The Channel Islands and Isle of Man - Real Estate Realities podcast

Zoe Dare Hall (ZDH): Hello, and welcome to 'Real Estate Realities' from Barclays Private Bank, the podcast series that looks at prime residential property through the lens of shifting priorities for buyers and sellers as we all navigate the market trends shaped by the COVID-19 pandemic.

I'm your host, property journalist, Zoe Dare Hall. And, in this episode, my guests will be waving their respective flags for the crown dependencies, the island nations of Guernsey, Jersey, and the Isle of Man, and what makes them each such a magnet for those in search of a particular lifestyle.

Just a note for listeners. This episode was originally recorded on 16 December 2020. Since that day the number of COVID-19 cases reported on the islands have peaked and responded to government restrictions.

So, first of all, let me welcome Jo Stoddart, who's a Director at Locate Guernsey, joining us from her home on the island.

Jo Stoddart (JS): Good morning, Zoe. It's great to be joining you today.

ZDH: Hi, there. And, and from Jersey we have Kevin Lemasney, Director of High Value Residency at Locate Jersey.

Kevin Lemasney (KL): Thank you, Zoe. Pleasure to be speaking to you.

ZDH: Hi, Kevin. I'd also like to welcome Nick Preskey, Head of Inward Investment at Locate Isle of Man.

Nick Preskey (NP): Great to be here, Zoe. Thank you for having me.

ZDH: Thank you. And, and also joining us today is Susan Hollis, who is Director-Head of Credit Product for Barclays Private Bank. Welcome, Susan.

Susan Hollis (SH): Thanks, Zoe. It's great to be here today.

ZDH: So, hello to all of you. I'm sure this is going to be a very interesting half hour chatting about the similarities and differences among these self-governing, tightly-knit island communities. I also suspect there may be a bit of friendly competition among the three of you, from each of the Locate organisations, which, if I'm correct, are sort of semi-governmental bodies that promote living and doing business in the Crown Dependencies. Kevin Lemasney, is that a fair assessment, would you say?

KL: Yes, Zoe, very fair assessment. Healthy competition but very collaborative approach in many cases Jo, Nick and I meet regularly at different events. And, one of the things I'd like to say is that, in working together, we would rather, if somebody wasn't for any one particular island, that we'd refer them to the other island. Because, you know, it's a huge decision that families and businesses are making about their future, and it's terribly important they get that decision right. Nobody wants an unhappy family or a case like that to be dealt with.

ZDH: That's great, thank you. I, I know there are various attractive tax benefits in each of the islands. Kevin, can you run us through the highlights on Jersey, please?

KL: Yeah, the highlights in terms of tax are very simple. We've got a 20% personal tax rate for all islanders. But, for high-value residents coming to the island, they have to meet a minimum worldwide income criteria, which, at the minute, is set at £725,000 per annum. On that, they pay 20%, which, as I said, is the local personal tax rate, and everything above that is taxed at 1%. So, there's a minimum tax liability per annum of £145,000.

In terms of the other taxes, it's exactly the same for everybody. There are no tax breaks, or no tax holidays, or anything of that sort. We have zero capital gains, zero inheritance tax. Corporation tax is on what we call a Zero Ten regime. So, 0% for businesses that are not in the regulated space.

But, for those that are, in particular financial services, they pay a corporation tax of 10%. And we have a 5% GST tax, which is a VAT equivalent. And, of course, finally, people will pay stamp duty, or land tax, on the properties that they purchase.

ZDH: And I know that there are some similarly attractive tax conditions in Guernsey and the Isle of Man, but there are also other things that the Crown Dependencies have in common. Political stability, good connectivity, in terms of travel and digital infrastructure, and, of course, they all enjoy a high quality of life.

One of the things that's struck me as well has, has been the islands’ admirable COVID responses. Very low case numbers, and very decisive measures, early on, helping to control the spread. I know the situation has changed in Jersey recently with case numbers increasing in December, but, for the Isle of Man and Guernsey, the numbers have remained extremely low.

