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Even though 2012 has just barely begun, the market activity in January indicated that 2012 will see an increase in demand for local residential and commercial premises, whilst the construction of new developments will continue to be negligible.
This follows a similar vain to the activity in 2011, which once again highlighted the robustness of Gibraltar’s property market and the pivotal role our Finance Centre and growing international reputation plays in underpinning it.
I am confident that Gibraltar can weather the worst storms these uncertain times may throw the Rock’s way, and the past years have certainly demonstrated that, but based on my experiences, I also firmly believe there are issues we too can address internally which would add further impetus to the local property market.
For some time now I have been advocating a change from the current arbitrary based stamp duty system to a fixed rate of stamp duty irrespective of a property’s value. In my opinion a change to a fixed rate is the best way to ensure the system is fairer to vendors and purchasers and will prevent the distortion of local prices just because of arbitrary thresholds.
Under the current system if you buy a property that costs £200,000 or less, then no stamp duty will be payable, but if you a agree a purchase price of between £200,000 to £350,000, stamp duty is payable at a rate of 2% on the first £250,000 and the balance attracts a rate of 5.5%.
A buyer of a property with a value in excess of £350,001, will pay 3% stamp duty on the first £350,000 and 3.5% on the balance of the purchase price.
We nowadays often see vendors having to unfairly reduce their asking prices below their market value in order for purchasers to be able to afford the stamp duty. In this situation the vendor loses out, but it is also common for buyers to be also adversely affected by the current system.
Take for example the many Gibraltarians who need a larger property for their growing family. More often than not, their price range will tend to be in the £200,000 bracket, yet these families are forced to pay stamp duty at a time when their financial constraints are probably at their tightest.
By further way of comparison, under the current system a wealthy individual can purchase as many properties as they wish and avoid stamp duty as long as they buy properties at less than £200,000.
Gibraltar has always prided itself on its socialist roots, yet the current system seems strangely at odds with those principles and I sincerely hope the Government will review and replace it during 2012.
If you have any views on this, I look forward to hearing from you
Justin Bray
To top off 2011, Bray Properties recently presented the local leukamia & cancer research charity with a cheque for £1000 to assist with their invaluable work.
A large part of the donation was raised by the Bray family holding a stall outside their offices in Tradewinds on a sunny weekend in November.
With the festive season upon us it is understandable why many vendors consider taking their property off the market at this time of year, especially with so many seasonal obligations on their shoulders.
With so much going on the last thing that many people think they need is the added pressure of keeping their home in a “show flat” condition and the seasonal decrease in viewings would at first glance reinforce that point of view.
It is true that viewings do tend to drop off at this time of year and increase once again in January, but there are some positive aspects that make a forceful argument for marketing your property during the holiday season.
The first of which is that your property will not sell if it is off the market. Although buyer activity does tend to slow down at this time of year, you can be sure that prospective purchasers that view your property during the holiday season are that much more serious, and many buyers actually prefer to look at this time of year as they tend to take time off work during this period and are able to house-hunt as a couple.
Gibraltar also has a large percentage of families that relocate here due to their work commitments and many of those do not have a choice as to when they are able to leave for these shores. These families are highly motivated in seeking to have their families either settled in before the new school term in January or after Easter, and if you exchange contracts by New Year’s Eve the timing could be ideal for you and them.
The festive season is also a time when we become very house proud in anticipation of our family and friends coming round to our property and your home probably looks more inviting than ever at this time of year – what better time is there to show it to potential buyers?
On behalf of all the team at Bray Properties I would like to wish you a very enjoyable festive season and a prosperous 2012!
Justin Bray
When we first opened our doors to the public in the mid 80’s, the property market primarily encompassed pre-war properties with small residential developments scattered about the town area and the South District was the exclusive domain of the MOD.
With the passing of time property developers soon realised Gibraltar’s huge potential and it was not long before the first large-scale private development was launched.
