Home buyers are being urged to give their thoughts to a survey which, if successful, could shave thousands of pounds off the cost of buying a home in Guernsey. The research will examine the cost of document duty payable to the States of Guernsey on registration of a bond and – given the chance – where home buyers might otherwise have spent the money.
Bond fees explained
Bonds are registered at the Greffe by any homebuyer taking out a mortgage. The bond ensures that the bank or building society lending against the house has the ‘first charge’, meaning they can take control of the property if the mortgage repayments aren’t kept up.
Fees are payable upon registration of a bond and include Document Duty payable to the States of Guernsey, Court and Greffe fees and Advocate’s fees. Document Duty to register a bond costs 0.5% of the mortgaged value of a property. Taking the average local market Guernsey home priced at £400,000 as an example, with a 10% deposit, a buyer would be borrowing £360,000. Registering a bond for that amount would incur Document Duty of £1,800.
An additional tax on stretched homebuyers
The survey is being launched online today at www.largemortgageloans.com/guernsey by local entrepreneur Paul Welch. Locally born and bred, Welch spent a decade in London founding and building several successful financial services and technology businesses including largemortgageloans.com and millionplus.com.
On his return to Guernsey last year, he began exploring the prospect of waiving Document Duty to register bonds. He says there are a number of reasons he’s so passionate about this campaign, “Guernsey’s mean local market house price is about £400,000. The mean income is £33,000. Do the maths and you will see that home buyers at every stage of the cycle are being squeezed by Guernsey’s housing market – whether first time buyers, growing families looking for more space or empty nesters downsizing.”
Consumers deserve a better deal
Document Duty is payable every time a home buyer registers a bond, including every time you move house, remortgage or change mortgage provider. Over a lifetime, these costs can become very significant. Welch says consumers in Guernsey deserve better. “Mortgage holders generally don’t end up changing their mortgage provider as it’s not cost effective to do so. That means lack of choice and lack of competition in the mortgage market. The system needs to change so that consumers can be sure they’re getting the best deals.”
Supporting islanders will pay dividends in the long term
As for the lost revenue to the island, Welch believes that a portion of the enterprise fund announced earlier this year could be a viable source of funding to pick up this shortfall. The States placed £25 million in a fund with the aim of investing in projects and companies with a Bailiwick focus.
Welch says, “I applaud the spirit of the enterprise fund, but there’s a wealth of enterprise already here that we also need to support. Relieving home buyers of the burden of Document Duty would mean more money flowing through our economy, and the money saved is likely to be spent elsewhere. Think of the benefits for local businesses. Tradespeople, shops, services – these are all likely to benefit much more than the public purse.”
It’s time for the public to have their say
Having met with all of the appropriate stakeholders to discuss the topic, Welch says the time is right for islanders to have their say and is asking people to complete a simple survey of four questions. He says, “I’d urge islanders to give us their views as the States need to know that abolishing this needless additional tax on home buying could make a really positive impact. The survey will take no more than one minute to complete and respondents can rest assured that the information will only be used for this purpose and won’t be stored or passed on to other parties.”
The survey is online now at www.largemortgageloans.com/guernsey until the end of May.
Facts about home buying in Guernsey:
- At the point of purchase, homebuyers in Guernsey pay a number of different costs.
- The cost of conveying the property, paid to their Advocate.
- Document Duty on the value of the property, payable to the States of Guernsey. Current Document Duty rates are as follows:
- 2% on the first £250,000 of the transaction value
- 3.25% on the portion of value between £250,001 and £400,000
- 3.5% on the portion of value between £400,001 and £750,000
- 3.75% on the portion of value between £750,001 and £1,000,000
- 4% on the portion of value exceeding £1,000,000
- Document Duty to register the bond is additional and charged at 0.5% of the cost of the mortgaged value of the home.
- Additionally, the home buyer needs to pay the costs to register the bond with the Greffe, Court costs and the legal fees of the bank with whom they have secured a mortgage.
- Fees to register a bond are payable every time your mortgage changes, including every time you move house, remortgage or change mortgage provider.
YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT
Notes for Editors
Contact: 020 7519 4900
largemortgageloans.com is a market leader in the UK mortgage industry and the UK’s first mortgage broker to specialise in arranging mortgages above £500,000. Founded by Paul Welch in 2006, largemortgageloans.com is at the forefront of the industry as a result of providing innovative funding solutions, million plus mortgage advice and access to sources of capital not generally available.
Having built up an unprecedented global network of 115 finance providers to date, largemortgageloans.com uses this expertise to strengthen partnerships between financial services companies and high net worth individuals, all underpinned by absolute discretion and integrity.
largemortgageloans.com is a trading name of largemortgageloans.com Ltd, 12 Pepper Street, London, E14 9RP which is authorised and regulated by the Financial Conduct Authority. The Financial Conduct Authority does not regulate some aspects of Buy to Let mortgages, commercial mortgages, business finance, overseas mortgages and tax advice. largemortgageloans.com is also registered with the Guernsey Financial Services Commission as a Non-Regulated Financial Services Business.