Housing

Summary

  • The housing problem in Jersey is one of affordability. Housing costs have risen to an unacceptable level because supply has not increased to match demand. The problem needs to be tackled from both demand and supply sides and by helping people meet housing costs.
  • Demand should be constrained by strict enforcement of population policies so only people who are residentially qualified or who make a demonstrable beneficial contribution to the Island are able to buy or rent housing.
  • Supply should be increased by relaxing requirements for car parking spaces and height restrictions, releasing surplus government owned land, removing constraints on the Jersey Development Company requiring pre-contracts before it can commence construction, and increasing Andium’s programme from 3,000 new affordable units to 5,000 by 2030.
  • People should be helped to pay for housing by income support to meet rental payments and by expanded schemes to help first time buyers.
  • Rent policy for social rented housing should ensure that rents do not exceed 80% of market rents.
  • The recommendations of the Jersey Homelessness Strategic Board should be implemented in full.
  • People who have settled in Jersey and who have contributed to the Island should be treated more fairly in respect of access to housing, consistent with maintaining strict controls on immigration.
“The rise in house prices was the inevitable consequence of supply failing to respond to demand. This was not the fault of housing providers, but rather was a direct result of planning policies and practices and the failure of Government to release surplus land.”

Housing is a complex issue and policy needs to be evidence based. There is no shortage of evidence and analysis of the housing situation in Jersey. Indeed, arguably there has been an excess of analysis and reports at the expense of action.

The proposals in this paper have been developed after extensive consultation with housing providers and others and study of the following reports –

  • Objective Assessment of Housing Need, by the consultants ARC4, January 2019.
  • Review of Access to Social Housing in Jersey, by the consultants HQN, April 2019.
  • Housing Policy Development Board Final Report, including a report by its consultant, Altair, April 2021,
  • Creating Better Homes – an Action Plan for Housing in Jersey, published by the Minister for Housing, June 2021.
  • Affordable Housing – Supply and Delivery, by the Environment, Housing and
  • Infrastructure Scrutiny Panel, including a report by its consultants ARK, October 2021.
  • Jersey Homelessness Strategy, report by the Jersey Homelessness Strategic Board, November 2020.

 

In looking at housing in Jersey it is first helpful to note the current distribution of the housing stock by tenure. The figures are approximate only as they are based on the 2011 census.

  • Owner occupied 54%
  • Private rented – registered 22%
  • Private rented – unregistered 10%
  • Social rented – Andium 10%
  • Social rented – others 4%

 

It is also necessary to note use of the word “affordable”. In the context of housing in Jersey it means housing at below market prices, so with a subsidy. Housing that is not “affordable” is open market housing, over 80% of the total.

Eligibility for “affordable housing” is restricted to those with entitled status and household earnings below a threshold. Access to “affordable” housing is through the Housing Gateway.

The number of people eligible for the Gateway will always exceed the number of homes available given that they are at a below market price, and accordingly the supply of ”affordable” units is rationed to the most in need. Eligibility for the Housing Gateway will be widened later this year and while this will increase the number of people eligible for subsidised housing it will not increase the supply.

The Problem

The housing problem in Jersey is one of affordability. The facts are clear. The average house price figures for Q3 2021 are –

  • Jersey £634,000
  • London £510,000
  • South East E (excl London) £359,000

 

In short, prices in Jersey are 24% higher than in London. Prices increased by 19% in the year to 2021 Q3. Average earnings in Jersey are around 7% % higher than in London. In very round terms, the ratio of average house prices to average earnings is 15 in Jersey as against 13 in London.

Since 2011 average earnings in Jersey have risen by 26% while house prices have risen by 57%. In a normal market over time rents and house prices move in line as they are simply different means of paying for the same product. The latest published statistics show that market rents rose by 48% in the ten years to 2021 Q3, less than the increase in prices although it is worth noting that if the Q2 figures are used the increase was the same, indicating volatility in the quarterly data. In the last year market rents have risen by 5%. compared with the 19% increase in house prices.

The consequences of the high housing costs

  • The consequences of high housing costs in Jersey include
  • Lower standard of living generally, for younger people in particular
  • Difficulty in recruiting essential workers from off-island.
  • Young Jersey people more inclined to leave the Island and talented Jersey people who have left the Island for higher education and employment opportunities are less inclined to return.
  • High cost of income support to meet housing costs – about £30 million a year.

 

The rise in house prices also raises the question of intergenerational fairness. For many established Jersey residents the substantial increase in the value of their property has been very welcome, significantly increasing their wealth which in some cases can be realised.

Children of people who have benefited from the rise in house prices also benefit to some extent through the “bank of mum and dad”. However, this leaves a significant proportion of young people having to meet, or being unable to meet, the high housing costs. This phenomenon is not unique to Jersey and applies in parts of the United Kingdom and in many other jurisdictions.