So a question for you Jo Stoddart, are residents of the Bailiwick still enjoying what we in the UK used to call normal life?

JS: Well, yes, actually, Zoe, we are. We've been very, very fortunate. We went into lockdown pretty much at the same time as the UK back in March, but, by the end of May, we didn't actually have any more COVID, COVID cases on the island.

And so, we gradually went back into a normal life, which meant that we were able to have a lovely summer with no masks, no social distancing, restaurants are open, bars are open, parties, weddings, things like that, are all still going ahead. I mean, I even, sadly… but attended a funeral on Friday, and there were 800 people, actually, at the funeral, which, obviously for the family, is, is really encouraging to have so many people there. But the freedom to be able to be there is just amazing, actually.

But we had a very strong government response to this. The communications have been excellent, actually. We had frequent media briefings, the comms team has generally been disseminating information and videos and reminders. There is a lot of information out there.

And there's been a real sense of everybody joining together for the good of the community. We started using, quite early on, the hashtag, #GuernseyTogether, and I think that has become a real, almost like, a movement within the island. Everybody's doing this for the good of the community and to protect one another. And that's actually been something that's been quite powerful, actually.

ZDH: Yeah, that's clearly a very efficient response to it all. I imagine that the sense of community is a real draw, especially for people thinking about moving from London or other big cities such as Manchester. Nick Preskey, let's talk a little bit about lifestyle on the Isle of Man. What are the main attractions?

NP: Yeah, agreed about that, Jo, a sense of community is really important. I think on the island you can have almost like a village lifestyle, but you can also have a, have a, like a city career. The island is relatively large for the population of 85,000 people.

And, yes, we are looking to attract the younger demographic, and, recently, I've been working with people who've had digital businesses and have been very successful. But we are also here for those of a slightly older age who might want to come and make the island their home. As far as what Locate does, as Kevin mentioned, we offer a similar sort of service. So, it's a one-stop concierge type of offering.

Now, when it comes to what really attracts people, we have a great outdoor lifestyle here. Kayaking, mountain biking, all those sorts of things are exceptionally popular. And, of course, let's not forget that TT has been a, a great attraction, and particularly for those people with performance cars.

We do have a national speed limit, but that is actually unlimited when you get on the mountain roads. So, on a Sunday morning, you can quite often hear those high-performance cars are revving their engines as they're heading up towards the mountain to go and have some fun. And, yes of course, always drive responsibly.

ZDH: Sounds like a dream place for petrolheads. We'll come back to the lifestyle, but I, I also want to talk about the business aspect, because now that remote working is, is a dream come true for many people, especially for high, and ultra-high net-worth individuals who may, maybe have been enjoying a better work-life balance in the past year, I wonder whether any of you are seeing a shift in the way people are doing business on the islands? Kevin, could you tell, tell us a bit about the business landscape on Jersey?

KL: Absolutely, Zoe. Well, first of all, the, the, the work-life balance you speak about is primordial, I would say, for our clients. And that's one of the huge differences that people see when they come to the island, is that they can spend more time with their family.

And, in certain cases, even more time with their, with their business, because they're losing those hours where they've had to commute into London, or into Manchester, into some of the larger cities. Of course, with COVID, people are travelling much less anyway, so that's given them a quality of time.

And we've seen, in particular with the businesses, that were ready for COVID, and, by that I mean that they had the systems in place, they had staff and, and, and IT platforms that were fully-functional, and that as soon as, you know, as soon as we went into lockdown, people were immediately able to continue working pretty much as normal, with the exception, of course, of international travel.

In Jersey, we had the foresight, five years ago, to start a fibre cable rollout. So, every home, and every business on the island, has fibre cable to its front door. So, from that perspective, for people who, who went through the lockdown, or simply for people who choose to spend more of their time working from home, they've had fantastic opportunities. And you can have people who're working with - your husband and wife working from different rooms of the house, with children on their iPads, streaming, and whatever, and we've all had incredible capacity.

