Govt to impose resale restrictions on affordable housing
The Gibraltar Government intends to impose “resale restrictions” on future affordable housing projects to ensure the properties are not priced out of the market.
A recent advertisement of a flat in Beach View Terraces for £495,000 placed a spotlight on the resale mark-up of houses intended for the affordable market.
The flat would have been purchased at a much lower price three years ago, meaning the homeowners could gain a hefty profit if sold at the asking price.
In a bid to crack down on homeowners selling affordable housing at an increased price the Government is considering restrictions on resales.
However, the proposed restrictions would not apply to past affordable housing estates such as Beach View Terraces, Mons Calpe Mews or Waterport Terraces, but to the upcoming developments.
A Government spokesman confirmed the Minister for Housing, Samantha Sacramento, is considering “different options” for future affordable developments “in order to control the profit which can be made on the sale of such properties”.
Last year the Government announced three developments, Hassan Centenary Terraces, Bob Peliza Mews, and Europort Avenue, which would provide over 1,600 affordable homes.
The resale restrictions could be imposed on these upcoming developments.
Under the current regulations those selling a property at Beach View Terraces or Mons Calpe Mews would have to pay a premium back to the Government for the first 10 years.
Properties can be sold four years after they were completed, meaning the property advertised cannot be sold until 2019.
“The property in question is being advertised for a price substantially higher than that originally paid for by the purchaser,” a Government spokesman said.
“However, this does not mean that this is the market value of the property, and it remains to be seen what price the property is in fact actually sold for, especially as the terms of the under lease have residence requirements.”
“Even if the price of these properties does increase, there will still be affordable properties further down the property ladder as homeowners start moving up.”
“Having said that and as mentioned above, Government does intend to include further restrictions on resales in order to limit the profit made on resales in future estates. This would also have the effect of the properties in these future estates continuing to be part of the affordable housing market.”
The under leases for Beach View Terraces and Mons Calpe Mews were modelled on the precedent set by Waterport Terraces.
Homeowners can sell within the first 10 years with those owning 100% of the house set to pay 10% of the profit to Government.
Those who purchased the property under a co-ownership basis would pay a percentage of the profit upon resale and this is calculated on a reducing scale.