This is simply unfair, which is why concerted action needs to be taken to reduce the cost of housing and to help younger people meet housing costs.

The cause of high housing costs in Jersey

Over the period of the 2011-20 Island plan, new housing supply fell 2,000 units short of the increase in demand. The rise in house prices was the inevitable consequence of supply failing to respond to demand.

This was not the fault of housing providers, but rather was a direct result of planning policies and practices and the failure of Government to release surplus land.

Policy – constraining demand

The rise in house prices has been caused by demand outstripping supply. Attempting to deal with the problem can be done by either or both constraining demand and increasing supply. In respect of demand, it is sometimes suggested that there is unrestricted immigration into Jersey.

This is not the case. Jersey has some of the strictest controls in the world about who is allowed to buy or rent housing. The housing qualifications are well known to people in the Island and are enforced. However, it needs to be recognised that Jersey does need teachers, nurses and people to work in agriculture and hospitality.

Jersey cannot now, and has not for many years, been able to provide all the workers that are needed in these sectors. Therefore, some immigration is essential, and policy restricts immigration to those who will make a significant contribution to the Island.

The recently published population policy reflects this but currently, there is inadequate data to enable policy to be implemented effectively.

One method of constraining demand is to reduce economic activity, which reduces the demand for labour, but this obviously has a consequential effect on living standards. There is no magic bullet that can successfully further constrain demand for housing in Jersey which would not cause unacceptable consequences.

Taxing capital gains or levying a tax on the rise in the value of owner-occupied housing would certainly constrain prices but would be deeply unpopular with Jersey people many of whom have already suffered by having to pay high prices. If there was a magic bullet it would have been found a long time ago.

All that can be done to constrain demand is to enforce strictly the controls on who is allowed to buy or rent property. Policy measures must concentrate on increasing supply,

Increasing supply

The Objective Assessment of Housing Need report concluded that Jersey needed at least 7,010 units between 2021 and 2030. This is now accepted as being necessary. So the issue is how to provide these units while preserving the character of the Island.

Some facts are helpful. Jersey is not “concreted over”. Some basic figures on land use –

  • Cultivation 52%
  • Natural environment 18%
  • Built environment 25%
  • Other 5%

 

The major components of the built environment are –

  • Gardens 10%
  • Major buildings 4.6%
  • Roads 3.2%
  • Driveways 2.8%
  • Car parks 0.9%

 

Housing comes under the “major buildings” definition, which also includes offices, schools and public buildings. So housing is around 3% of land use. If the 7,000 units identified as being needed in the Objective Assessment of Housing Needs are built then the amount of land used for housing will increase by less than half of 1%, although if past practice is continued this proportion will be increased by the construction of driveways, car parking spaces and private gardens.

Currently, driveways, roads and car parks comprise 7% of the land area of Jersey. There are 145,000 vehicles registered in Jersey, an average of more than three per household. Since 1966 the population has increased by 60% and the “car population” by 220%. The provision for car parking has got out of hand. The following evidence was given by the Chief Executive of Andium Homes to a Scrutiny Committee.

There is a slight disconnect between the planning policy on parking and then effectively the control element of the Planning Department that then goes to enforce that, for instance, a requirement for 0.7 parking places per flat.

What we would say to you on that is that we spend an enormous amount of money creating parking spaces. I will give you an example, La Collette flats where we have spent £15 million effectively on a substructure to create substantial numbers of parking places, which will not be required by the residents living there.

The Chief Executive added that in St Helier, Andium had 300 more parking spaces for its tenants than it required. The expression “slight disconnect” is an understatement.

The Gas Place story illustrates how muddled decision-making has prevented the building of much needed social housing units. In 2017 the site was acquired by Andium Homes in the private market with a Planning Approval in place to deliver 253 open market new homes.

However, the States Assembly required Andium to provide a large underground public car park of between 150 and 200 spaces, which reduced the viability of the scheme such that only 122 units could be provided, and the car park proved to be unacceptable for planning reasons. It is clear that the provision of much needed social housing has been frustrated because of the requirement on a social landlord to build an underground public car park as if this has no cost.

Gas Place should now have on it 250 social housing units; conflicting public policy decisions means that the site remains empty.

To remedy the situation the following changes are appropriate –

    • In appropriate areas allowing higher densities. Here an obstacle is that the current planning requirement that developments higher than six stories must be of particular architectural merit. Height restrictions can be eased where there would be no significant adverse effect on views.
    • Social housing providers should not have additional requirements imposed on them which properly should be financed by tax revenue.
    • Reducing the parking provision in new developments following necessary changes to transport policy, including an enhanced bus service and extension of shared car schemes.
    • Applying the policy on listing in a more sensible way rather than the current approach which does not adequately reflect the existing categories of listing. Decisions that involve listed buildings must take full account of the need for housing. The cost of any requirements for preservation of listed buildings should be explicit.
    • Reducing the cost of housing by facilitating the introduction of modern methods of construction, which are capable of producing benefits in respect of time and cost of construction and impact on the environment.