I've also experienced, with two or three families that happened to be here during the early part of the year, and just spending time on the island and loving it so much, and the sense of community that Nick has spoken about, and they just felt that - where would they rather be at this time, and into the future? And we're there to help with that process, because there is, in Jersey, an application process for residency. We control our population through that process.

But we're there to help, as are all of the, the local service providers, be it tax advice, legal advice, estate agents, relocation agents, etc.

ZDH: That's great, thank you. And let me ask Susan Hollis to comment here. You, you, of course, know the Crown Dependencies through Barclays's presence on each island. From a macro-economic perspective, what do you think makes each island unique?

SH: If I take the Isle of Man, for example, it's all about economic stability, transparency of best practice, especially when it comes to things like the banking side, so tax evasion, fraud, money laundering. And this robustness is really, really important to our clients in what's becoming an increasingly digital world.

Guernsey, on the other hand, is probably the lesser known of the islands when it comes to financial services. But they actually are quite unique in that they, they have a lot of relationships with fintechs and digital. So, few people really know that they had the first green fund, and they also had the first PE fund managed by blockchain. And they've managed to underpin this innovation with, really, stability, and a government that's known for trust and transparency, which is really attractive to our clients, as you can imagine.

But, probably the most well-known, and the island that most people talk about is Jersey. Obviously got a long history of financial services. Our clients have been banking there for many, many years. And, with daily flights back to London, it really does make it just an extension, really, of the financial centre here, and, and clients get a lot of comfort from that.

It's because of all these things that really the relationship Barclays has with the islands has become really, really important to us. And we feel very committed to the cultures and the communities out there. In the Isle of Man, for example, we're one of the largest employers, and with that comes a real responsibility. We continue to collaborate with the local governments, and we've got really close relations with each of the governing bodies in each of the islands.

And it's that two-way trust and collaboration that really means that we're able to offer the best of the islands to our colleagues and our clients.

ZDH: Yes, we've been hearing a lot about trust and transparency lately, and that, that seems to be a theme across all three islands. With a lot of talk about safe havens during the pandemic, the Crown Dependencies seem to epitomise safety and security, both in terms of lifestyle and investment. Let's move on to real estate investment now. So, Jo, let's start with Guernsey. Could you tell us a bit about the two-tier property market, and how somebody coming to Guernsey as a buyer negotiates the market?

JS: Okay. Yes of course, Zoe. Well, we have this two-tier property market. We have what we call the open market, and the local market. And local market properties are essentially saved for people who are locally born, or, in certain circumstances, people who have been granted an employment permit by their employer to come to Guernsey and work in a role that it's been difficult to recruit someone for locally.

But, the open market is effectively open to anyone who does, is not locally born or locally qualified. And it means that anybody who holds a British passport or who has right of abode in the UK can simply move to the island and live in an open-market property - whether they rent it or buy it. Anybody who doesn't hold a UK passport would effectively need to apply for the appropriate visas. But, it’s a really easy way in for people to come to the island.

There's no obligation to work if you don't want to. But, equally, if you live in an open-market property, you can work, you could set up your own business. It really is remarkably straightforward, and it's a very popular route for people being able to come into the island.

I would say typical price ranges would probably start around £1m, but go up as far as £20m and even £25m. There's a whole range of different properties, ranging from waterfront apartments looking over the, the sea, to old, traditional Guernsey granite properties, as well as some more modern developments, as well. And, as I said, the, the price ranges is quite varied. And, in terms of actually purchasing a property, it's relatively straightforward to be able to do this.

It's not unknown for someone to be able to purchase the property and actually complete on the same day. But, normally, a buyer would buy, would sign conditions of sale, and the whole process would take between four to six weeks. But it's, it, as I say, it has been done very easily between, for people wishing to do this very quickly.

ZDH: That's great, thank you. And, and, Nick, what's been happening with house prices at the upper end of the market on the Isle of Man?

NP: Well, interestingly, you know, one of the big events that we saw back in 2008 was the global financial crisis. And, since then, I think it's probably fair to say our, our property prices have remained, you know, quite static compared to other territories - perhaps we've seen a little bit of a fall away.

