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Tax breaks could encourage more affordable first-time homes

Tax breaks could encourage more affordable first-time homes

Tuesday 25 October 2022

Tax breaks could encourage more affordable first-time homes

Tuesday 25 October 2022

Deputies will be asked to back an investigation into tax changes which could increase the supply of less expensive first-time buyer homes.

Deputy Gavin St. Pier believes that giving developers tax breaks on profits made on houses sold below the average local market price could encourage them to build more affordable first-time buyer homes.

He has submitted an amendment to the 2023 Budget which will be debated by the States' Assembly next week. 

His amendment asks deputies "to direct the Policy & Resources consider the options and issues in relation to introducing income tax incentives in respect of the profits derived from the development of units sold for less than a fixed percentage, e.g. 75%, of the median local market price".


Pictured: Deputy Gavin St. Pier wants the Policy & Resources Committee to look into the pros and cons of using the tax system to encourage more affordable first-time buyer homes.

"It is recognised that there will be a number of issues to consider – for example, a definition of first-time buyer or finding an appropriate percentage of median local market price to better encourage the development of first-time buyer units," said Deputy St. Pier. 

"In considering such issues, the Policy & Resources Committee will no doubt wish to consult with such interested parties as it sees fit and the proposition enables such an approach."

Deputy St. Pier has submitted a second amendment to the 2023 Budget which also relates to housing.

His second amendment proposes an investigation into whether tax should be charged on profits made from the sale of second homes.

He is asking deputies "to direct the Policy & Resources consider the options and issues in relation to introducing an income tax charge on the uplift in value on disposal of properties which are not the principal private residence of the taxpayer who makes the disposal".

Deputy Mark Helyar

Pictured: Deputy Gavin St. Pier's Budget amendments have the backing of the politician who will propose the Budget to the States next week - Deputy Mark Helyar, the Policy & Resources Committee's treasury lead.

If the States vote for Deputy St. Pier's amendments, the Committee will be required to report back with the results of its investigations by no later than the 2024 Budget report this time next year.

Both amendments will be seconded by the Committee's treasury lead, Deputy Mark Helyar, who will present the Committee's third budget in the States' Assembly next Tuesday, 1 November.

In May, the Committee pledged to make the island's housing challenges one of two priorities for the States. At the time, its President, Deputy Peter Ferbrache, said: "For this coming year, the pressure on our housing market is one area that we must address urgently, as it creates challenges in many other areas, socially and economically. We have taken some important steps, but we must do more, quickly."

In July, as part of their Government Work Plan, which is led by Deputy Heidi Soulsby, the States' Assembly agreed to direct the Committee "to evaluate and implement actions to address private housing market capacity and affordability [and] key working housing capacity and affordability [and] progress proposals to the States by December 2022 on housing need and on management of States' housing stock".

The Committee's proposed 2023 Budget features several changes which it believes would help the housing market. These include relief from document duty to encourage downsizing, additional document duty on properties purchased as investments and additional charges on unoccupied or derelict properties. 

The latest available figures, published by the States in August, revealed that the average price of a local market home is now a fraction away from £600,000, up 18.5% on the same period 12 months earlier. 


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P&R says States "must tackle" housing needs and cost of living 

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