GST won’t be payable on rent – or will it?

The messaging from Policy & Resources is that GST won’t be payable on rents. This is certainly supported by the GST proposal.

But, as must be well known to P&R, rents will nevertheless increase due to GST implementation because of the one-off bump to RPI (GST will increase the basket of the goods cost used to calculate RPI changes over and above normal cost of goods price inflation). And RPI forms the basis of increase (along with market value in almost all leases).

In Jersey, where GST was first introduced, the effect was estimated to be between 1-2%.

In Guernsey at 5% the effect will be much greater.

But for those, say renting a family home for £2.5k a month (£30k a year) in 2025, the effect of three 3% cost-of-living rises and a full year of the expected RPI bump (say 4%) means that in 2029, the cost to the tenant will be £1,200 per annum, relating solely to the effect of GST implementation.

And don’t forget this, approximately £1,200 is payable annually – increasing by RPI. Effectively giving the landlord £23 per week index-linked forever.

Recently we heard that the government wants to help young families have children. I wonder what the average age of a landlord is?

Finally, I wonder if both the tax allowance rises and the admin scheme for extra payments for hardship will be big enough?

And how minded will landlords be to offer a reduced rent, knowing the States has a hardship fund to help them get paid?

Guy Plummer