Acquiring commercial property in the Channel Islands: 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. Guernsey's conveyancing system whilst similar in certain regards to that of Jersey has its roots in its feudal past. Based upon these ancient origins, Ogier has established a modern commercial property law practice. Here is a brief synopsis of the main differences between Jersey, Guernsey and English Law in relation to property transactions.

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  Jersey System Guernsey System (excl. Sark and Alderney) English System
Contract and transfer Conveyances are passed before the Royal Court only on Friday afternoons. It is the norm for transactions to proceed directly to completion with no prior "exchange" stage. 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.

It is normal to sign Conditions of Sale (either conditionally or unconditionally) prior to completion.

Completion takes place before the Royal Court on a Tuesday or Thursday morning only.

If a lending bank requires a charge over the property then consent is usually given to that charge on the same day that the purchase completes.

Shares in a property holding company can be purchased on any day of the week, but where the purchaser is borrowing to finance the acquisition it may be necessary to complete on a Tuesday or Thursday

Parties can exchange contracts for the sale and purchase of property at any time, for simultaneous or later completion.
Leases Leases for a period in excess of nine years are also passed before the Royal Court on Friday afternoons. Leases are in English and are in a substantially similar form to institutional English leases.
 

Leases in Guernsey will be familiar to those used to commercial leases in England.

There is no obligation to do so, but longer leases in Guernsey will often be registered.

Leases of any length (whether a 7 year registrable term or not) can be completed when the parties choose.
Security of Tenure Commercial: a tenant has no right to remain in premises after the term expiry without a new lease. 

There are no procedures akin to the Section 25 notice to be served on the tenant, nor any rights for a tenant to oppose termination pursuant to the equivalent of a Section 26 notice. 
 
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. The court can grant a delay to the tenant on the balance of hardship test. 
 

Commercial – a tenant has no right to remain in the premises after the term has expired, but where the tenant remains in occupation and the landlord accepts rent a new lease is implied.

The new lease will roll over on a monthly or quarterly basis, depending on the frequency of rental payments.  

The terms of the new lease are likely to be similar to the expired lease, save for the term and any guarantee provisions.

Residential – same as Commercial.

If a tenant does not vacate then eviction proceedings need to be implemented.  The court can stay an eviction depending on the circumstances.

All tenants with a lease of at least one year automatically have a right to remain in the premises on the same terms after the expiry of the term, unless this right is specifically excluded within the lease by the parties agreeing in statutory form to exclude the provisions of s.24-28 of the Landlord & Tenant Act 1954 or by a Consent Order at Court.
Attendance Attendance at the Royal Court is necessary either by the parties or their lawyer or any other party who is duly authorised under a Power of Attorney to pass a conveyance or long lease.
 
Parties must attend before the Royal Court for completion of a conveyance (either in person or by attorney). The parties solicitors are able to exchange contracts for a later sale at any time, day or night, over the telephone subject to Law Society formula protocol.
Land Registry There is a Public Registry in Jersey, but it is a registry of deeds and not title. There is no guarantee of title provided by the government in respect of a property transaction and title is based upon the claims set out in the documents recorded at the Public Registry. Hence there are no "deeds" to hold.
 

There is no Land Registry as such in Guernsey. 

Title deeds are held at the Greffe.  

As in Jersey, there is no guarantee of title provided by the States of Guernsey.

Her Majesty’s Land Registry guarantees the title to registered property.
Consents Tenants or purchasers of immovable property must hold a valid registration card pursuant to the Control of Housing and Work (Jersey) Law 2012.  Superior landlord consent may be required for a sub-lease.
 
None, other than consents of superior landlords in the case of leasehold transactions. None, other than consents of superior landlords in the case of leasehold transactions.
Specific Performance Under Jersey Law it is only possible to get specific performance to grant a lease up to a period of nine years with the remedy for the balance being damages - York Street Pharmacy v Rault 1974 JJ65. Specific performance can be obtained in respect of an agreement to acquire shares, but not freehold property.
 
Specific performance is not a remedy known to Guernsey law (except in limited circumstances in the case of housing schemes).  Specific performance of an agreement for sale or lease can be ordered by Court in order to complete a sale and purchase or to grant a lease of any term length.
Assignment

Presumption that assignment requires the prior consent of the Landlord and no equivalent of s.19 of the Landlord and Tenant Act 1927. It is the norm for Jersey landlords simply to require an assignee to be of equivalent financial standing to the assignor or provide suitable accounts and references and/or a guarantor.  
 
The position is unclear on the continuing 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.

As with Jersey, except that the original tenant (and any other assignor tenants) remains liable unless specifically released.

Presumption that a tenant may assign a lease without the consent of the Landlord unless the lease expressly provides otherwise. Furthermore s.19 of the Landlord and Tenant Act 1927 implies an obligation on a Landlord not to unreasonably withhold consent where required.  
 
The Landlord and Tenant (Covenants) Act 1995 provides that under all leases granted after January 1996 an assignee is released from the tenant’s covenants at the time of assignment.

