The Current Property Market and the new Stamp Duty

The Jersey property market has seen a decline in sales since the Autumn due to the economic and inflationary crisis and the decline has accelerated since December 2022, due to the sudden increase in stamp duty to 3% on buy-to-let and second homes, and a rise in interest rates to 4%. This change has made it more challenging for buyers to afford these types of properties, leading to a decrease in demand. However, despite the market slowdown, there are still motivated buyers looking for properties to meet their specific needs and circumstances.

The stamp duty imposition appears to be a draconian piece of work, a hammer to crack a nut. Buy to Let investors who, for example, were buying an apartment to let in Spectrum may have been paying £299,000 for the purchase of a 1 bedroom flat which they would be letting for around £1,000pcm a return of £12,000 before costs. Stamp duty in 2022 would have been approximately £4,095. In 2023 the price is £13,065. So before costs, it will take at least two years to start seeing a return. For an apartment of £495,000 for example the stamp duty in 2022 would be around £4,095. In 2023 for a Buy to Let investor stamp duty would be £22,860. Again it would be at least 2 years for a Landlord to see a return. So they are not entering the market. Those that would have been looking for an investment for their pension are shying away.

Unfortunately, there are also those who own apartments, perhaps a young couple who would like to move to a house, they have lost a whole market of potential buy-to-let investors.

As Jersey estate agents, we act on behalf of the Vendor and have noticed a substantial decrease in apartment viewings, which could be down to people's concerns about the new rules and uncertainty about what the future holds. These factors, along with the current cost of living crisis, have contributed to the current state of the Jersey property market for new and second homes. Those looking at apartments at present only tend to be those who are going to live in the apartment.

It's important to note that the Government of Jersey does not have control over the interest rate increase, which was made by the Bank of England. Additionally, they do not have the power to control external influences such as inflation. The stamp duty increase, however, is a decision made by the Government of Jersey and has had a significant impact on the market.

Despite the challenges, there are still motivated buyers looking for new properties. These buyers may have specific needs or circumstances, such as a growing family, a change in employment, or a desire to live in a new area, that make them eager to find a new home. Although the current market may present a slower pace of sales, there may still be room for negotiation on price, and buyers who are able to act quickly may be able to secure a better deal.

The market is likely to improve over time as the economy recovers and the cost of living crisis subsides. The Government of Jersey may also choose to adjust their policies in response to the current state of the market, which could help to improve the situation for buyers.

In conclusion, while the Jersey property market has experienced a slowdown, motivated buyers may still have opportunities to negotiate and secure a better deal on their purchase. Estate Agents generally act on behalf of the seller, but buyers can use their knowledge of the market and negotiation skills to find a property that meets their needs.

If you are looking for a new home or considering selling a property, please register with us or contact us for a free verbal valuation.