Housing help welcomed, but experts warn market could slow
MEASURES in the Budget to help first-time buyers – including proposed cuts to stamp duty for cheaper homes – have been welcomed by property professionals.
But industry experts have also warned that plans to increase stamp duty on higher-value properties could slow the market and they have raised concerns that lower-income Islanders would still struggle to buy a home.
This week Treasury Minister Susie Pinel announced that in her first Budget she intended to change the Island’s stamp duty bands and rates to try to help Islanders get on the property ladder.
Her plans include removing stamp duty on mortgages up to £600,000, which are currently charged at 0.5 per cent. She also hopes to increase the threshold for first-time buyers’ tax relief on properties from £450,000 to £500,000, while adding 0.5 per cent to the standard stamp duty rate for homes worth more than half-a-million pounds.
Roger Trower, the managing director of Broadlands Estates, said that he believed it was ‘about time’ that stamp duty was reduced, labelling it a ‘stealth tax’.
‘It needs to happen. People trying to get on the property ladder need all the help they can get and £1,000 here and there will do that,’ he said.
He added, however, that he disagreed with the proposed increase in stamp duty for higher-priced homes, which he believed would ‘slow the market’.
‘Rather than buying a new property, people will stay where they are. That extra £5,000 they would have to pay could be spent on a new kitchen or bathroom and go into the economy,’ he said. ‘In the UK market, stamp duty is too high, and it has killed the market.’
Jonathan Gough, the head of financial planning for States social housing administrator Andium Homes, said that the plans were an ‘excellent proposal’ for first-time buyers at a time when house prices had been increasing.
‘On the sale of our new-build homes, the stamp duty is often in excess of 1.5 per cent of the open market price, which creates
an additional upfront cash requirement for the purchaser,’ he said. ‘The increase of the threshold to £500,000 for first-time buyers’ tax relief, and the adjustment to stamp duty on mortgages, will provide much-needed assistance.’
Constable Mike Jackson, chairman of the Environment, Housing and Infrastructure Scrutiny Panel, said he was concerned that there might not be sufficient housing, if more demand is generated by the stamp duty cuts.
‘Most of the family homes are in a more expensive bracket, so providing help for people buying homes for less than £500,000 won’t help much with that,’ he said.
‘And we don’t how much supply of housing there is. It would be interesting to see the States figures on that. These measures will help people trying to get onto the property market but it’s no good doing this if there isn’t a supply of homes there.’
His colleague on the panel, Deputy Kirsten Morel, added that it was ‘imperative’ that the States ensured that house prices were controlled if demand increases.
‘The problem with making it easier to buy is that demand will increase, which could force prices up,’ he said. ‘It is imperative that the government analyses what tools it has to manage supply, and control the housing market.’