Client Weekly Update – 20 May

Market Overview

U.S. Stocks recorded solid gains for the week, with the S&P 500 Index breaching the 4,200 level in intraday trading for the first time since late August. The index has remained notably range-bound over the past few months, and T. Rowe Price traders observed that the previous week marked the sixth consecutive one in which it failed to move by more than 1%—the longest such stretch since November 2019.

Shares in Europe advanced amid optimism that interest rates could be close to peaking and that the U.S. would avoid a debt default. In local currency terms, the pan-European STOXX Europe 600 Index ended the week 0.72% higher. Among major markets, Germany’s DAX climbed 2.27%, while France’s CAC 40 Index gained 1.04%.

European government bond yields climbed amid growing confidence in the European economy and a possible breakthrough in U.S. debt ceiling negotiations.

Over in Asia, the Japanese market continued its winning streak, with stocks surging to their highest level since 1990 and most other Asia-Pacific markets also seeing an uptick.

Half of this year’s first-quarter flat sales not as main residences

Just under half of all flats sold in the first quarter of this year were bought as buy-to-lets, second homes or holiday homes, according to the latest house price statistics, as the average value of a two-bedroom flat rose by £21,000 to £556,000. Released by Statistics Jersey, the latest House Price Index showed that 251 properties were sold between January and March this year – 36% of which were not purchased as the buyer’s main residence. In all, 17% of properties sold went to first-time buyers. A total of 49% of flats purchased were not the buyer’s main residence, with 22% purchased by first-time buyers.

This data has been provided for the first time due to the introduction of a higher rate of stamp duty paid on second homes. The data comes amid widespread concern about the cost of owning a home and the inability of many Islanders – and especially first-time buyers – to get onto the housing ladder. Anecdotally at least, that is said to have led to many people leaving the Island, fuelling fears about a worsening dependency ratio of people in work compared to those who are retired, and the more immediate impact on the economy. The issue of the effect on the market of investors has been raised by several States Members, especially Reform Jersey Deputies, who have sought to limit the number of properties that can be sold to them.

Reform argued successfully to stop foreign investors being able to buy flats in the Jersey Development Company’s scheme at South Hill. Overall, the mean price of one-bedroom flats, three-bedroom houses and four-bedroom houses all decreased in the first three months of this year compared to the previous quarter, while two-bedroom flats and houses saw an increase. The largest quarterly decrease was seen in the price of one-bedroom flats, with the mean price falling by 12% from last quarter. The report also revealed that total transactions of houses fell to their lowest level since at least 2002 in the first quarter of this year – 26% less than the same point the year before.

Plans to increase tax for super-rich residents

New super-rich residents will pay at least £250,000 a year in income tax, if proposals lodged by the Treasury Minister are approved by the States. Treasury Minister Ian Gorst has tabled proposals to increase the minimum tax payable by new 2(1)(e) residents under the High Value Residency Scheme. Previously, to be eligible for so-called high-value residency, wealthy immigrants had to be able to able to pay a minimum of £170,000 in income tax annually, or 20% on the first £850,000 of their income generated anywhere in the world. Additionally, they were required to rent or buy houses worth at least £2.5 million or flats costing more than £1.25 million. Under the proposals, the minimum tax requirement would rise to 20% on the first £1,250,000 of worldwide income. This is a 47% increase on the minimum amount of tax paid. The minimum property price has also risen to £3.5 million for houses, and £1.75 million for apartments. In addition, applicants would have to have a net worth of at least £10 million, excluding their primary place of residence .The proposed new legislation follows a review by the Housing and Work Advisory Group, chaired by the Chief Minister, which examined the available evidence, including the number of applications and house-price data, and considered the views of recent applicants and industry professionals.

Those 2(1)(e) residents who are approved before the legislation comes into force will continue to be taxed at their current rate. The government estimates that the proposed changes would generate an extra £1.2m per annum in tax. The Chief Minister, Deputy Kristina Moore, said: ‘This government welcomes people who generate wealth and contribute to sustainable economic growth, whether home-grown or those who want to make Jersey their home and become part of our community. ‘We believe we have a package of measures that will maintain a stable and supportive environment for relocation and investment, while requiring a modest increase to their contribution to the public purse.’ Garry Bell, a partner and the head of tax at PKF Chartered Accountants, has experience in helping high-value residents move to the Island. He had some concerns that a change in the minimum contribution might lead to Jersey becoming less attractive to wealthy immigrants, as the Island risked becoming more expensive than the competition. Mr Bell felt it was important to attract wealthy immigrants to the islands, not just because of their material benefits in terms of income tax and GST, but also because of their ‘intangible’ benefits. For instance, the opportunity offered for mentorship and networking

Most common health conditions in Jersey revealed

Obesity and high blood pressure continue to be the most common long-term health conditions among Islanders, according to a new report from Public Health. The multi-morbidity report – produced annually with data from GPs – also revealed that about 13% of Islanders are living with multiple chronic conditions, many of them preventable, which is an increase of 1% from the previous year. Findings show the prevalence of multi-morbidity – the presence of two or more long-term medical conditions in a patient – is not improving over time and may be worsening among those aged 85 and older.