At the time of their launch in 1985, prices for a 3 bedroom apartment in Watergardens started at £49,900 and 1 bedroom apartments fetched £28,600. The same properties nowadays start from £270,000 and £190,000 respectively.
To put these figures into perspective, if you had £28,600 in the bank in 1985 and received 4% interest per annum throughout the past 26 years, today you would have the sum of £79,292 sitting in your bank account.
If, on the other hand, you bought a Watergardens 1 bedroom apartment in 1985 for £28,600 and sold it in 2011 for £190,000 after having rented it during the previous 26 years you would be sitting on an even grander sum of at least £161,400 – more than double of the person who placed their savings in the bank.
Watergardens is just one example of how investing in the property market makes your money work harder and grow at a rate unmatched by bank savings and the same pattern is repeated time and time again.
Take Queensway Quay as another example – on average in 1993 a 3 bedroom marina-facing apartment would sell for £145,000, yet the very same property is today worth circa £600,000. If you had placed £145,000 into your bank account in 1993 and lucky to receive an average 4% interest per annum on your savings during that time, you would today have £293,743, yet if you had bought the Queensway Quay instead and rented it out you would have amassed a profit of at least £455,000.
With the continuing volatility in the global financial markets making them the domain of only the brave or foolhardy, and insurance policies continuing to underperform, now is the right time to consider your investment options and diversifying your investments in to property could be the best decision you ever make – the figures speak for themselves!
If you would like to discuss your requirements and see how we can help you please call us on 200 47777 – we will be delighted to help.
Justin Bray
There have been significant changes in the way stamp duty is calculated in recent years, the result of which is that with the exception of properties sold under £200,000, buyers now pay higher levels of stamp duty than ever before.
The first change occurred in 2005 where stamp duty went from a flat rate of 1.26% of a property’s sale price to a tiered system. At first sight it may have seemed logical to increase the stamp duty, especially when the property market was performing so well and full of property speculators, but with the passing of time the logic of the current tiered system is becoming harder to justify in my opinion.
The stamp duty system we currently have was introduced in 2010 and since its inception has been a topic of debate as it can produce some rather bizarre results.
Advocates of the current system will obviously point out that a property sold for under £200,000 attracts no stamp duty and this benefits many of the local population, especially those buying in Government assisted housing schemes such as Montagu Gardens and Harbour Views, but what they fail to mention is that by imposing thresholds the current system has a distorting effect on many sectors of the local property market.
For those that are not familiar with the current system I will try to summarise it. If you buy property in Gibraltar for up to £200,000 then no stamp duty is payable, but for properties with a value between £200,000 to £350,000, stamp duty is payable at a rate of 2% on the first £250,000 and the balance attracts a rate of 5.5%, whilst a buyer of a property with a value in excess of £350,001, will pay 3% on the first £350,000 and 3.5% on the balance of the purchase price.
So what is the problem with the current stamp duty system you may ask. Firstly I would respond by asking what is the point of it? Why not just have a flat rate of stamp duty irrespective of the purchase price instead of setting arbitrary thresholds?
In my opinion the current system unfairly prejudices vendors with properties priced at just over £200,000 for the very simple reason that in today’s economic climate where lending institutions have reduced their lending ratios, buyers are struggling more than ever to find the deposit to purchase a home. It is therefore understandable why vendors with a property priced slightly above the current stamp duty threshold of £200,000 often find themselves in the position of having to reduce the selling price to below the market value in order to secure a sale.
If this is allowed to continue it could result in property prices in the shared ownership schemes being unfairly held back, and directly affecting the very people it was partly designed to assist. It also means that a property speculator can buy as many properties under £200,000 as he/she wants without paying any stamp duty. However a family in need of a 4 bedroom property for example and who arguably need as much financial assistance as possible, have to pay stamp duty on their new home if the price is £200,000 or over. Does the logic of the current system now look to have wobbly foundations to you too?
