With the price of houses in Guernsey expected to continue to
fall, and the number of conveyancing transactions at its lowest for
years, now is the time for the island's government to
intervene, says Ogier's Guernsey property partner Martyn
Intervention could help stimulate the market, help first time
buyers get on the ladder and increase the amount of duty received
by the Guernsey coffers on property sales.
After a States of Guernsey meeting last September to consider a
joint report by two committees - Treasury and Resources and Housing
- on various schemes to assist first time buyers, government agreed
it would support the Guernsey Housing Association's (GHA)
partial ownership scheme rather than intervene in the housing
market. In the longer term it was agreed to review document
duty and consider ways of encouraging new lenders to operate on the
"Since then the most recent figures available show States
Local Market Residential Property Prices reflecting a fall in the
mixed adjusted average house price between Quarter 2 of 2012 and
Quarter 4 of 2015 of about 9%," said Martyn.
"These figures are interesting because those involved in
the property market (estate agents, surveyors, developers and
lawyers) actually believe the fall in house prices is greater than
that reflected in the States quarterly bulletin –
and some believe that house prices may continue to
fall. In addition, the number of property transactions has
fallen to such a degree that the States are possibly losing out on
about £4 million of income each year."
It was announced recently that the ratio of earnings to house
prices in Guernsey is high, in fact as high as London.
Martyn poses the question: "So a fall in house prices would
be good, wouldn't it?"
However he adds: "Not necessarily. A fall in house
prices will result in negative equity, which upsets the housing
market and disrupts the economy in general. If we need a price
adjustment it has to be a gradual process whereby earnings are
allowed to increase faster than house prices. No economy will
benefit from a crash in house prices."
High property prices and a smaller number of lenders is bad news
for individuals and couples trying to purchase their own home but
cannot because they are unable to raise the deposit required by a
"At the moment banks in Guernsey will lend a maximum of 90%
of purchase price, meaning a couple buying a house at the lower
quartile (£295,688) will have to raise approximately
£40,000 towards their deposit and the costs of buying the
property (of which some £7,500 will be duty and court fees).
Ironically, saving such a sum is made more difficult by the fact
the couple are paying rent.
"It was acknowledged by the States last September that the
island could benefit from having more lenders. There are fewer
active lenders on the island than there has been for a long
time. The loss of the Co-Operative Bank and Guernsey Home
Loans left a gap in the market, and the introduction by some banks
of stricter lending criteria mean that there is a lack of available
credit in Guernsey."
Although the focus has been on the Guernsey Housing
Association's scheme, it has limitations, says Martyn.
"Unfortunately, the GHA have no partial ownership units
available. The good news is that there are some GHA
developments in the pipeline, but even when those units become
available the GHA believe there will be a waiting list of some 200
applicants. The States could, through a change in policies,
release land for development of further partial ownership units,
but that will take time. Also, whilst acknowledging that the
GHA has an important role to play, why put money into development
of that number of partial ownership sites when there are homes
available but inaccessible in the private sector?"
So what's the solution? Martyn has some suggestions:
"If the States were to fund a first time buyers deposit
loan scheme for a trial period of say 6 months, using £3
million of funds, up to 100 first time buyers could be helped into
the private sector, so increasing the number of sales and raising
about £750,000 by way of document duty in the
process. The ripple effect could mean that the States receive
much more than that in the way of document duty. Such an amount of
funds, and the relatively small number of people who are likely to
benefit from such a scheme, is unlikely to over-stimulate the
market to bring about inflation. Evidence of the success of
such a scheme can be found at our sister isle, Jersey, which ran a
similar scheme two years ago; their housing market is now
experiencing a very acceptable 2% a year increase in value.
"Can the States continue to do nothing for the private
sector?," he asks.
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The process for obtaining planning permission for development of property in the Cayman Islands has been updated as a result of the latest revision of the Development and Planning Law and accompanying regulations (July 2015).
In principle, when the parties agree to arbitrate, they shall be
bound by that agreement. It should therefore follow that when a
party initiates arbitration proceedings, the other party - the
respondent – will avail itself of the opportunity to present
its case and participate in the proceedings.
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