I think one of the main reasons for that is we've got quite a, a diverse economy. And, you know, we see the emergence of the digital economy as well. So, it's not just about traditional financial services that's been, that was the cornerstone of our economy, but now we have other parts in there that I think have helped keep the, the Isle of Man buoyant.

Now, when it comes to actual property, we have a, a total open property market. So, unlike some of the other territories, where you might have a registration process, we don't have that. I mean, I've had instances where people have come to the island, high-net-worths, and they've actually bought a property of in excess of £6m.

To give you a sort of a sense of, you know, what, what, what your pound can buy, in the Isle of Man, if you wanted a purpose-built apartment - two bed, two bath, two car parking spaces, you know, Douglas Bay, say, you're probably starting around about £750,000.

But, as Jo said, you know, you can actually go right up to, you know, the, the, the upper millions. Even on an apartment. I mean, we've also got another house that's up for sale in the south of the island, which is close to King William's College and The Buchan, which are the private schools that we've got, they're ten-bedroomed, twelve acres, and you can, you can get that for around about £2.5m.

So, I think there's a lot of, there's a lot of property you can get for your money here on the island. And, you know, in, in some great places.

ZDH: So, quite a range of prices, too, which people might not be aware of. I understand that the planners are quite sympathetic, as well, encouraging a mix of old and new architectural styles. Speaking of which, I know that Jersey's well known for some significant modernist architecture, among traditional and contemporary styles. And, also, some significant pricing. Kevin Lemasney, what are your high-value resident clients looking for in Jersey, and what's the buying process like?

KL: Zoe, I think the, the first thing they're looking for, and, and is hugely important, is a home rather than a house. And that's very important, that we understand the, the personalities we're dealing with and, and guide those people through what's available on the market.

For high-value residents arriving on the island now there's a minimum value price of £1.75m that they have to spend. And the average this year, year to date, on the 23 properties that have been purchased, is £3.75m. So, they're making big investments, and it's very important that they find the home.

Value for money becomes a very important factor. And then, really, the hygiene factors - what, what's important to the family in their daily lives? So, is it proximity to schools for children? Is it proximity to the airport for travel? Is it proximity to the sea for views, etc.? And, with regards to the planning on, on the island, we have an island plan which guides all redevelopment.

Our zones are divided into three very distinct zones. The coastal national park, which, as the name would suggest, is our coastal region, which is very, very difficult to do any form of development in, and, and rightly so. Then we have the green zone, which, again, as the name suggests, is the, the countrified part of the island. And then the urban. And there's an underlying theme that we would like to develop the urban area and preserve our green and coastal zone.

What we do find, though, is a lot of our incoming high-value residents will buy some of the beautiful old properties and breathe life back into them. We don't like, and the planning department certainly don't like, pastiche old. And they're quite happy, sometimes, to see some of the old beautiful granite properties being developed in quite a modern way. And that's brilliant for the island, and, of course, preserving our patrimoine. 

ZDH: I also wonder if there's a lot of try-before-you-buy rentals for people considering a move? Susan Hollis, in terms of lending and loan-to-value criteria, what's the buy-to-let market looking like in these parts of the world?

SH: You’re absolutely right Zoe, when people first arrive on the island, they often choose to rent. This is either just because of residency restrictions or just personal choice as they sort of get to know their new environment. But many choose to stay longer term because of the lifestyle on the islands and that’s the point at which they often choose to buy.

As with anywhere, Zoe, when clients are looking to buy on the islands, the process of actually purchasing a property is different between each island, and also the process in the UK. So, we do find that a lot of clients engage with local brokers on the islands.

And it’s for that reason that we actually in the Private Bank developed our first broker portal that was online to launch in the islands, which we did a few years ago and that’s been really, really popular because it really helps clients and brokers engage with Barclays, our products and services in a frictionless way.

Of course, everything we do on the islands is in collaboration with local regulators. We’ve had really long and deep relationships with them and it’s about shaping and working with them in order to shape the financial landscape of the future.