Another issue that has cropped up since the change in stamp duty came in to effect is that Land Property Services (the Government’s Land Agents) are increasingly questioning whether the declared purchase price was the true market value. It is only right that they question a price where they feel there may be grounds to do so, but with such potential savings in stamp duty it is just a matter of time before a vendor and buyer will conspire to under-declare a purchase price and this could easily be avoided if there was just one flat rate of stamp duty.
Those familiar with the Spanish property market will be all too aware of the common practice of purchasers under-declaring the purchase price of a property in order to save on the their purchase costs. Whilst it is clearly illegal to do so and I do not advocate that one does, it does show what could happen if the current local stamp duty system continues in the same format.
I do not profess to have all the answers, but to me it would seem sensible for the Government to apply a flat rate of stamp duty irrespective of a property’s value and consider waiving stamp duty completely for first-time buyers who have resided in Gibraltar for a minimum amount of years and meet residency requirements.
Sometimes the simple solutions are the best ones!
If you have any thoughts on the current system I would be pleased to hear from you.
Justin Bray
Considering that a number of our European neighbours are asking or may be about to ask the European Central Bank and the International Monetary Fund for bail-outs, Gibraltar is a remarkable example of how our dynamic finance centre and property market can fly in the face of convention.
Just across the Frontier and across Europe the construction cranes are in a state of hibernation and will do so until confidence in their economies and housing markets returns. As everyone knows, it will be years before they do, and we will in all probability see further price drops in Spain before buyers are tempted back into the market, but on the flipside, whilst the Spanish sales market is moving at a snails pace, its rental market has picked-up as willing mortgage lenders continue to be as scarce as hen’s teeth.
Fortunately for Gibraltar, our property market does not suffer from an oversupply of residential accommodation. One only has to look abroad to emerging markets such as Dubai to see the detrimental effects of easy attainable and unmonitored finance combined with an over optimistic construction industry can have on a nation’s economy.
Although Gibraltar too has had a construction boom, our limited amount of land meant the supply of new housing kept abreast of demand but never surpassed it to the extent that prices dropped as a result. This was evident last year with a healthy turnover of residential and commercial resale properties, and with the exception of Quay 27 (The first phase of Kings Wharf), there was a negligible supply of new private housing and an acute shortage of readily available and modern office premises.
The shoots of growth in our housing market began once again towards the latter part of 2010, and property sales and rentals are up considerably in the first quarter of 2011 compared to the same period in the preceeding years. This is in itself testimony to the succes of our finance centre and the confidence of many international companies establishing and expanding their operations here.
However, as demand for residential accommodation once again increases and the construction industry attempts to catch up, Gibraltar is running the risk of an undersupply of readily available accomodation, especially in the residential and commercial sectors which can only benefit the market.
With such a good start to 2011, it is very likely the local property market will soon see prices slowly rising again.
One of the most noticeable changes in Gibraltar’s property market in recent years has been the significant rise in the number of local and international landlords, and with it, the need for professional lettings and management agents has increased to unprecedented levels.
Life for most of us has never been busier and with many landlords not having the time or experience required to manage a property or simply living too far away, it often makes sense to appoint a company with the necessary expertise to manage your property and ensure the tenancies run smoothly. It is not always the case that a tenancy goes without a hitch though, and every once in a while problems can arise, and these can be as diverse as boilers breaking in the middle of the night to tenants unreasonably withholding rent. It is at times like these when you will be rewarded for having taken the time in carefully selecting your letting and management agent.
Although many estate agents offer letting and property management there is a vast difference in the service levels and quality offered locally and it is worthwhile establishing with your intended agent exactly the services they include in their management service.
A good lettings agent will take care of everything with the property, keeping you informed of tenancy issues and contact you when there is a problem that needs your consent. A good lettings agent will also have a comprehensive and pro-active marketing strategy which will help ensure your property is seen by as many prospective tenants as possible, and exposing it to far more people than you could probably achieve on an individual basis.
