Implications Of The Finance (2023 Budget) (Jersey) Law 202- For Property Transactions

• Published date: 23 December 2022
• Subject Matter: Finance and Banking, Real Estate and Construction, Financial Services, Real Estate
• Law Firm: Carey Olsen
• Author: Mr Christopher Philpott, Will Whitehead and Lyndsay Houlette

The Finance (2023 Budget) (Jersey) Law 202- (the "Law") was adopted by the States of Jersey on 16 December 2022. Most of the provisions of the Law (and all of those provisions discussed in this article) will take effect from 1 January 2023.

In this briefing, we will review the implications of the Law for property transactions in Jersey.

Tax on purchase of residential properties which are not used as a main residence

The key implication of the Law is that stamp duty (and equivalent land taxes such as land transactions tax and enveloped property transactions tax) on acquisitions of domestic residential property which will not be the purchaser's main residence will be increased. This will therefore capture the purchase of buy-to-lets, second homes, and holiday homes. The changes apply only to residential properties and do not currently affect the stamp duty rates payable on acquisitions of commercial property.

Stamp Duty (Freehold and Flying Freehold Property)

Following implementation, such purchases will incur Stamp Duty at a rate 3% higher than the standard rates for residential property, with effect from 1 January 2023. The Law amends the provisions of the Stamp Duties and Fees (Jersey) Law 1998 (the "Stamp Duty Law") to give effect to this change.

The Law uses the term"main residence", which is defined as "...the property that is occupied as the person's main residence, whether or not it is in Jersey". A dwelling which has been acquired for any purpose other than as the purchaser's main residence will be a "relevant property" for the purposes of the law, and will be liable to the higher tax rates on acquisition.

By way of example, using the current rates, the stamp duty payable on a '700,000 residential property would have previously been '14,000, regardless of whether such property was the purchaser's main residence. Following adoption of the Law, if the property is not the purchaser's main residence, the stamp duty payable will be '35,000, plus the usual registration fees.

The Law also applies to contract leases (i.e., leases for a term greater than 9 years) of residential property, where the residential property being leased is not the main residence of the tenant. As with freehold properties, leases within the scope of the Law will attract stamp duty at 3% above the usual residential rates.

In addition, the Law has added provisions requiring a statement by any purchaser confirming that the dwelling is being acquired for use as their main residence...