Stamp Duty on Purchase

Accumulative scale:

0.5% up to £50,000

Plus 1.5% £50,001 to £300,000

Plus 2% £300,001 to £500,000

Plus 2.5% £500,001 to £700,000

Plus 3% £700,001 to £1m

Plus 3.5% £1m to £1.5m

Plus 4% £1.5m to £2m (thus £59,500 on the first £2m)

Plus 5% for balance in excess of £2m

(different rates apply for residential properties/sites for residential development)


 

Duty on conveyancing transaction in Guernsey is called Document Duty.

Accumulative scale as follows:

2% on up to £250,000, plus

3.25% on the next £150,000, plus

3.5% on the next £350,000, plus

3.75% on the next £250,000, plus

4.0% on remaining amount.

Some conveyances are exempt from duty, including family transactions and intra-group transfers.

Stamp Duty Land Tax on a non accumulative scale:

Zero up to £150,000

1% £150,001 to £250,000

3% £250,001 to £500,000

4% £500,000 to £1,000,000

5% over £1,000,000 to £2,000,000 

7% £2,000,000 +

(* 15% rate in certain cases)

(residential only)

Stamp Duty on Leases

Duty is calculated on new contract leases and on the assignment of such a lease by multiplying the annual rent by the length of term (subject to maximum multiplier of 21) with any premium added in. Of this total, there is an accumulative scale: 
 
0.5% up to £100,000

0.75% over £100,000

 (no distinction between commercial and residential properties) 
 

None.
 

Stamp Duty Land Tax on a non accumulative scale (non-residential):

Zero up to £150,000 NPV

1% over £150,000

NPV = Net Present Value of rent

When calculating duty payable on the NPV of leases you must reduce your NPV calculation by £150,000 before applying the 1% rate.

(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 plus registration fee. Document Duty is charged at 0.5% of the amount shown on the face of the bond registered at the Greffe.
 
None.
Stamp Duty on Share Transfers None unless the Articles of Association attach a right to occupy residential accommodation to the share and then Land Transfer Tax equivalent to Stamp Duty set out above is payable.

Where the sale of the shares has a similar effect to the transfer of an interest in real property duty is payable at the same rates as if the property were being conveyed.

There are some transactions that are exempt, including family transactions and where the principle use of the property is for the business of the company being sold.

0.5% is payable.

Termination / Forfeiture

As stated above, Jersey leases terminate automatically at the expiry of the lease or if earlier by agreement between the parties.  
 
Most leases will reserve rights to a Landlord to cancel the lease in specific circumstances but taking account of the fact that one must apply to the Royal Court for an Order to cancel any contract lease. 
 
Forfeiture is not technically a Jersey concept so there is no right to forfeit a lease by peaceable re-entry. There is no Jersey equivalent to the Law of Property Act 1925 so landlords are not required to serve tenants with a Section 146 notice (which applies where a tenant is in breach of covenant other than to pay rent) or any Jersey equivalent of such a notice specifying their breach, as a condition precedent to exercising their right to cancel the lease.  If both parties consent then a contract of cancellation is entered into on agreed terms.

As in Jersey, Guernsey leases terminate automatically at the expiry of the lease or if earlier by agreement between the parties.

Most leases will reserve rights to a landlord to terminate the lease in specific circumstances.

To obtain vacant possession a landlord must commence eviction proceedings.  

The Court may grant a stay of eviction, the length of which will depend on all the circumstances of the case.

A maximum stay of eviction of 6 months can be granted in the case of a mere occupier.

 

 

A tenant's right to remain at the expiry of a commercial lease will depend on whether the same is contracted out of the provisions of the Landlord & Tenancy Act 1954. 
 
If the Act does apply then a Section 25 Notice must be served by a Landlord requiring possession and a tenant may serve a counter-notice (s26) to oppose termination.  
 
A lease will contain an express clause permitting forfeiture (re-entry) in certain specified circumstances.  
 
A Landlord can forfeit a lease either by peaceably re-entering the property or by going to court to bring forfeiture proceedings against the tenant but must, where a Landlord seeking to allege that a tenant is in breach of covenant (other than payment of rent) serve a notice pursuant to s.146 Law of Property Act 1925.

Sales Tax

There is no Value Added Tax ("VAT") in Jersey but there may be Goods and Service Tax ("GST"). GST is generally payable on the rent due under a commercial lease. 
 
The purchase of shares does not presently attract GST. 
 
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 any commercial deal.

 None.

VAT at a current rate of 20% may be payable on the land value or lease premium as well as on the applicable Stamp Duty Land Tax in respect of any purchase or lease (where the Vendor has elected to waive their exemption). Transactions which involve a going concern where both parties are VAT registered can be exempt from VAT.

Other Taxes

No Capital Gains Tax ("CGT"). 
 
Property income is taxed at 20%. Deductions and relief can be claimed for normal outgoings and capital allowances may be claimed for plant and machinery.

No Capital Gains Tax ("CGT").

Property income is taxed at 20%. Guernsey property rental income is taxable net of certain statutory deductions for repairs and actual deduction of other expenses, dependent on the use and lease terms of the property.

“Tax on Real Property” is payable annually and is calculated on the footprint of the building and a multiplier to take account of the number of floors.  The rate of tax depends on the use of the property, with financial services paying the highest rate of tax.

Capital Gains Tax may apply to a property transaction (there is a main residence exemption). 
 
Property income is taxed in accordance with standard income tax rates (an accumulative scale of up to 40%).

The information and expressions of opinion contained in this guide 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.