Government implements a Special Stamp Duty to deter speculation on resale of properties at Beach View Terraces & Mons Calpe Mews.
In the first term of office, Her Majesty’s Government of Gibraltar constructed two brand new affordable housing estates at Beach View Terraces and Mons Calpe Mews. Homes in these estates were sold to purchasers at cost price, that means the cost to build the property, without factoring in the value of the land or the relevant infrastructure. Therefore, the cost to purchasers was well below the market value of these properties.
In the past, purchasers have taken advantage in the resale of such affordable housing at great profit at the expense of the tax payer. That is not fair on the tax payer at large or those seeking to purchase homes at affordable prices.
The Government has today published a Bill introducing a Special Stamp Duty in order to mitigate abuse on such sales. The introduction of the Special Stamp Duty was announced during the Chief Minister’s budget address of 2018.
In accordance with the terms of the underlease flats can now be resold as 3 years from the date of original purchase. These resales are subject to conditions. In order to curtail the level of profits which will be made on such resales, the Government has introduced a Special Stamp Duty on resales which will apply for the first 10 years of ownership from the original purchase. The Special Stamp Duty only applies to Beach View Terraces and Mons Calpe Mews. The Special Stamp Duty shall be 7.5% of the total sale price. This Special Stamp Duty will be payable by the seller over and above any relevant stamp duty on the sale that may be paid by the buyer. The Special Stamp Duty is not deductible in arriving at the calculation of ‘profit’ under the Trust Deed and will not apply to the sale of any part of the Government’s equity by the Government.
There may be exceptions from the payment of Special Stamp Duty as directed by the Land Management Committee in cases of forced sale resulting from a relationship breakdown or in cases where families move to another affordable housing estate as a meritorious upgrader.
The Hon the Chief Minister Fabian Picardo QC MP stated “The Underleases relating to the properties at Beach View Terraces and Mons Calpe Mews were modelled on those from previous developments built by the former administration and allowed for an element of speculation which, in our Government’s view is not in keeping with the objective of providing affordable homes.
It is very important that these homes, which the Government builds to assist our community to become home owners and which are subsidised by the tax payer, be real homes and not acquired for speculation and used for investment purposes. By the introduction of this new measure, a proportion that is relevant to the value of the sale will be recovered by the tax payer.”
The Hon Samantha Sacramento MP Minster for Housing said “This Special Stamp Duty is a new measure that applies to resales at Beach View Terraces and Mons Calpe Mews. Further measures to prevent abuse and speculation on resale will be introduced to the underleases of the new affordable housing estates such as Hassans Centenary Terraces, so the Special Stamp Duty will not be needed for these estates. It is unconscionable that housing that has been subsidised be sold at extortionate rates, with the new measure some of the profit will return to Government and can be reinvested into future affordable home schemes.”