Good letting agencies will also conduct reference checks on prospective tenants – by weeding out the potentially problematic tenants and leaving you with a selection of the good ones. Every landlord knows the problem of having a tenant who causes issues, so if you can help to remove the ones that might cause problems later down the road, it will hopefully help to make sure your relationship with your tenant remains positive.
Before a tenancy commences it is also important to itemise the exact contents remaining in the property, together with their condition, so that at the end of the tenancy the inventory can be verified and any damage noted. In the UK, there are a number of companies who specialise solely in preparing inventories, but a local managing agent should undertake this often time consuming but vital service on your behalf at no additional cost.
A professional letting agent will also be responsible for preparing the rental agreement, rent collection and the deposit administration. All too often though this is where many of the new agents through lack of experience or knowledge fail in their duties to their landlords. The rental agreement should be comprehensive and clearly define each party’s respective duties and rights so as to avoid any unnecessary delays or confusion in the unlikely event of a disagreement between the landlord and the tenant. This will not necessarily guarantee a tenancy without issues, but if you choose the right managing agent you can rest at ease, safe in the knowledge that your property is achieving the best possible return for you with minimal effort on your part.
If you want high calibre tenants, reference checks, highly concentrated marketing of your property, accompanied viewings, a professional management service including, rental document preparation, rent collection, maintenance, advice on rent reviews, inventory preparation and your own personal lettings advisor, the solution is simple – call us now on 00350 200 47777 or email lettings@brayproperties.com and leave the rest to us.
Every seller wants their home to sell fast and at the best price. Does that sound good to you? Well, it’s not luck that makes that happen, but careful planning and knowing how to professionally spruce up your home that will send buyers scurrying for their cheque books.
Ask any estate agent and they will confirm how common it is for potential buyers to be put off a property simply by the way a seller presents their home. This may sound obvious but vendors often do not give enough importance to the way in which outsiders view their property.
If your property has been on the market for a while and not selling, then the odds are that it needs a make-over or may be overpriced.
With so many new agents in Gibraltar vying for new property listings it is unfortunately commonplace for many of them to be overly optimistic in their valuations. Whilst high valuations can understandably induce a seller to list their property with the agent who gives them the highest valuation, this often unfortunately leads to properties sitting on the market for years and can easily be avoided by obtaining the opinion of an established agent with knowledge of the prices properties actually achieve.
If you are confident the asking price of your home is in line with comparable properties and you have still not achieved a sale then it is definitely time to scrutinize your property and establish the reasons why it has not sold.
The best way to do this is to completely disassociate yourself from your home. By this I do not mean that you have to move out, but rather let go of your emotions and focus on the fact that soon this home will no longer be yours.
So where do you start? Don’t worry, its not rocket science, but does require you to take certain steps.
Estate agents often refer to “curb appeal” as being one of the defining moments in a buyers mind. This is when they see a property for the first time and as everyone knows, first impressions count!
It is easy to add curb appeal if you are selling a house, but in all likelihood you will be selling an apartment and now may be an opportune time to speak to that neighbour who habitually leaves their rubbish bag on the landing or those broken and flickering communal lights which you have been meaning to tell the management company about for ages.
If the exterior of your home looks as best as it can then its time to move inside. The first step is to de-clutter your home. You will be amazed at how much junk you will have collected thorough the years, and if you haven’t used it in over a year, you probably do not need it.
Then concentrate on depersonalising your home. Buyers often find their attention drawn to personal artefacts, and you do not want them to be distracted, so now is the time to remove those personal photographs and family heirlooms. Likewise, if you want to take fixtures and fittings with you, remove them now. If the mirror in the living room once belonged to your great grandmother, take it down. If a buyer never sees it, they will not want it or miss it, but once you tell a buyer an item isn’t included with the home, the chances are they will covet it!
It is also common for buyers to open cupboards and wardrobes and on more than one occasion I have seen buyers dive for cover as long forgotten items come tumbling down from wardrobe shelves. Think of the message it sends if items fall out! Now imagine what a buyer believes about you if she sees everything organized. It says you probably take good care of the rest of the house and that storage is not an issue.
