GOVERNMENT OPENS A NEW FRONT IN THE WAR ON LANDLORDS

“It has become axiomatic that all landlords are bastards – selfish, greedy bastards who should be content with owning one property but, determined to spite the sainted poor, gobble up loads of properties to make themselves even more money.”

So said the columnist Rod Liddle  the other week when considering the clobbering that landlords are facing from the UK Government.  Sadly, it seems that our own Government here in Jersey is intent on following Angela Rayner’s policies without proper consideration of the consequences, nor indeed the very different micro economic climate that Jersey represents.

In the last year or so, we have seen stamp duty rates for buy to let purchases sky rocket.  In addition, Landlords are now required to be bestowed a licence by Government to let their property out.  The justification for the licencing process was so that the Government could enforce standards in respect of rental properties, even though those standards have not yet been set or published.  

Yet more clobbering is coming.  Shortly, the requirement for energy performance certificates (EPCs) for rental properties will come into force.  From 1 January 2026 all properties sold or starting new lease agreements will require an EPC and from January 2028, minimum energy performance standards will be applied.  Many homes presently let and occupied by tenants who are entirely content with the present condition of their homes, will simply be unable to fulfil those requirements, particularly older properties which are subject to heritage planning restrictions.

Also coming down the line is the restriction on no fault evictions.  That will make it impossible for landlords to sling out a tenant who does not pay their rent on time, treats the property or their neighbours with contempt, or even runs a cannabis farm in the attic.  

As a consequence, new landlords have disappeared from the market in the last two years.  The eyewatering stamp duty on acquisition of a new rental unit means that the figures simply do not stack up.

Those landlords already in the market are now faced with a decision to run for the door or face the crippling cost of compliance with the regulations, the risk of rental gaps and non-payment of rental, or, in due course, the inability to get rid of dodgy tenants.

One would have thought then that our Government had deployed all of the weapons that it had in its war on landlords.  Not so.  Last week Deputy Andrews lodged a proposition proposing that from 1 January 2028, Capital Gains Tax of 20% should be applied on the sale of residential property purchased after that date where it was purchased as a buy to let property.

Deputy Andrews expressly says in his proposition that he intends to disincentivise rental investors from entering the housing market.  He thinks this will create ‘more opportunities for first time buyers to buy a home on the open market’.  He is right on the first point.  He is completely wrong on the second.

The increase in stamp duty has significantly reduced new investment in rental properties – there is no evidence whatsoever however to support a conclusion that this has benefited first time buyers.

Landlords have seen the direction of travel.  Increases in regulation started a flow of Landlords to the exit door.  The prospect of licencing requirements increased that flow and when the regulations are, finally, delivered and EPCs become a requirement that flow will only increase.  Add the prospect of the closure of the path to exit a property investment by way of punitive tax on sales or the requirement to retain a generally unacceptable tenant because of a ban on unforced evictions, then the problem for the rental market is at large.

As the supply of the private rented sector shrinks, then inevitably rents will rise.  Inevitably, that will hit the lowest earners in our community as well as contributing to inflation.  

Deputy Andrews’ proposition in the midst of this might politely be said to be unhelpful.  Those less polite than me might suggest that it is daft.  Jersey’s reputation as a stable low tax environment is important.  A challenge to the imposition of the buy to let stamp duty remains before the Courts because of the Government’s failure to implement that properly.  The proposed new tax will be fraught with all the usual difficulties that attach to calculation of a Capital Gains Levy.

The proposed tax is wholly inconsistent with Jersey’s longstanding tax regime which has always eschewed a tax on Capital Gains.  That approach has nurtured long term investments by local entrepreneurs and the arrival of wealthy individuals who rely on the consistent and stable approach to tax which Jersey has provided.  In addition, selecting one type of investment for a Capital Gains attack is grossly unfair.

Our housing crisis is one of affordability, not one of supply.  If our Ministers are intent on solving that, they should be nurturing private landlords not waging war on them.  A moderate programme of regulation of standards is acceptable but the repeated brick bats being thrown at landlords will mean a reduction in private rental supply, with the consequence of greater reliance on Government funded housing units and rental subsidy.  

Whilst bashing those who appear to be greedy capitalist bastards might seem like a good idea for the immediate popular vote, the current assaults on landlords need to be substantially rethought.  

Philip Syvret is a Solicitor at Benest & Syvret.  He heads up the property team and has advised in the acquisition, construction and disposal of some of the Island’s largest residential developments.  

Contact philip.syvret@benestsyvret.com or via 706670.