HISTORICALLY the only residential properties that non-residents could purchase in Jersey were share-transfer flats and apartments. The States have already closed this ‘loophole’ so that this option is no longer available for non-residents to purchase residential property in Jersey. However, I believe that there are still several hundred share-transfer residential properties currently owned by non-residents that could be released into the local market for Islanders to purchase.
So how would we encourage these non-resident landlords to divest of their interest in the local residential property market? Other jurisdictions like New Zealand have introduced Residential Land Withholding Tax as a policy to encourage non-residents to exit their local property market, releasing supply in to the market for actual residents to be able to purchase.
RLWT is a tax on the gross sale proceeds, which is withheld at the time of sale and paid into the treasury’s coffers, thus contributing to providing services to Islanders.
If our government announced now that, with effect from 1 January 2024, all residential property owned by non-residents would be liable to RLWT at, say, a rate of 20% of the gross sale proceeds on any sales of share transfer properties completing after 31 December 2023, then such a move should encourage non-residents to sell their Jersey residential properties into the local market before the tax comes into effect, thus increasing supply and providing some relief to our overheated housing market in the next 12 months.
Ideally, RLWT would not actually raise any tax if completely successful, because all of the residential stock currently owned by non-residents would be sold into the local market prior to RLWT coming into effect.
In short, we would increase supply and that would mean that either these homes would be bought by local families to live in or by local landlords to rent out to local families.
Progress has raised this with the government and are in the process of lodging a proposition to request them to bring forward such a measure and get these residential units back into local ownership.
A simple win-win policy our government could introduce without costing taxpayers a penny, do you agree?
Eddie Noel | Party Treasurer
First published | JEP 12 November 2022