-out” by the Opposition, has won approval in the House of Assembly.

The Companies Amendment Act 2014, tabled by Economic Development Minister Grant Gibbons, is intended to stimulate the economy by bolstering the real estate market and construction industry while encouraging exempt companies to set up roots on the Island.

But Shadow Finance Minister David Burt questioned who would benefit other than banks and realtors — and said the Act opened the door for companies to buy up vacant land.

Dr Gibbons told the House that current law allows local companies to own land only if it is required for the operation of the company, while with the exception of certain existing exempted companies that have been incorporated by a Private Act, exempted companies are currently not able to acquire and hold land fee simple.

However under the new policy, both local and exempt companies will be allowed to buy “restricted properties” — residential properties with an annual rental value of more than $177,000.

The proposed policy changes will also allow, within certain restrictions, exempt companies to hold commercial property if it is used for the specific purposes of their business.

“The Minister will be allowed to impose conditions deemed appropriate,” Dr Gibbons said. “For example, if an exempt company seeks to purchase a building for commercial use, they must declare what it is they intend to use if for.

“If they say it is for a dry goods warehouse, then the minister can impose the condition that the building must be used for storing dry goods.”

He said the law is intended to resolve some problems with the current legislation while create a more welcoming environment for companies.

“Strengthening the bond that companies have with the island will encourage them to retain existing jobs in Bermuda and hire new people,” Dr Gibbons said. “Like the Incentives for Job Makers Act, this Bill is designed to send a clear message that those who create jobs in Bermuda, for Bermudians, are valued members of our social and economic fabric.

“Those in senior decision making positions are far more inclined to make a long-term commitment to Bermuda when they feel they are welcomed and valued.

“We want their jurisdictional decision to be more than just a numbers game. It should also be emotional.”

He said the legislation would not only support existing international businesses on the Island and encourage others to move to Bermuda, it would help provide job opportunities for Bermudians.

“We believe that with passage of this Bill, several properties that are currently on the market will be acquired,” he said. “This will produce revenue for the government via stamp duty.

“And, most importantly, this will produce jobs in the construction sector. Many of the properties, once acquired, will undergo renovation and redevelopment.”

Any properties purchased under the Act could not be rented out to third parties, and should the company leave the Island they would have to sell the property within three years.

Shadow Minister Glen Blakeney, however, questioned what measures had been put in place to protect the long-term interests of the Island and ensure that properties were available for Bermudians.

He also expressed some doubt about how many construction jobs the legislation would create, saying the companies would be more likely to find a property that suits their needs rather than finding and renovating another.

“I don’t see where there will be this immediate uptick,” Mr Blakeney said. “They will eat up the property, but the will look for the property that’s ready made for their particular interests.”

MP Michael Scott expressed concern that while the legislation would benefit exempt companies and bankers, it would cost the Island eminent domain and do little for the average Bermudian struggling in the current economy.

And both Independent MP Terry Lister and deputy opposition leader Derrick Burgess expressed concern about the legislation making land less available for Bermudians.

However Finance Minister Bob Richards however responded: “We can protect the property, but if the value of that property keeps on going down we aren’t doing our successors any favours. It’s not just the birthright, it’s the value of the birthright.”

Junior Environment Minister Sylvan Richards went on the offensive by charging the Progressive Labour Party with “fear mongering” over foreigners and international business, prompting rebuttals from MPs Wayne Furbert and Zane DeSilva.

Mr Burt then questioned why the legislation was even necessary, telling the House that the One Bermuda Alliance predicated its decisions on “threats” from international business.

Policy could be altered under negative resolution without coming before Parliament, the Shadow Finance Minister added — and middle class Bermudian families would lose out on rent once companies owned property.

In addition, the bill would allow local companies would be able to buy any condo under $32,400 on the Annual Rental Value scale.

PLP Leader Marc Bean charged the OBA with “serving another master” than the voting population.

Accusing Government of “selling us out”, Mr Bean hinted the OBA’s days were numbers, warning: “After our people finish getting crucified, we will be there to ensure there is resurrection and renewal.”

But Dr Gibbons countered that no threats or pressure had been applied on Government, and said the policy had been written to address the absence of hard and fast rules.

Currently, some 2,300 acres of land is owned by restricted persons — still below the legal limit of 2,500 acres.

“Nothing is being done under threat,” the Minister told MPs. “Nobody has got a gun to our head. This is simply good policy that will benefit Bermuda with jobs.”