/ Author: SPF

The long awaited KPMG Guernsey Housing Market Review is published today and, at 118 pages will take some digesting, but we’ve made an initial review and feel that overall its recommendations will have a positive impact.

It has sought to address all of the concerns we have with regards to the first time buyer market and whilst we are supportive of the majority of the recommendations, there remain questions as to whether or not the proposals form the best option both for first time buyers themselves and for Guernsey’s taxpayers as a whole.

We believe that although the proposals to remove fees for first time buyers are a very positive move, they will impact on an already dwindling revenue stream for the States. At a time when they are already concerned about how to recoup tax across the economy, it seems a little odd that they are considering ‘writing off’ income from property sales when there is a cash-positive option available.

This is specifically with reference to the recommendations to limit transaction costs such as document duty and bond fees for first time buyers. We think it’s a good proposal and believe it will stimulate the market so, in the absence of anything else, we are in favour of it. However we still believe that there was a better option on the table in the First Time Buyers Deposit Scheme (FTBDS).”

Fees for first time buyers in Guernsey are high. On a £300K property they would be £11,160 here, £4,130 in Jersey and £7,412 in the UK, but with the average deposit at 10% it’s clear that reducing them will not help in overcoming this hurdle. A FTBDS would offer a larger cash injection and, with the States as lender, even at a very low rate of interest, the tax-payer would be getting something back.

Whilst it is true that similar schemes in the UK caused house prices to rise it should be noted that the increases were in areas where the market was generally more depressed to begin with. London, which is closer to our housing model, saw little impact. In addition, the UK alternative of building much larger numbers of affordable homes, is not a viable option for us here given the space available. Many of the concerns over Help to Buy Scheme raised were over people falling between social housing and own homeownership and here we have the GHA who are doing a fantastic job for that segment of the market.

In conclusion, we view the report in general as an overwhelmingly positive move for the market. It does provide a good solution to helping first time buyers. Whether it is the best solution for everyone, remains to be seen.