States expected to earn less in 2022 from property sales

TAX revenue generated from the property market could fall back by millions of pounds this year – although it is still expected to remain a ‘good earner’ for the States.

(Picture By Peter Frankland, 30660436)
(Picture By Peter Frankland, 30660436)

Provisional assessment of the States’ financial position for 2021 showed that Guernsey’s buoyant property market raised £32m. for the States in document duty. It had budgeted to raise £20m.

Income from property sales has been climing. In 2018, document duty raised £17.58m., rising to £18.22m. in 2019 and £23.03m. in 2020.

But property experts said that they thought document duty revenue was likely to fall this year because of a lack of stock for sale. The States is budgeting to raise £22m. this year in a normalising housing market.

‘There are a lot of buyers but I suspect the number of transactions will be lower this year. My view for this year is that the number of transactions will be down because of the shortage of houses,’ said Pierre Blampied of mortgage brokers SPF Private Clients.

Comparing the property market this year to last, Mr Blampied said the figures were not yet showing this but added the figures from the start of 2022 could be ‘a bit of a hangover’ from 2021 in terms of transactions completing.

He said that £71.6m. was lent in January and February 2021 with 118 transactions, including property purchases and re-mortgages.

Between January and February this year, the total amount loaned was £79.4m. with 151 transactions.

The good news was that banks were willing to lend. Building more houses was a longer-term solution to the island’s housing problems, added Mr Blampied, but would not happen overnight.

Property expert Trevor Cooper said it was difficult to be precise or give predictions about the property market seeing how it has gone for the last two years.

‘But I do see a slowing-down in the market. There are fewer properties to come onto the market. That is causing it to slow down.

'It is not going to crash. It is like stopping at the traffic lights. It will still be very high and be a good earner for the States but it won’t be as much,’ he said.

The States’ budget for 2022 also urged caution about prospects for document duty.

‘The exceptional circumstances experienced in 2021 are considered to be temporary, particularly in relation to the high levels of document duty receipts because of the exceptionally strong housing market; and customs duties which have benefited from reduced access to duty free products as a result of travel restrictions,’ it said.

‘The budget estimates also prudently assume that the housing market activity returns to a more normal level from the exceptional level being experienced in 2021. This sees the estimate for 2022 at £22m. versus a forecast outturn for 2021 of £27.5m. Should prices and or volumes of transactions continue at current pace then document duty receipts could once again be significantly higher in 2022.’

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