An offshore funds manager has welcomed the abolition of a stamp duty avoidance loophole that “was bringing the industry into disrepute”.
William Hill, head of property at Schroders, said the government was considering setting up a product to replace seeding relief, which was introduced in 2003 and abolished in the latest Budget.
Seeding relief was aimed at encouraging indirect investments through established property unit trusts, but it inadvertently allowed any purchaser of property to avoid stamp duty payment.
Hill said: “I don’t like paying stamp duty.
“It is a daft tax that damages market efficiency. However, the system was being abused beyond belief.
It was prejudicing the proper interests of genuine offshore funds, and therefore I welcome the closing of this loophole.”
Schroders manages £5.2bn of property offshore through vehicles including the Hercules and WELPUT funds.
In recent weeks, property companies have rushed to transfer buildings into JPUTs before selling them.
British Land added several million pounds to the asking price of the 550,000 sq ft Plantation Place, EC3 which it sold this week to Insight Investment Management and Westbury Property Fund for £527m after transferring it into the One Plantation Place Property Unit Trust.
Justin Cornelius, a corporate real estate partner of Nabarro Nathanson, said his company alone had transferred £1.5bn of property into JPUTs in the past two weeks.
“A while ago, we estimated that £20bn of property had been moved across to Jersey. It could have comfortably doubled since then and could well be £50bn,” he said.
Hill said back office and legal departments in Jersey were struggling to cope with the huge number of asset transfers.
References: EGi News 24/03/06