As I mentioned earlier, there’s a lot of innovation on the islands, and it’s that along with the lifestyle that is really making the islands popular places to live. So, that work-life balance means that in more recent years families have really seen the islands as an alternative to moving out of the cities in the UK to the suburbs, and are opting for islands over possibly some of the home counties. And it’s quite easy to understand why, having heard some of my colleagues talking about the lifestyle benefits.

ZDH: Well, you've all given us a, a great flavour of the prime property markets on each island. Let's get back to talking lifestyle and what makes each island so unique. Jo, let's start with Guernsey. Why do people love living there?

JS: It's very easy to live in Guernsey. It's both, it's easy to get here, and the lifestyle is very laid back and relaxed. But, I think, obviously, the same can be said about Jersey and the Isle of Man, as well. Safety, security, and stability are the three things that first really attract people to come to the island. They love the fact that it's so safe. They love the fact that they can, if they forget to lock their houses, or forget to lock their cars, it's not a problem.

Having that deep sense of safety and security is incredibly important. And I think you can't really put a price on that. But, as I say, the ease of getting here, and the ease of our lifestyle.

I had a high-net-worth I was speaking to recently, and he said that when he first arrived, he wondered if maybe he'd got something wrong because he couldn't believe quite how straightforward and easy it was to actually come over here. But obviously, it's as Nick referred to, we do have the…give people the opportunity to be able to have a city-style life, a city-style career, without the commuting. And I think the Island punches well above its weight for so many things, as, as do Jersey and the Isle of Man.

But it's a very attractive lifestyle. We have a really diverse economy. We've got a good digital infrastructure. But, also, we have excellent education and private healthcare. And that's something else that is really important. People like the fact that they can easily get to see a doctor and that they're well looked after.

We have a very good foodie scene, actually, the restaurants over here are incredible, actually. And, certainly at the moment, because people aren't travelling away from the island so much, and it's the Christmas season, you have to book a couple of weeks in advance to get into most restaurants, because it is just extremely busy. And our hospitality sector, again is, it's something that's, that's weathered COVID quite well.

And we had a staycation club in the summer where all the hotels were offering special deals to local residents, and it's encouraged us all to rediscover what we've actually got on our doorstep. Because, obviously, as part of the Bailiwick of Guernsey, we also have Sark and Herm and Alderney, so there's been lots of travelling between the islands. And that's, again, something that people appreciate a lot.

Obviously, we've got great clean beaches. It's a very beautiful place. There's lots to do outside. And lots of cultural things going on as well. But, I think, again, as Kevin said, you know, the work-life balance is something that's incredibly important. And the real community feel.

ZDH: It really sounds like Guernsey encapsulates so much of what people have been dreaming of during the pandemic. I think there are going be a few common themes here, too, when we're talking about lifestyle. So, Kevin, let me ask you to pinpoint what you think are the key benefits of living on Jersey for residents?

KL: Well, the quality of life is, is pretty much the same for everybody. And, albeit that we're talking principally about high-net-worths and ultra-high net-worths, it, it's the same for everybody, because we can all enjoy the beauty of the island, the safety of the island, the friendliness of the people, the familiarity. 80% of our clients are coming from the UK, so they find that there's a familiarity about the island, but, also, there's that quirkiness of island life. The proximity to France. And, and I think it applies to the whole family.

Quite often when we talk and read about high-net-worths, we seem to be talking about the person who's that wealth creator, that successful businessman or woman. For us, what's hugely important is that the whole family feel that Jersey becomes their home. And one of the statistics that, that we in Locate Jersey are most proud of is the low turnover.

We're welcoming approximately 20 high-net-worth families per annum, and about 29, 30 businesses per annum, and their extended families, of course. We lose no more than one per annum of the total arrivals over the last 10 years.