 

But even with these changes, more housing requires appropriate sites to be available. This does not mean extensive building on green fields but rather the concentration of development in what are termed “brown field” sites, that is sites that have previously been used, for example by public utilities, light industry, offices and even some poor quality housing.

By far the largest owner of such sites is the government, and it has failed to release surplus sites, something that is well documented, most recently in a report by the Environment, Housing and Infrastructure Scrutiny Panel, drawing on research by the consultancy ARK –

ARK further concluded that the role of publicly owned land is critical to the success of improving housing supply. There are a number of sites in public ownership already identified for new affordable housing and the Panel shares ARK’s view that the sites already identified for new affordable housing take too long to come forward for scheme development.

Moreover, that GoJ can lead the way and create a step-change in affordable housing production by speeding up the release of its own sites to affordable housing providers. The Housing Policy Development Board similarly pointed to the failure to release Government owned land – Due to delays in the release of government-provided land, affordable housing providers are currently competing with open market developers for land.

Recently some welcome decisions on releasing Government owned land have been made but more urgency is needed given the housing shortage. It is also worth noting that the Jersey Development Company has published plans that include a further 1,000 housing units on the waterfront.

Andium Homes plans to build 3,000 homes by 2030, increasing its total units under management by two thirds. This will make a significant contribution to meeting the housing needs of Jersey families.

Andium is capable of making an even greater contribution, provided that sites are made available and that planning reforms are implemented. A plan to build 5,000 units by 2030 is reasonable.

There is also a particular issue that affects Jersey Development Company. It has been criticised for selling housing units before construction has commenced, which inevitably means they are more likely to be sold to investors rather than to occupiers.

However, the company is not doing this on its own volition but rather because it is required to do this by the law establishing the company. This lists a series of requirements that are termed “risk mitigation”, but which probably have the effect of doing the opposite and which are contrary to housing policy. The law should be amended so as to place responsibility for risk mitigation measures on the board of the company.

It is clear that Jersey is able to expand substantially the provision of new housing without adversely affecting the natural environment, which should be regarded as sacrosanct. Indeed, Jersey needs to go further in ensuring that all the environmental impact, in its widest sense, of all new developments is carefully considered.

Protection and enhancement of the natural environment is very much a poor relation in considering planning applications compared with protection of the historic built environment.

The planning system also needs reform as currently, it is simply unable to cope. Four changes should be implemented –

    • The current planning system is hugely costly, causes significant delays to important projects and cannot be justified given the inability of the current system to cope with the current level of applications. Significant reforms are needed to ensure that applications are dealt with efficiently and effectively, with the interests of developers, those affected by the development and the wider community all being properly considered.
    • Increasing the scope of permitted development rights, that is small-scale developments that do not have wide implications and which can be taken without the need for planning permission, but consistent with legal requirements in respect of the environment and wildlife.
    • Enabling small scale residential conversion, so that existing homes to be repurposed to better suit the needs of their occupants and create an additional supply of housing. Requirements for listed buildings similarly need to be implemented in a way that does not inhibit renovation and increase the supply. There is for example a potential conflict between a heritage requirement that prevents double glazing and housing and climate change objectives.
    • Again recognising the resource constraints within the planning department, outsourcing some work by using appropriately qualified professionals.

 

There is one other initiative that can make a modest contribution to increasing the supply of housing. Many people, mostly the elderly, occupy houses that are large for the size of their family. This is sometimes referred to as “under-occupation” as if this is a bad thing and that people should not have more housing than they need.

This concept is not helpful. People are entitled to use their incomes and wealth as they wish and many elderly couples quite rightly want to continue living in three or four bedroomed houses. However, others are happy in principle to “downsize“, thus freeing up a home for family use.

The Housing Policy Development Board had a helpful analysis and recommendation on this issue, which should be implemented –

Jersey has significant under occupation in all tenures of its housing stock, with about a quarter of all households under occupying by two or more bedrooms in 2011. It is most prevalent amongst owner-occupiers, 42% of which under occupy by at least two bedrooms.

This is an inefficient use of limited housing stock. The issue is compounded by barriers to moving to smaller properties and unsuitable ‘right-sizing’ options.

Moving home can be one of the most stressful experiences in a person’s life. Resourcing personal support and advice throughout the moving process can remove psychological barriers to moving for those who are deterred from ‘rightsizing’ by the prospect of the upheaval and stress of moving home.

