Acquiring Commercial Property in Jersey - a brief comparison with England
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Jsy/Property/14333935
October 2011
Acquiring Commercial Property in
Jersey - a brief comparison with
England
Freehold property in Jersey has its origins in French law. In 1602, Sir Walter Raleigh as Governor of the island decreed
that all contracts relating to land passed before the Royal Court should be recorded in the rolls of the Public Registry.
Based upon these ancient origins, Ogier has established a modern commercial property law practice.
Brief synopsis of the main differences between Jersey and English Law in relation to
property transactions
Client briefing
Jersey System English System
Contract and transfer Conveyances are passed before the Parties can exchange contracts for the sale
Royal Court only on Friday afternoons and and purchase of property at any time, for
it is the norm for transactions to proceed simultaneous or later completion.
directly to completion with no prior
"exchange" stage. Similarly, all charges
secured over real property in Jersey can
only be registered on a Friday afternoon.
Shares in a property holding company can
be purchased on any day of the week.
Leases Leases for a period in excess of nine Leases of any length (whether a 21 year
years are also passed before the Royal registrable term or not) can be completed
Court on Friday afternoons. Leases are in when the parties choose.
English and are in a substantially similar
form to institutional English leases.
Security of Tenure Commercial - A Tenant has no right to All Tenants with a lease of at least one year
remain in premises after the term expiry automatically have a right to remain in the
without a new lease. premises on the same terms after the expiry
of the term, unless this right is specifically
There are no procedures akin to the excluded within the lease by the parties
Section 25 notice to be served on the agreeing in statutory form to exclude the
Tenant, nor any rights for a Tenant to provisions of s.24-28 of the Landlord &
oppose termination pursuant to the Tenant Act 1954 or by a Consent Order at
equivalent of a Section 26 notice. Court.
If a tenant does remain in occupation after
the expiry date of the lease and the
landlord acquiesces and accepts rent for a
period of time then a presumption that the
parties have entered into a new lease (or
have renewed the existing lease) on
identical terms (save any guarantor
provisions) can arise.
Residential - If a residential tenant does
not vacate then eviction proceedings need
to be implemented and the court can grant
a delay to the tenant on the balance ofAcquiring Commercial Property in Jersey - a brief
comparison with England
hardship test.
Attendance Attendance at the Royal Court is The parties solicitors are able to exchange
necessary either by the parties or their contracts for a later sale at any time, day or
Advocate, duly authorised under a Power night, over the telephone subject to Law
of Attorney to pass a conveyance or long Society formula protocol.
lease.
Land Registry There is a Land Registry in Jersey, but it Her Majesty’s Land Registry guarantees the
is a register of deeds and not title. There title to registered property.
is no guarantee of title provided by the
government in respect of a property
Client briefing
transaction and title is based upon the
documents recorded at the Public
Registry. Hence there are no deeds to
hold.
Consents Every freehold conveyance and Lease in None, other than consents of superior
excess of nine years (or any lease of landlords in the case of leasehold
residential accommodation) requires the transactions.
formal consent of the Housing Minister of
the States of Jersey. There is a standard
form of application for this consent and an
application fee of £65 is currently payable.
Specific Performance Under Jersey Law it is only possible to get Specific performance of an agreement for
specific performance to grant a lease up sale or lease can be ordered by Court in
to a period of nine years with the remedy order to complete a sale and purchase or to
for the balance being damages - York grant a lease of any term length.
Street Pharmacy v Rault 1974 JJ65.
Specific performance can be obtained in
respect of an agreement to acquire
shares, but not freehold property.
Assignment Presumption that assignment requires the Presumption that a Tenant may assign a
prior consent of the Landlord and no lease without the consent of the Landlord
equivalent of s.19 of the Landlord and unless the lease expressly provides
Tenant Act 1927. Most leases do not otherwise. Furthermore s.19 of the Landlord
contain a list of predetermined conditions and Tenant Act 1927 implies an obligation
where refusal of consent will be deemed on a Landlord not to unreasonably withhold
reasonable but rather it is the norm for consent where required.
Jersey landlords simply to require an
assignee to be of equivalent financial The Landlord and Tenant (Covenants) Act
standing to the assignor or provide 1995 provides that under all leases granted
suitable accounts and references. after January 1996 an assignee is released
from the tenant’s covenants at the time of
The position is unclear on the continuing assignment.
liability of the original tenant following an
assignment. The usual practical solution is
that the assignor requires release from the
Landlord and the assignee takes on
liabilities from the completion date.
There is therefore no obligation on a
Jersey assignor to enter into an
Authorised Guarantee Agreement (an
"AGA") guaranteeing the incoming
assignee's performance of the tenant's
obligations under the lease.
