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20/20
MONEY MATTERS
Is Jersey Property still
a Good Investment?
by Jody Whittingham,
DIRECTOR,
Savills Private Finance (CI) Ltd
To say 2008 was a confusing year would be an transaction volumes drop by around a third, a direct
understatement. response to a third drop in mortgage lenders. It is very
apparent that Jersey is mainly at risk from the lack of
At the beginning of the year Jersey boasted ten lenders willing to lend. Admittedly there has to be a
mainstream, easy to access residential/commercial natural cap on the number of lenders otherwise none of
lenders, and countless numbers of estate agents. Now, the lenders will see us as a profit making jurisdiction and
only half of the lenders are active but strangely enough potentially withdraw. A very hard balance to be struck
the number of estate agents has increased! and 2009 will prove to be an interesting year throughout
the property market and, following extensive discussions,
Jersey, or even Guernsey for that matter, has never had Savills Private Finance expect to bring two new lenders to
the same number of lenders as the UK due to the islands’ the market in 2009.
unique legal and fiscal systems. For new lenders to enter
the islands they have to arrange new legal paperwork and So what of property as an investment option?
closely look at the implications of tax. Accounts have to With interest rates reducing the buy to let and commercial
be set up and various meetings and acceptances have to mortgage calculations are now working favourably again and
be issued by the powers that be. All this so the Jersey tax for those individuals/companies with 25% - 30% deposits
payer can, amongst others things, claim and benefit from available these investments, whilst tenanted, will be self-
the tax relief on mortgage interest. An item long gone in funding. The reason for investment being capital growth.
the UK.
A great investment opportunity exists in the residential
The island is extremely privileged to have its own political buy to let market due to the tightening in mortgage
and economic independence and with this it has so far lending criteria. More and more first time buyers are
been protected from the full onslaught of the credit delaying buying their first property. Residential property
crunch. However it can also be seen that this investment still remains a sensible choice, amongst a
independence and legal/fiscal differences have caused diversified portfolio especially when the islands residents
lenders to look past the islands to easier/quicker profit don’t currently have to worry about tax on capital gains or
making jurisdictions or to just stick to what they know. inheritance.
Could the recent global credit crunch do the islands a Commercial property investment will also be key in
favour and show Jersey in a new light? Jersey’s economy over the next couple of years with the
The island is still showing an increase in the value of its start of the waterfront transformation and availability of
property, as outlined in the Q3 house price index and all, new retail and office space. This could be a catalyst for
bar one that preceded it. Proving so far that negative companies to look to purchase their business address if
equity (one of the lenders areas of concern) is not interest rates remain low and the balance shifts to lower
knocking on the door. Jersey has however seen property mortgage costs as opposed to paying rent.
20/20 fifty six
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