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Govt stems ‘abusive’ resales of affordable homes

Pic by Eyleen Gomez

The Gibraltar Government has published draft legislation to introduce a special 7.5% stamp duty to prevent the abusive resale of affordable homes at Beach View Terraces and Mons Calpe Mews.

The Bill comes against the backdrop of concern that some people in Gibraltar have in the past speculated with affordable properties purchased at cost price but sold on for huge profit at taxpayers’ expense.

The government also plans separate measures to stem abusive resales in new estates including Hassans Centenary Terraces.

The government said such resales were unfair on tax payers or those seeking to purchase homes at accessible prices.

The introduction of the Special Stamp Duty was first announced during the Chief Minister’s budget address of 2018 but the Bill is being published to coincide with the end of the three-year period during which sales of the properties were not allowed.

“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,” said Chief Minister Fabian Picardo.

“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 Bill, which has yet to be approved by Parliament, will introduce a “Special Stamp Duty” in order to mitigate “abuse” on such sales.

In accordance with the terms of the under lease of the two estates in question, flats can now be resold as from three years after the date of original purchase. These resales will be subject to conditions, however.

In order to curtail the level of profits which will be made on such re-sales, the Special Stamp Duty on resales 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, 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.

Housing Minister Samantha Sacramento added: "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.”

Pic by Eyleen Gomez