Stamp duty exemptions top $5.5 million

The content originally appeared on: The BVI Beacon

Though only first-time homeowners will now benefit, the House of Assembly recently voted to continue exempting belongers from paying stamp duty when buying land.

Premier Andrew Fahie presented the Stamps (Amendment) Act, 2022 on March 10 and sought to fast-track the bill in one sitting.

“I know at least 10 persons who have told me that they want to buy property, but they are waiting on this amendment to be passed,” he said when introducing it for a first reading.

In August 2020, Cabinet decided to suspend the stamp duty for the sale or transfer of land to a belonger, and the House then passed the supporting Stamp Amendment Act, 2020.

The premier said earlier that year that government “recognised the need to ease some of the financial burden of residents who would be in a position to purchase property” during the pandemic in a “manner that encourages the property to remain in local hands.”

The initiative waived stamp duty on the sale or transfer of property to a belonger from May 7, 2020 to May 31, 2021. However, if the belonger sells the land to a non-belonger within seven years, the stamp duty fees would need to be paid.

The exemption later was extended to December 2021, and Mr. Fahie said on March 10 it had “proven to be an effective initiative.”

$5.5 million

From May 2020 to December 2021, exemptions totalled $5,543,481 with a total of 513 sales, Mr. Fahie said.

He added that the new amendment would limit the exemption to first-time home buyers.

“There remains great uncertainty as to when some normalcy will return to the global, regional and local economies,” Mr. Fahie said.

He also noted recent financial upset caused by the conflict between Ukraine and Russia. “Therefore, it is incumbent for your government to create opportunities and greater participation in landownership, and consequently its development,” he said.

The premier argued that the tax proceeds that would have gone into the government’s coffers would be allowed to circulate in the economy and help create generational wealth.

He also commended several financial institutions that promoted homeownership during the past few years and urged them to allow belongers to make purchases without having to put down any deposit.

Seven years

Opposition Member Julian Fraser said the proposal “sounds good.” However, he and Opposition Leader Marlon Penn said they had concerns about what happens after the seven years during which the land can’t be sold to a non-belonger.

“Seven years is a short time when it comes to property,” Mr. Fraser said. “You can purchase property and sit on it for years.”

He said he had no opposition to the core of the bill in its aim to support belongers, but he wanted to ensure it didn’t become a way for people to make a “quick buck.”

Those who also lent their support for the bill included Health and Social Development Minister Carvin Malone; Junior Minister for Trade and Economic Development Shereen Flax-Charles; Deputy Speaker Neville Smith; Natural Resources, Labour and Immigration Minister Vincent Wheatley; Transportation, Works and Utilities Minister Kye Rymer; and Deputy Premier Dr. Natalio “Sowande” Wheatley.

Mr. Malone argued, “Yes, $5 million could have been put in the treasury, but when the homes are built, it will return. I see it as an investment, … and the investment made today will be for a bigger, better Virgin Islands tomorrow.”

He promised to deliver an update on how the housing stock has been recovering from the 2017 hurricanes at a later date.

New development

Ms. Flax-Charles noted that even a four percent stamp duty adds up when it comes to property, and she said she appreciated that those savings could go toward the cost of building materials for new landowners. She strongly encouraged young people in particular to take advantage of the opportunity.

Government assistance needs to go beyond the initial land sale, Mr. Smith said, and it will be important to ensure roads and utility lines reach every property so owners aren’t left waiting to start building new homes.

Mr. Wheatley said land is a good investment for young people, especially given the relative stability of the VI real estate market even through difficult times like the 2008 recession.

“I was told a few months ago that within a year, all real estate stock in the market will be gone,” Mr. Wheatley said. “The intention is for us to retain this land for generations and generations to come.”

The deputy premier also encouraged anyone caught up in family disputes to “free up the land for young people” and prioritise keeping land in the hands of Virgin Islanders, even if that means not taking the highest offer.

The premier called for a division of votes, and the committee-amended bill passed unanimously with 10 votes in favour and three absences.

It now awaits assent from Governor John Rankin.