New taxes on certain types of property transactions could raise up to £1m a year to be put towards creating more social housing and affordable homes, if politicians agree.
Treasury Minister Deputy Susie Pinel wants to create an ‘Enveloped Property Transactions Tax’ (EPTT) applying to purchases involving land or property owned by a company.
The tax will apply where the land has a market value exceeding £700,000 for commercial property and £500,000 for residential – thresholds put in place to “mitigate any adverse impact… on lower-value properties, including those in the retail and hospitality industries.”
Currently, only certain transactions involving properties or land owned by a company rather than an individual will incur Stamp Duty or Land Transaction Tax.
Where commercial real estate is held within a company, and the ownership of the company changes hands by way of share transfer, there is no charge.
If the Treasury Minister’s proposal succeeds, this would change that, ensuring all share transfer transactions receive “broadly equivalent treatment.”
Pictured: Treasury Minister Deputy Susie Pinel.
It would also mean up to £1m extra in revenue being generated each year – money the Minister is pledging to earmark for the Housing Development Fund, which provides loans to Andium Homes and other social housing providers.
The intention to rectify "the issue of the sale of Jersey real estate owned within a corporate structure by way of transfer of shares which crystallises neither a stamp duty charge nor a land transaction tax liability" was first outlined in former Treasury Minister Alan Maclean's 2018 Budget Statement.
A consultation was then held between 22 July and 14 October 2019 to get the public’s views on the proposals. Numerous discussions about the policy and the technical detail with key stakeholders have been taking place since April this year, including two round table events.
In a report explaining her proposals, Deputy Pinel explained that the consultation “examined the position of residential and commercial property held within a company” and found that “transactions of this nature are more common with commercial property than with residential property due to Jersey’s housing restrictions on residential property.”
The draft law put forward by the Minister also allows for surcharges to be levied in the event of late payment of the tax and for penalties to be applied for failure to provide information or to otherwise provide incorrect information.
During the Government Plan debate earlier this month, the Chief Minister indicated that he would be moving to ban new share transfer residential units from being created and sold to an individual.
Express understands that he was originally due to sign an order to facilitate the change before Christmas. However, an official Ministerial Decision to update policy under the existing Control of Housing and Work Law is yet to emerge.
Deputy Pinel’s EPTT proposals are due to come before the States Assembly for debate in February 2022.
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