The stamp duty on second homes could be increased to 5% next year in a bid to tackle “spiralling property prices”, if a politician’s plans are approved.
Deputy Max Andrew is proposing that Stamp Duty, Land Transaction Tax and Enveloped Property Transaction Tax for properties that are not main residences should be increased from 3% to 5% from 1 January 2026.
He said that the stamp duty surcharge “provides more opportunities for first-time buyers because it discourages investment in second homes”.
The increase could generate an additional £1.2m in stamp duty revenue, according to the proposition.
Deputy Andrews said that, if stamp duty remains at 3%, there is a “greater risk of the housing market becoming more distorted”.
“To avoid this outcome, the States Assembly need to increase the stamp duty surcharge to reduce the extent of investment in second homes,” he said.
“We must recognise that Jersey’s partial housing market failure is worse than the UK’s, partially due to being a low tax jurisdiction leading to higher net incomes and wealth accumulation for some of the population who invest in the housing market.”
Deputy Andrews pointed to the fact that the UK has increased stamp duty to 5%.
“The UK has the same problems as we do, however, Jersey has not been as proactive as the UK, when it should be,” he said.
“It could even be argued that Jersey’s stamp duty rate could be higher than 5 percent as Jersey’s housing market is more distorted than the UK.”
The politician also said that the island’s 2021 census showed a 38% increase in qualified private rent.
“This shows that the private rent sector saw greater growth than homeownership and social housing units,” said Deputy Andrews.
“I find this most disconcerting however it does not come as a surprise when we have been dealing with incessant demand in Jersey’s housing market.”
Deputy Andrews added that he has an “ambition to increase homeownership”.
He said: “As a politician, I want to see the development of new homes for working families. I also want to give working families more opportunities to access affordable housing.
“When I define affordable housing, I refer to the household’s ability to acquire and service its debts without impacting the financial wellbeing of the household throughout the tenure of the mortgage.
“I am not advocating that house prices reduce because negative equity could have significant implications.
“However, I do believe hardworking families should be given the opportunity to own their own home over that of someone who seeks to achieve an economic rent.”
The full proposition can be found online.
It will be debated in the States Assembly next month.