With new revenue measures in the 06/07 proposed budget in place, Cayman’s real estate and construction sectors will be seeing their effects in coming years.
Budget measures affecting the real estate sector include changes in stamp duty, building permit and infrastructure fund fees.
Real estate agent Sheena Conolly of Sotheby’s International isn’t surprised at the rise in rates.
‘These changes were not unexpected now that the Cayman Islands have mostly recovered from Ivan. They are moderate enough that they will not deter those buyers who are interested in West Bay Road and George Town properties, and a one per cent increase for the rest of the Island is also acceptable to a large majority of potential buyers.’
Mrs. Conolly pointed out that higher costs due to an increase in fees in the construction sector would likely cause an increase in price points on new developments.
These costs increases would arise from proposed increases in Building Permit and Infrastructure Fund fees, which the Government would like to see return to pre-9/11 levels.
‘The fees had to rise again at some point,’ says Steve Hawley, President of the Cayman Contractors Association. He believes that the way the fees have been applied is quite creative.
‘Actually, the timing is excellent. Cayman is rolling into a building boom and, if a few projects are cancelled as a result of the fee increase, there will still be considerable development that will continue forward. It’s a wise move to raise rates at a time of economic growth.’
Mr. Hawley does not think that minor increases in skilled construction worker work permit fees will affect construction costs in a major way.
He also believes the Government has shown great sensitivity to the needs of first-time Caymanian homeowners with regard to the proposed lower stamp duties.
‘It’s an excellent decision. This is the one area of development that really needs a break. For those Caymanians who can just barely afford a new home, this will be a very welcome assistance.’
James Bovell, President of the Cayman Islands Real Estate Broker’s Association said his organisation was reserving comments to the media until it had a chance to present its views to the government ministries responsible for the changes
Stamp duty fees will rise from five to 7.5 per cent along the West Bay Road corridor and certain areas of George Town, while other areas will rise to six per cent Caymanian purchasers will receive a fee cut of one per cent to four per cent, excluding areas in the Seven Mile Beach and George Town areas.
First-time Caymanian buyers will be treated to a tiered stamp duty regime. Undeveloped land purchases of up to $50,000 outside the West Bay Road corridor and George Town areas will be exempted from stamp duties. For purchases between $50,000 and $75,000, the duty will be two per cent.
For first-time Caymanian buyers of properties with an existing residential building, purchases of $200,000 will be exempted from duties. Similar properties ranging between $200,000 and $300,000 will be subject to a two per cent.