The Editor, Sir:

The recently announced reduction in stamp duty and transfer tax is commendable, but it is not a short-term stimulus.

We commend the Government and especially our Minister of Finance Audley Shaw for taking the bold move to reduce the burden of the transfer tax and stamp duty. It will mean a savings to the vendor of 1.75 per cent and a savings to the purchaser of 0.75 per cent. The ultimate goal is to increase the number of transactions and to encourage and provide opportunities for more persons to invest in real estate.

As a sector, real estate is a large contributor to the Government's revenue, both directly and indirectly. Any stimulus to this sector would have an obvious effect on revenue. The real-estate market is experiencing a sharp downturn with more properties coming on the market and fewer persons willing or able to buy. There is an unhealthy mix of job uncertainty, increased mortgage interest rates and banks that are reluctant to lend, fearing an increase in non-performing loans. Properties are taking longer to sell and vendors are not getting their listing price. We are going into a buyers' market and for those fortunate enough to purchase with cash, they are able to pick up some great deals.

We are well aware of the real-estate market in the United States and the devastating effect it has had on their economy and, indeed, the world's. They have tried to stimulate their industry by reducing interest rates and the mortgage institutions are working closely with their clients to minimise foreclosures. President Obama has put a stimulus package in place to boost the real-estate market and the early signs are encouraging. He understands that home ownership is the benchmark of a healthy economy.

Ineffective stimulus

We are very concerned that the stimulus provided by the Government in decreasing transfer tax and stamp duty will be too late. What is the rational of starting the stimulus in January 2010 when the market is crumbling right now? The Government appears to view the reduction of these taxes as a 'cost'. The effect, in fact, will be the opposite.

The number of transactions are down by 30 to 40 per cent over the same period last year, so the Government needs to do something now to reverse this trend - remember, it is not just real-estate companies which would benefit. The loss of revenue from the related sectors will also have a negative effect on the Government's coffers.

The Government needs to do everything possible to lessen the impact of the economic downturn. A stimulus can only work if it is implemented. We do not have the luxury to wait. We need to act now. If this is done we can look forward to a vibrant real-estate market driving the economy sooner rather than later.

I am, etc.,

Deborah Cumming

First vice-president

Realtors' Association of Jamaica