On the face of it, this might sound like a very simple question, and with an obvious answer.
To a buyer, contents are things like carpets, curtains and white goods and are important to the use and enjoyment of a property. To a Guernsey conveyancer and our Treasury, contents are the trigger for a separate thought process. Why is that?
In fact, it goes back to an old Ordonnance in 1852, and which is called the Ordonnance des Biens Meubles et Immeubles 1852.
Most recently, contents play a very important part of the new Document Duty regime and which came into force on 15 November this year; more on that below.
The governing piece of secondary legislation of 1852 is still important today. It made an important distinction between “immeubles”, literally translated as ‘immovables’ and what we consider as realty (being the land and things forming part of the land, such as pipes for services and buildings), and “meubles”. That word translates as ‘movables’ or personalty, and (very) loosely equates to what most of us would consider as ‘contents’. The Ordonnance treated meubles as those things which could be removed from one place to another, either of its own volition (e.g. a horse), or by physically being moved (e.g. a dress, or silver in those days).
Perhaps for exploring in depth in another article, in 1852 some things that we would now think of as contents, were in fact treated as forming part of the land itself, for they were so important to the home. They included the kitchen table, the shutters on the windows, tools used in workshops and even the manure heap! In 2017, a fitted kitchen might well be considered not as contents, but forming an integral part of the building and thus the land itself.
However, back to the point. At its simplest, no document duty is paid on the value of personalty. Document Duty is actually levied on the value of realty.
When an offer is made and accepted for the purchase of property, a Guernsey estate agent will prepare Conditions of Sale. In those Conditions, there will be a split between the value of the realty (until recently generally 95% of the purchase price) and the value of personalty (the remaining 5%).
The new Document Duty regime now requires sellers and buyers to declare before the Royal Court (in the property Conveyance) that the value of the realty, and therefore the value of the contents, is correct. It is very important, since a false declaration may be construed as an attempt to avoid the payment of Document Duty, which is a criminal offence.
The starting point, since 15 November, is that contents are going to be treated as representing 2.5% of the property price. If it is the case that the contents are worth more, then a buyer’s Document Duty bill will slightly reduce, but conversely, if the contents are worth less than 2.5% of the purchase price, then a buyer’s Document Duty obligation will increase. Some Advocates may take the view that it is safest that no value is attributed to personalty, so their clients do not innocently and unwittingly make a false declaration. As the process is relatively new, no doubt greater clarity in practice will emerge.
In conclusion then, what may seem like a straightforward question, is actually more complicated.