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Why do we ask cash buyers to jump through hoops?
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From James de la Cloche.
AS a firm we were interested to read Keith Shaw’s response (JEP, 23 November) to Clifford Wilson’s letter of November 20th.
We are not in disagreement with Mr Shaw’s view that the Guernsey ‘local/closed market’ system is excellent for the local purchaser. Our own thoughts of abolishing the current 1(1)k system and allowing a high net worth person to purchase a house of £2.5 million and above, or an apartment of £1.5 million surely works to the same end, houses and apartments at that level being generally out of reach of local purchasers.
We have had a great deal of discussion in our office with various well informed sources from within the Island’s business banking and legal community, and the common denominator that appears to concern all is that our government has, on this issue, too narrow a view.
To them, it seems a wealthy immigrant is little more than another annual tax statistic. This is demonstrated when allowing 1(1)ks to rent – which confirms their total lack of interest in the welfare of the Jersey housing market – for the sake of tax revenue.
We have always believed that the 1(1)k market is the key to a prosperous housing market, creating non-recycled money to enter the market, beneficially lubricating it and creating ripple effects down the line. We have all seen over the past years the devastating effect on the whole housing market when new money ceases to enter from the top level. Everything becomes completely stagnant, causing long property chains purely and simply because nobody has got any cash.
The whole of the housing market in the UK is suffering because the banks will not lend money and here in Jersey we have would-be residents with vast amounts of cash to spend, yet for some unaccountable reason we are asking these individuals to metaphorically jump through too many hoops, with the inevitable consequential results that a substantial number elect not to take up Jersey residence but rather decide to take up domicile in jurisdictions such as Guernsey, where there is perceived to be a much more friendly and less intrusive immigration system in place.
Guernsey clearly sees the bigger picture, placing less importance on tax revenue but calculating the benefits from wealthy people living in their island, which is an advertisement in itself, to say nothing of the benefits from spending large sums of money on their houses, investing in the island’s activities, donating to local causes, tax planning for their businesses, personal wealth and day to day living.
Our Jersey government has always had a tendency to move the goal posts when it suits them. As soon as the Island starts to attract unusual nimbers of rich people the entry level is raised and at one time the annual 1(1)k allowance was restricted to five people. This was chaotic and resulted in people queuing to come in and the housing committee unable to decide who they wanted. Word soon got around that Jersey was closed for business so once again Guernsey, who have always benefitted from an open housing market, sat on the pig’s back.
We believe that the present financial climate will lead the States into adopting a much easier and far less intrusive system aimed to attract wealthy residents of high personal calibre to our shores but, if this does prove to be the case, then let us hope that government greed does not yet again come to the fore and strangle the golden goose.
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