ADMIN-14333935-2Acquiring Commercial Property in Jersey - a brief
comparison with England
Stamp Duty on Accumulative scale Stamp Duty Land Tax on a non
Purchase 0.5% up to £50,000 accumulative scale
Plus 1.5% £50,001 to £300,000 Zero up to £150,000
Plus 2% £300,001 to £500,000 1% £150,001 to £250,000
Plus 2.5% £500,001 to £700,000 3% £250,001 to £500,000
Plus 3% £700,001 to £1m 4% over £500,000
Plus 3.5% £1m to £1.5m
5% over £1,000,000 (residential only)
Plus 4% £1.5m to £2m
(thus £59,500 on the first £2m)
Plus 5% for balance in excess of £2m
(no distinction between commercial and
residential properties)
Client briefing
Stamp Duty on Leases Duty is calculated on new Contract lease Stamp Duty Land Tax on a non
and on the assignment of such a lease by accumulative scale (non-residential)
multiplying the annual rent by the length of Zero up to £150,000 NPV
term (subject to maximum multiplier of 21) 1% over £150,000
with any premium added in. Of this total, NPV = Net Present Value of rent
there is an accumulative scale: When calculating duty payable on the NPV
0.5% up to £100,000 of leases you must reduce your NPV
0.75% over £100,000 calculation by £150,000 before applying the
(no distinction between commercial and 1% rate.
residential properties) (for residential premises the figure is
£125,000 in place of £150,000)
Stamp Duty on Loan 0.5% of the amount of the loan. None.
Stamp Duty on Share None unless the Articles of Association 0.5% is payable.
Transfers attach a right to occupy residential
accommodation to the share and then
Land Transfer Tax equivalent to Stamp
Duty set out above is payable.
Termination / As stated above, Jersey leases terminate A Tenant's right to remain at the expiry of a
Forfeiture automatically at the expiry of the lease or commercial lease will depend on whether
if earlier by agreement between the the same is contracted out of the provisions
parties. of the Landlord & Tenancy Act 1954.
Most leases will reserve rights to a If the Act does apply then a Section 25
Landlord to cancel the lease in specific Notice must be served by a Landlord
circumstances but taking account of the requiring possession and a Tenant may
fact that one must apply to the Royal serve a counter-notice (s26) to oppose
Court for an Order to cancel any contract termination.
lease.
A lease will contain an express clause
Forfeiture is not technically a Jersey permitting forfeiture (re-entry) in certain
concept so there is no right to forfeit a specified circumstances.
lease by peaceable re-entry. There is no A Landlord can forfeit a lease either by
Jersey equivalent to the Law of Property peaceably re-entering the property or by
Act 1925 so landlords are not required to going to court to bring forfeiture proceedings
serve tenants with a Section 146 notice against the Tenant but must, where a
(which applies where a tenant is in breach Landlord seeking to allege that a Tenant is
of covenant other than to pay rent) or any in breach of covenant (other than payment
Jersey equivalent of such a notice of rent) serve a notice pursuant to s.146 Law
specifying their breach, as a condition of Property Act 1925.
precedent to exercising their right to
cancel the lease. If both parties consent
then a contract of cancellation is entered
into on agreed terms.
ADMIN-14333935-2Acquiring Commercial Property in Jersey - a brief
comparison with England
Sales Tax There is no Value Added Tax ("VAT") in VAT at a current rate of 20% may be
Jersey but there may be Goods and payable on the land value or lease premium
Service Tax ("GST"). GST is generally as well as on the applicable Stamp Duty
payable on the rent due under a Land Tax in respect of any purchase or
commercial lease (unless the lease was in lease (where the Vendor has elected to
being before 17 August 2007 where there waive their exemption). Transactions which
is a 5 year "grandfathering" provision until involve a going concern where both parties
16 August 2012 unless there is a variation are VAT registered can be exempt from
to the lease during that period). VAT.
The purchase of shares does not
presently attract GST.
Client briefing
The acquisition of a business can attract
5% GST but this can be mitigated if it is a
sale of a going concern. Tax advice
should be sought on the structuring of a
deal.
Other Taxes No Capital Gains Tax ("CGT"). Capital Gains Tax may apply to a property
transaction (there is a main residence
Property income is taxed at 20%. exemption).
Deductions and relief can be claimed for
normal outgoings and capital allowances Property income is taxed in accordance with
can also be claimed at a rate of 25% for standard income tax rates (an accumulative
plant and machinery. scale of up to 40%).
About Ogier
Ogier is an award winning world leader in the provision of
offshore legal and fiduciary services. Our integrated legal
and fiduciary approach has proved a winning combination
which enables us to secure awards for the quality of our
services and our people.
The Group employs over 850 people and provides advice
on all aspects of BVI, Cayman, Guernsey and Jersey law
and fiduciary services through our international spread of
offices that cover all time zones and key financial
markets. Our network includes Bahrain, BVI, Cayman,
Guernsey, Hong Kong, Ireland, Jersey, London,
Shanghai and Tokyo.
ADMIN-14333935-2October 2011
Acquiring Commercial Property in Jersey - a brief
comparison with England
Contact details
Jersey
Chris Renouf - Partner
+44 (0) 1534 504106
christopher.renouf@ogier.com
Peter Bertram - Partner
+44 (0) 1534 504111
Client briefing
peter.bertram@ogier.com
Jonathan Hughes - Managing Associate
+44 (0) 1534 504336
jonathan.hughes@ogier.com
Katharine Marshall - Senior Associate
+44 (0) 1534 503904
katharine.marshall@ogier.com
This client briefing has been prepared
for clients and professional associates
of the firm. The information and
expressions of opinion which it contains
are not intended to be a comprehensive
study or to provide legal advice and
should not be treated as a substitute
for specific advice concerning individual
situations.
Ogier includes separate partnerships
which advise on BVI, Cayman,
Guernsey and Jersey law. For a full list
of partners please visit our website.You can also read
