The Association of Real Estate Agents of Trinidad and Tobago (AREA) is calling for a minimum six-month moratorium on stamp duties for any potential property owners. The industry advocacy organisation recently submitted its budget recommendations to the Ministry of Finance.
AREA said while the existing stamp duty scale allows stamp duty exemptions for first-time homeowners for homes valued under $1.5 million, a general moratorium, even for a fixed period, will present several downstream opportunities for both residential and commercial property purchases as well. For non-first time homeowners, the exemption is up to $850,000.
Speaking with Newsday following AREA's remote consultation with the Ministry of Finance on Wednesday, AREA president Mark Edghill noted that there was a need for incentives for new property purchases in an industry dulled by both economic and covid19 related shocks. “The recommendation presented to the ministry is based on a straightforward idea.
Currently, the State is depending on continued purchasing of property from which stamp duty can be derived, however, the revenue collected may likely end up being used as funding for grants to assist people who aren’t working. Our approach with the moratorium is to stimulate real estate transactions which would subsequently spur downstream economic activity, which inevitably results when a commercial or residential property is purchased."
When properties are acquired, he said, the new owners will need to spend money on the preparation of these properties for rent or occupancy and therefore engage the services of tradesmen and also require goods and services from suppliers.
This means that the masons, painters, tilers, plumbers, roofing and gypsum contractors and so on, will all benefit from the downstream employment opportunities, helping people get back to work, and also keeping the doors open for suppliers of furniture, fixtures, fittings, appliances and hardware materials, during this difficult time, he explained.
“Put another way, whether it's $60,000 or $400,000 that the property owner would be exempted from paying in taxes during the moratorium, they will be able to allocate or redirect these funds to outfitting or updating the property purchased,” Edghill said.
Such a proposal in the budget will require Parliamentary approval and may even require a special majority as it relates to a constitutional right with regards to the enjoyment of property. Edghill and AREA, however, believe that urgent intervention is needed. "We have heard of situations where banks are withdrawing their mortgage offers or requesting an updated valuation of the property because of the instability and uncertainty at these times. We have seen commercial property values being challenged because businesses are closing and they cannot pay their rent and the value of these properties is based on revenue that can be derived from them – which means that more must be done to encourage investing and buying activity in real estate.
"We are keenly aware that taxes are an important means in helping us get through the period of low energy revenues but we have to be careful concerning how much tax we are asked to pay at a time when everyone is not earning what they were earning before,” he said. Citizens who purchase a property will also have to pay property tax shortly thereafter anyway, he added, so this moratorium would be a means to encourage greater home ownership, stimulate downstream activity and ensure longer term tax contributions for the State via property tax thereafter. The budget will be read in Parliament on October 5.