LAST year saw a £17 million drop in the government’s annual stamp duty intake, it has emerged – amid fears that extra tax on the purchase of second homes “destroyed” investor interest in Jersey’s housing market.
Figures obtained by the JEP through a Freedom of Information request have revealed that the amount of stamp duty received by the public registry in 2023 was £29,095,000 – compared to £46,178,000 in 2022 and £54,564,000 in 2021.
The Treasury Department has said the drop was “forecast” and “factored into the Government Plan” agreed by the States Assembly in December.
At the start of 2023, the government introduced a 3% rise in stamp duty payable on the purchase of homes that were not going to be the buyer’s primary residence.
The move was criticised by Broadlands director Harry Trower, who argued that “if the buy-to-live market is slowing, that is usually when investors step in and purchase the properties as an investment”.
Reflecting on last year, which saw the lowest annual turnover of properties for at least two decades, Mr Trower said: “Interest rate rises killed the market. What the States did, is they killed the lifeline for that market.”
He added that the investors “walked away”.
Mr Trower said: “The market is not buoyant enough and properties are still too expensive to actually generate any yield that is worthwhile.”
The FoI request also revealed that the stamp duty charged at the higher rate last year generated £2.1m.
“It made no difference apart from destroying the market on the investor-side,” Mr Trower continued, suggesting that a stamp duty “holiday” would be appropriate.
“I would do an experiment – pause it for two years and see what happens.”
In a statement, the Treasury Department said: “The decrease in stamp duty revenues for 2023 was forecast and factored into Government Plan 2024–2027, which sets out the government’s expenditure plans for this year.
“The drop in stamp duty revenues was forecast through the July 2023 Fiscal Policy Panel assumptions, which assumed a 50% drop in housing transactions and 2% drop in house prices in 2023. These assumptions were used as the basis for the Income Forecasting Group’s Summer 2023 forecast, which in turn was provided for in Government Plan 2024–2027.”
Former Housing Minister David Warr, who was in government at the time of the 3% increase, said that “hindsight is a wonderful thing” and noted that interest rates had been a lot lower when the additional duty was introduced.
“Transaction levels as a whole for the market fell because a lot of economic circumstances came into effect at the same time,” he continued.
“Could you argue that stamp duty was a part of that? Yes – but the idea [in 2022] was to cool the market because house prices were getting out of control.”
He cited the major rise in inflation – and consecutive jumps in the Bank of England base rate designed to tackle it – as some of the factors that had influenced the market last year.
