PROPOSALS to increase stamp duty on second homes by 10% would kill off the rental market if successful, according to an estate agent.
Broadlands director Harrison Trower said that the original 3% proposed hike in the Government Plan was ‘already hard enough to stomach’ and that a 10% increase ‘will hurt the little person more’.
Reform Jersey member and St Saviour Deputy Raluca Kovacs recently lodged an amendment to the Government Plan to increase stamp duty on residential properties not permanently lived in by the owner by 10%.
This could include investment properties, buy-to-lets or holiday homes.
She said the main purpose of the amendment was to ‘increase the homes available to owner-occupier and first-time buyers and enable them to get on the property ladder, if they want to buy’.
The original proposals in the Government Plan involve a 3% increase and St Helier North Deputy Max Andrews has also lodged an amendment – calling for a 4% increase in stamp duty on second homes.
Mr Trower said: ‘The problem you have is that a lot of second homes are buy-to-lets. A lot of people can’t afford to buy and their first introduction to the housing market is by renting a place. If you increase stamp duty by 10% on second homes, then no one is going to buy a house, which means that you are going to kill off the rental market and you will hurt the little person more.’
He added: ‘Increasing stamp duty seems to be the government’s fall-back for everything. In a booming market I get it, but that is not the case. Three per cent is hard enough to stomach, but I understand it. However, it is game over for a few years if it increases by 10%.’
Mr Trower said that a healthy housing market should have ‘a bit of everything’ – including rentals and investors in second homes.
‘The catch in the current market is that with interest rates going up, first-time buyers are drying up anyway. Buying a place is not cheap and the current situation has already removed a massive pool of people who can afford to buy,’ he said.
Mr Trower added that the government should focus on helping first-time buyers into the market.
‘They need to be looking at shared-equity schemes and other similar measures in order to help those in need,’ he said.
‘Andium are also doing a great job but they don’t shout about it enough,’ he added.
Roger Trower, chief executive of Broadlands, said that the increase in stamp duty would stop investment in the market by Jersey-born Islanders.
‘Too much is spoken about overseas investors taking away units from locals. But it is actually the locals who want to invest in the units so they can be rented to local people who can’t afford to buy. Any extra cost to investment by locals is wrong,’ he said.
In her amendment, Deputy Kovacs says: ‘In the future, if objective evidence can be brought to the Assembly showing that there are sufficient affordable residential properties available for owner-occupier and first-time buyers, then this additional increased rate of stamp duty for buy-to-let investment properties, second homes and holiday homes could be reviewed.’
She adds: ‘Currently, we do not have sufficient housing for the Jersey residents wishing to purchase an affordable home. Therefore, my proposed amendment needs to be applied quickly ahead of any further proposed reviews on stamp duties, to help these residents while also raising more revenue.’
