Buyer beware! Stamp duty increase introduced on the purchase of second homes in Jersey
17 January 2023
The Government of Jersey has passed legislation to increase the stamp duty payable on the purchase of a second home.
Purchasers of residential property who will not occupy such property as their main residence will have to pay an additional 3% stamp duty as opposed to an owner-occupier.
The Finance (2023 Budget) (Jersey) Law 202- (the "Law") defines "main residence" as "the property that is occupied as the person's main residence, whether or not it is in Jersey." This means that where a purchaser, whether a Jersey resident or not, buys a residential property that they will not occupy as their main residence (such as a buy-to-let property, holiday home, or any other type of second home), they will be charged a higher rate of stamp duty.
The 3% stamp duty rise also applies to residential leases for a term greater than nine years (contract leases), where the property will not be the tenant's main residence.
By way of example, a residential property costing £750,000, if intended to be the purchaser's main residence, will result in a stamp duty liability in the region of £15,750 (plus registration fees and jurat stamps, where applicable). If this property is bought as a buy-to-let property, the stamp duty payable rises to £38,250.
Share transfer property – land transaction tax
This increase will also apply to share transfer property, with the additional 3% being reflected in the amount of land transactions tax ("LTT") payable under the Taxation (Land Transactions) (Jersey) Law 2009.
Temporary concession on additional LTT
As a temporary concession, the Comptroller has agreed that purchasers can defer payment of the additional LTT for up to three months after the date of completion, provided that the purchaser:
- is purchasing a residential dwelling;
- has, or will complete, the transaction between 1 January 2023 and 31 March 2023;
- entered into a binding contract before 17 December 2021 (being date at which the States Assembly decided to impose the additional higher rate from 2023); and
- makes a complete return to Revenue Jersey and agrees to pay, and does pay, the equivalent of the basic rate of LTT (i.e., without the additional 3% uplift) within 28 days of the transaction.
Enveloped property transactions tax
It will also increase the enveloped property transactions tax ("EPTT") payable in applicable transactions under the Taxation (Enveloped Property Transactions) (Jersey) Law 2022.
Going forward, purchasers who intend to live in the property they are purchasing will need to give a statement confirming that it will be their main residence. Giving a false or misleading statement is an offence that could result in imprisonment for six months and a level three fine on the standard scale, which is currently set at £10,000.
Whilst the law does not increase the amount of stamp duty, LTT, or EPTT payable on registering mortgages or other debt, the LTT and EPTT registration fees have increased to £90 per registration, bringing them in line with the stamp duty registration fee.