Addressing Property Speculation in Gibraltar: New Legislative Measures Image

Author: Corrine Bossino

By Corrine Bossino, Conveyancing Team, Charles Gomez & Co

The Gibraltar property market has long been characterised by its limited land availability and high demand, leading to soaring property prices, although there have been occasional adjustments which have sometimes caught property investors unawares.  As of 2024, the average cost of a three-bedroom apartment in Gibraltar has reached £600,000.

This situation has been fuelled by speculative investments, with many buyers entering the market solely to generate wealth through property trading rather than for the acquisition of a home. In response, the Gibraltar government is set to introduce legislation aimed at addressing the potential negative economic impact of such practices.

Legislative Overview

Nigel Feetham MP, Minister for Justice, Trade and Industry, has announced that new legislation is being prepared to impose taxes on individuals owning three or more properties, excluding their primary residence and other exempted properties.

This move aims to discourage speculative investments and promote a more sustainable property market.

“We will set the threshold for tax at the ownership of three or more properties other than a primary residence or other exempted property,” stated Mr Feetham in Parliament on the 4th of July 2024.

No details of the new legislative measures have been disclosed but property and tax experts have pointed out that engaging in the business of property sales has always come within the ambit of the heads of charge to income tax under Section 11 and Schedule 1 of the Income Tax Act 2011. The same having applied under its 1950 predecessor.

From what we can make out therefore, it seems that what the Government may want to address is anti-avoidance schemes for taxation which already exists.

Current Market Trends

Recent published data indicates that the Gibraltar property market is already experiencing a notable shift.  An increase in the volume of properties available for sale and rent has led to a market slowdown and slight price adjustments. It is reported that there are currently between 170 to 200 units for sale, a significant rise from fewer than 100 units in previous years.  Similarly, rental availability has surged to 70-100 units, up from just 10 units a year and a half ago​ (according to BMI Group Estate Agents)​​.

According to BMI, these changes have resulted in a decrease in property prices by 5% to 12%, depending on the segment. However, prime properties have retained their high values, ranging between £9,500 and £10,500 per square metre​​. 

Our experience in the property department of Charles Gomez & Co is that, in the main, sellers are holding out for the prices that were being achieved in recent years with a growing number however, taking a more pragmatic view.

Future Developments and Market Outlook

New developments, such as the One Bayside Development, have been well-received, demonstrating the continued demand for high-quality properties.  

If the forthcoming legislation is to be aimed at enforcing existing taxation and clamping down on tax avoidance, then it will, of course have a salutary effect on the market.  In fact, it could provide useful clarity in the sense that sales of up to three (and possibly four if one includes a main residence) apartments will avoid taxation.

On the other hand, it may be that in the current uncertain state of the economy, care should be taken not to create worries which might dampen down inward investment.  Perhaps, to prevent speculation in the area of subsidised housing which is meant to benefit young families and middle-income people, that is where attention should be focused.

Even then, it will be recalled that a motor for the creation of wealth among families here and elsewhere, has been the ability to legitimately profit from the sale of homes.

Mr Feetham is certainly brave in entering this highly complex economic reality, where any false move could have unforeseen consequence.

For those considering entering the property market, either as buyers or investors, it is crucial to stay informed about these legislative changes and market trends. The conveyancing team at Charles Gomez & Co remains committed to providing expert advice and support to navigate these evolving conditions.

Get in touch with us today.

Corrine Bossino is a senior member of the Conveyancing Team at Charles Gomez & Co, specialising in property law and market analysis, who works closely with Charles Gomez.


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