Local realtors are predicting increased rental rates for both commercial and residential properties following the implemented change in the property tax regime by the Government of Jamaica (GOJ) on April 1.

Deborah Cumming, managing director and broker with Century 21 Heave Ho Properties, said rental rates will rise.

“Commercial rentals will definitely be affected, as in some areas the increase is over 1,000 per cent. This is not something a landlord will be able to absorb solely.

“In fact, all rentals will be affected — residential included,” Cumming stated.

The GOJ recently announced that the new property tax regime will take effect on April 1. This coincides with the April 1 property tax due date for fiscal year 2017-18.

On Wednesday, Tax Administration Jamaica (TAJ) issued reminders that, as a result of the reform of the property tax system, the number of value bands has expanded to nine, with reduced tax rates ranging from a flat rate of $1,000 on properties valued at $400,000 or less, up to a high of 1.3 per cent on properties valued over $30 million.

The lowered rates, however, are being applied against higher 2013 property valuations.

Edwin Wint, President of the Real Estate Association of Jamaica and CEO of La Maison Property Services, told the

Jamaica Observer: “Any tenant with a commercial lease which states maintenance cost separately from the rent in the lease agreement, and includes property tax as a line item in the maintenance budget, should incur this increase in property tax in their maintenance charges.”

He added: “This could also affect some residential leases in a similar manner as above, but properties falling under the Rent Restriction Act may prove to be constrained from this.”

Cumming told Caribbean Business Report (CBR) that the promise by the new administration to reduce other charges on real estate transactions was yet to be addressed.

“In the real estate sector we feel completely deflated and blindsided by the complete lack of acknowledgment by the government to not come good on their promise to reduce Stamp Duty and Transfer Tax. They were not even mentioned when the budget was presented,” she said.

Meanwhile, the GOJ said it will be launching a new project to collect outstanding property taxes with arrears estimated at $13.5 billion.

TAJ indicates that property owners may apply for a special discretionary relief based on hardship; for statutory relief where the potential use of the land differs from its current use; or for agricultural de-rating in respect of agricultural lands.

Land owners, the tax authority said, also have the option of making payments in half-yearly instalments on April 1 and October 1, or in quarterly instalments on April 1, July 1, October 1, and January 1. A flat rate charge of $1,000, however, should be paid in full by April 30, the TAJ said.