So, the, the quality of life, the work-life balance, and, yeah, encapsulated by that low turnover of people who are very, very happy to be here. One of the things that we're experiencing is a shifting dynamic in the age profile of those applying for residency. 71% of those applying in the last five years haven't yet celebrated their 60th birthday. So, that does bring a, a family dynamic that's changing. Schools, healthcare and things like that are becoming much more important. And our role in helping those families to settle in has certainly changed direction.

ZDH: That is incredible, how, how few people leave once they, they find the island. Nick, that shifting average age is something that you mentioned about the Isle of Man, as well. And, I gather the average salaries are relatively high. What are you and your team highlighting to these younger people with, with wealth who may have recently relocated to work in the eGaming sector, for example?

NP: Well, as I think Jo and Kevin have said, one, one, one of the key things, really, is that safety, security, stability, and, and quality of life. I think the other thing about our island is, we're, we're slightly larger. And when you actually look at different areas of the island, they are quite diverse.

You know, you go to the north of the island, and, you know, you've got, sort of, rolling agricultural areas, you know, and it's quite green. And then you go right down to the south, where it, it's quite, quite hilly and, and, and quite dramatic.

So, in terms of, as, as a place to live, you know, there is quite a variety.

But, outside of that, when people come, what they're quite interested in, in seeing is, you know, what is the schooling like? You know, we've got a great range of state schools, but also we've got William's College, which I mentioned earlier. They have a great intake from all over the world. So, when the children actually go in there, you know, they're, they're rubbing shoulders with, with international students, and I think that can be quite enriching.

Also, other people have touched on it as well, the, the health facilities. You know, we've got a state-of-the-art hospital. Our population's round about 85,000, and that was built with a view to being able to service, you know, over 100,000 people. So, we've got some great capability still, still left in that, and some great services that are, are offered.

I think one of the other things that's quite attractive, particularly for people towards the north of England, is we're only, sort of, 20 minutes from Liverpool, 25 minutes from Manchester, and approximately an hour from London by, by air. So, we are central, and we have some, you know, great connectivity.

I think the island, as well, is, is quite a friendly place. And we have a saying in that, people come as a client, and if they do leave, they, they will leave as a friend. I think just to pick up on what Kevin was saying, what we've seen, people who've come to the island, what they do, they have a circle of friends, and, quite often, they are high-net-worths as well. And we've seen them actually bring those people over.

So, we are all-inclusive. And, yeah, we're a very friendly place, and it's, it's safe, secure, and, you know, a good place to bring up your family and your children.

ZDH: Thanks, Nick, you've all made island living sound absolutely idyllic. One final question for Susan Hollis. As we're looking towards 2021, what's on the real estate agenda for the first quarter of the year?

SH: We've got two pieces of legislation. The first one is the stamp duty holiday, which is entering its final three months. And then we've got the non-UK resident stamp duty surcharge, which comes into effect on 1 April.

So, the two are very much at the same time. And, together, they're really going to impact how the property market responds. And people trying to get transactions, especially in that lower part of the market, up to the £500,000, try and get those transactions completed. And they have a knock-on effect as the value chain goes up. So, I definitely think that, although we don't know what the future holds, it's definitely going to be a very busy quarter one next.

ZDH: Thanks, Susan. And there you have it. Now our listeners just have to decide which island is right for them. I'd like to thank all our guests for their brilliant insights. I've certainly learned a lot, and you're all great ambassadors for your island homes. So, thank you very much to Jo Stoddart, Director at Locate Guernsey.

JS: Thank you, Zoe. It's been a real pleasure to wave my Guernsey flag.

ZDH: And thank you to Nick Preskey, Head of Inward Investment at Locate Isle of Man.

NP: Thanks, Zoe. I've really enjoyed it. Thank you for having me.

ZDH: And thank you too to Kevin Lemasney, Head of High Value Residency at Locate Jersey.

KL: My pleasure, Zoe. It's been great chatting to you all.

ZDH: And many thanks to Susan Hollis, Director, Head of Credit, at Barclays Private Bank.

SH: Thanks very much, Zoe. It's been really interesting hearing everyone's perspectives on each of the islands.