According to the report, the most common condition was hypertension – high blood pressure – with over 17,600 sufferers. Hypertension and obesity were the most commonly co-occurring conditions, being present in 4,380 people. The most commonly occurring triad of conditions was hypertension, obesity and diabetes, being present in 1,125 people. At the end of 2022, there were more than 31,850 Islanders who had at least one of the 12 long-term conditions and 13,375 people had two or more long-term conditions. The least common condition was dementia. However, the number of these patients rose from 715 to 765. This rise may be due to an increased ability to diagnose patients with dementia, but Jersey’s ageing population also means there is a projected increase in patients.

Over half of the population over 85 are living with multi-morbidity, while over half of over-65s live with at least one long-term health condition. Studies show that people with multiple chronic conditions typically suffer a lower quality of life, have more frequent and lengthy hospital admissions, and may be more likely to die prematurely than those who do not have multi-morbidity. Data for the report is taken from GPs who maintain disease registers for 12 long-term conditions, as set out in the Jersey Quality Improvement Framework.

Business owners voice concerns over possible loss of Jersey’s mail plane

Jersey business owners have raised concerns about Royal Mail plans to replace the Island’s daily mail flight with a slower, ‘clunky’ ferry service. One said he feared that local retailers selling on Amazon would be hit hard as the online giant prioritised sellers by delivery time as well as price. The changes could see it taking at least a day longer for letters and parcels to travel between the Island and the UK. The plans, which are currently out for consultation to Royal Mail stakeholders, are part of Royal Mail proposals to ‘simplify and update’ its operation.

While Jersey’s mail currently arrives on a dedicated daily flight, Royal Mail has argued that, owing to declining volumes of letters, using a ferry instead would be more cost-effective and environmentally-friendly. It is not clear whether any savings would be passed on to customers. The Royal Mail said that it was not reviewing the flight to and from the Bailiwick of Guernsey ‘at this stage’, but added that it may do so in the future. If the ferry changes are approved for Jersey, the Royal Mail would be able to make such a change ‘without further consultation’. Also proposed is a change in the definition of ‘due date’ in the Channel Islands to allow for additional working days for sending and receiving mail.

The Royal Mail is bound by Ofcom regulations to offer a next-day delivery service. This means that, for customers who pay for a ‘first-class’ delivery, the ‘due date’ for a package is the following working day from the date of posting. For customers who pay for second-class post, the ‘due date’ is the third working day following the date of posting. Jersey is not bound by Ofcom regulations but it has nonetheless historically had the same ‘due dates’ as the UK. The Royal Mail now wishes to change this definition to allow for an extra working day for packages to arrive in the Channel Islands. Jersey Post would not elaborate further on the proposed changes, saying: ‘This consultation forms part of a wider review of its services by Royal Mail and while it is ongoing, and the outcomes unknown, it would be inappropriate for Jersey Post to comment further at this time. Our priority is ensuring our customers receive a reliable, consistent service.’

Incentive scheme for Islanders switching to low-carbon heating

An incentive scheme to help Islanders switch to low-carbon heating systems has been launched as part of a series of government measures designed to reduce Jersey’s carbon emissions. Electric flow boilers, electric storage heaters, panel heaters and air source heat pumps are all available via the scheme, which enables eligible homeowners to access up to £5,000 match funding. This means for every pound of grant funding awarded, the property owner must also be spending a pound of their own money on the project. The move, which aims to help Islanders to switch from fossil fuel heating to low carbon systems, forms part of the Carbon Neutral Roadmap approved by the States Assembly last year.

A total of £5.7 million pounds was allocated from the Climate Emergency Fund to provide incentives to support 1,000 properties to switch from fossil fuel boilers to low carbon heating systems, by the end of 2025. Homeowners interested in the scheme can contact one or more approved contractors, listed online at Once they have accepted a quote, their chosen contractor will submit an application on their behalf to Jersey Electricity who are administrating the scheme. The grant funding is paid directly to the approved contractors. Assistant Environment Minister Hilary Jeune, who has responsibility for energy and climate change, said: ‘The heating sector is one of the highest contributors to Jersey’s emissions. It’s therefore a priority to support Islanders with the move away from oil and gas heating and we think this incentive will make the difference for many people and give a nudge towards low carbon options.’

She noted that the Carbon Neutral Roadmap also includes a policy that no new oil or gas boilers will be allowed to be installed in Jersey from 2026. ‘This current incentive supports those wanting to make that switch early and also helps us build the skills and capacity within the market to be able to meet increased future demand for low carbon heating systems,’ she continued. ‘As well as the cost of installing new equipment, we’ve recognised that running costs are an issue for many Islanders, and therefore energy efficiency measures in homes will also be eligible for support for those switching away from fossil fuel heating systems. ’Low-income homeowners who meet the scheme criteria will be able to access £10,000 worth of support without the need to match fund.