Parliament unanimous on lower stamp duty for Caymanians

Lawmakers debated changes to stamp duty rates for Caymanian property buyers in light of rising land prices and deteriorating financing conditions on Thursday.

Opposition member for George Town West, David Wight, brought a private members’ motion that urged government to extend the zero-duty thresholds for first-time Caymanian homebuyers.

It would also cut the headline stamp duty on property purchases by all other Caymanians, who are not first-time buyers, to 5%. Non-Caymanians would still pay 7.5%.

The motion called for zero-duty thresholds for first-time Caymanian buyers to be extended to $200,000 for land purchases and $500,000 for houses or apartments. Any amount exceeding these limits would be subject to a 2% stamp duty. When a property is transferred to joint buyers the thresholds would be $350,000 and $600,000.

Wight cited a cost-of-living crisis, including the cost of home ownership, as reasons for the proposal.

“We are having to pay more for the electricity we use in our homes, more for the gas we put in our cars and more for the groceries we buy in the stores. These are not luxuries but represent everyday spending on those items we need just to get by,” he said.

At the same time, wages in the wider economy were not rising at the same rate, if at all. As a result, real wages were falling and incomes were getting squeezed as prices spiral.

“This motion seeks to reduce the burden of stamp duty on all Caymanians and also to provide increased assistance to Caymanians looking to buy their first home,” he said.

Wight argued that government’s financial situation with a larger-than-expected surplus in the first quarter of this year allowed it to forego some of the expected stamp duty revenue to provide assistance.

Finance Minister Chris Saunders accepted the motion, saying it was unanimously supported by the government. Housing is a basic human right, he said, adding that government’s revenue needs “cannot come at the expense of denying Caymanians the right to own a place to seek shelter”.

But he said the thresholds proposed by the Opposition were not high enough and government was looking at higher limits.

The finance minister said it was not sufficient to consider stamp duty alone but also the factors that drive up land prices.

Demand for properties was, for example, kept high by a permanent residency point system that requires owning property, as well as land banking.

He said that forthcoming government measures will exceed what is being called for by the Opposition, and not just in terms of stamp duty waivers and concessions.

A first land initiative is planned in East End, where land is currently being subdivided. In that district a land plot of almost 10,000 square feet will be sold at affordable prices of between $25,000 and $30,000 to buyers that meet certain criteria, he said. The initiative would then be expanded to all three islands.

In addition, Saunders noted that the Cayman Islands Development Bank had already increased its borrowing limits for property purchases to $600,000 and was offering a fixed rate of 3.75% that soon may be below the US prime rate.