Sounds like a lot of work? It is but don’t fret, the end is in sight and when you receive a good offer for your home you will fully appreciate the financial benefits of showing your home in its best light.
Justin Bray
At the outset of the year we predicted the reduction in lending ratios from their height of 95% to 80% for residential properties would have an appreciable impact on the local property market in 2010 and with it would come a significant decline in the first time buyers market.
Our view that the continuing credit constraints would also halt the construction industry and with it the cessation of new private property developments within Gibraltar also became a reality. Gone are the endless truck convoys from Spain running back and forth to supply Gibraltar’s booming construction industry, which has seen the creation of new residential areas within Gibraltar.
These new developments such as Tradewinds, Ocean Village and The Anchorage have all spouted up in the last three years and their success with local and international buyers is a clear sign of Gibraltar’s fundamental economic strength.
Many foreign companies can see the potential of Gibraltar and the benefits of establishing a presence here, and the new airport combined with hopefully easier traffic access to and from Spain will further bolster our infrastructure and increase our appeal with major corporations and investors. The recent announcement by a UK based hotel group to develop a new 160 bedroom hotel and 3000m² of modern office space in Devil’s Tower Road is already testimony to this.
The Government too recognised that funding is a major obstacle for the creation of commercial developments. Without readily available office space Gibraltar runs the risk of turning away major international corporations – all of which play a pivotal role in our growing economy and housing market.
This year however has not been a negative one despite the finance constraints faced by willing buyers. The reality is that although finance is harder to attain, the last twelve months have reaffirmed our opinion that Gibraltar’s property market is fundamentally sound and will not suffer the price drops witnessed in other parts of Europe.
In 2011 we expect to see a similar pattern to that of 2010– that is a healthy turnover of resale properties, a minimal supply of new private housing and an acute shortage of modern office premises for incoming corporations. Hopefully, the Government will do its utmost to assist the construction industry and in so doing ensure our continuing economic growth and stability.
On behalf of all the team at Bray Properties we wish you a Merry Christmas and a Happy & Prosperous 2011!
The Quay to Success?
Autumn is not a time of year normally associated with being a busy season for the property market, but the last quarter has re-affirmed that Gibraltar’s property market has now passed through the worst of the effects of the global economic climate.
There continues to be a significant increase in the number of international clients seeking to relocate here and who see Gibraltar as the place to make their property investment for the medium to long term.
Many are naturally attracted to our shores by the potential tax savings, but there is a growing interest in Gibraltar not only as a means of reducing tax exposure, but, more importantly, as a permanent residence. Gibraltar has come on leaps and bounds during the past two decades and there can be no denying that it is a more attractive proposition to international companies and High Net Worth Individuals that ever before, but tax savings are no longer the only reason for this influx.
Gibraltar has undergone a massive facelift during the last twenty years and thanks in large part to that the Rock has evolved in to jurisdiction where one can enjoy not only tax savings, but have the peace of mind in knowing it is one of safest places to live in Europe, with the added bonus of a modern infrastructure and a Mediterranean climate with international air-links on our doorstep.
As with any good recipe, the ingredients are always the secret of success and Gibraltar’s buoyant property market owes it strength to the combination of the matters I have mentioned, although that is not the whole story. The construction boom of the last decade ensured Gibraltar was able to accommodate the many professionals and businesses relocating here, but there is a distinct shortage of new housing projects in the pipeline.
Next month will see the completion of Quay 27, and it may be the last opportunity for investors to purchase before we see local house prices increasing due to the shortage of private residential construction. This imposing 19 storey structure is situated on the waters edge adjacent to Cormorant Wharf and Queensway Quay and features a selection of 1, 2, 3, and 4 bedroom apartments with an emphasis on large open areas.
There are a limited number of superb opportunities to purchase in this development at or below the original prices and now is the time to buy as handover by the Developer is imminent. If you would like any further information please contact our office on +350 200 47777 or by email – info@brayproperties.com
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