Taking a personalised approach can result in increased downsizing moves by helping to reduce the anxiety that many older people feel about moving home. The experience of some social housing providers in the UK suggests that the offer of personalised support can be more effective than cash incentives for downsizers in social housing.

In some English local authorities that have implemented similar measures, each specialist post facilitates over 50 moves per year.

Rent policy

This paper has already mentioned the issue of fairness between people who bought houses
some time ago and those now forced to pay high prices or unable to purchase housing at all.
But there are other forms of unfairness in the system which need to be addressed.

People currently renting housing can be divided into three categories –

    • Low-income tenants who are eligible for income support to meet some or all of their housing costs. In the case of Andium tenants, 60% receive some assistance and 34% have all their rent met by income support.
    • Andium tenants not in receipt of income support have been subject to a policy under which rents should be set at 90% of market level. However, over the last few years there have been a number of rent freezes and also many long-standing tenants are paying substantially less than 90% of market rents. Besides being unfair between tenants, this is also a deterrent to downsizing, the effect of which can be that somebody’s rent is actually increased even though they moved to a smaller property thus freeing up a larger one. The 90% policy is in the process of being changed to an 80% policy, which largely reflects reality.
    • Tenants in the private sector who are paying market rent.

 

In an ideal world, people in similar circumstances would be treated similarly but the current position is a long way from that. Equally, it has to be recognised that tenants cannot be subject to significant rent increases in a short period of time.

The objective should be that low-income tenants should continue to have all of their rent met by income support and otherwise social rents should be a maximum of 80% of market rents. This last point has received a great deal of political attention and needs to be seen in context.

Only about 6% of Jersey families are affected by the level of Andium rents and there are many families facing much higher housing costs for whom the priority must be increasing the supply of housing.

Regulation of the private rented sector

The private rented sector in Jersey is currently unregulated, similar to the position in the United Kingdom and many other jurisdictions. This means that property providers and tenants can agree on whatever terms they like in respect of the length of tenancy and rent.

There are good and bad property providers and good and bad tenants. An unscrupulous property provider can have the power to exploit vulnerable tenants and conversely an unscrupulous tenant can exploit a vulnerable property provider.

Jersey is actually unusual in having a large number of small providers – probably around 9,000 in all who between them provide about one-third of the total supply of housing. The vast majority are neither bad nor rich, but simply normal Jersey families earning some income and making housing available.

The Island may benefit from having some larger property providers, able to benefit from economies of scale and better able to provide long-term tenancies, but at present, the financial returns are simply not attractive.

There have been proposals in Jersey for controls on rent increases, the licensing of property providers and requiring a minimum notice period. Properly designed and implemented, these proposals all have merit but badly designed and implemented they simply run the risk of reducing supply.

Here, it is important to draw a distinction between commercial property providers with a stock of properties that are permanently rented and the quite separate market of Jersey people renting out one or more properties, some for a limited period for example because the owner is off-Island for a year.

In the case of the former, a minimum rental period of say one year is perfectly acceptable whereas in the case of the latter this would simply reduce supply. Rent controls are more difficult. Imposing a limit on rent increases, for example by linking them to an inflation index, is one option but this predominantly benefits existing tenants.

By far best protection for tenants is a functioning market in which supply matches demand and both new and existing tenants have a choice, so there should be an overriding objective of encouraging those with properties they do not occupy to make them available for rent.

Policy and practice on inspections must be in line with this, and not impose onerous requirements which would have the effect of removing properties from the market.

However, a property register, recording owners and tenants, which has been agreed in principle, should be implemented. This would facilitate the application of existing controls as well as providing much needed data, which is essential, for example, in estimating the demand for school places.

It must also be remembered that any regulation of the private rented sector does nothing to address the key problem in Jersey of inadequate supply, but rather provides protection, albeit limited, to those already housed.

Addressing the homelessness issue

Homelessness is a complex issue and one that is much more than a housing issue. In November 2020 a homelessness strategy was published by the Jersey Homelessness Strategic Board. The introduction to its report states –

The Strategy has been developed in partnership between the Government of Jersey, social housing providers, the third sector and private sector organisations, and aims to strengthen the housing safety net to prevent homelessness and provide for those who need support.

The report and the partnership is a model for how policy should be made and needs to be followed in other areas. The report had eight recommendations –

    • Understand and define homelessness by providing a statutory definition and clear messages to promote a shared understanding of the issue.
    • Evidence the scale and nature of the issue so that we can plan how to prevent and address it.
    • Create a housing advice hub so that everyone knows where to go to get help.
    • Establish a complex needs team to take responsibility for resolving the housing issues of the most vulnerable.
    • Provide a housing safety net for all, which is appropriate, flexible and able to meet the needs of everyone.
    • Implement commissioning and regulation to ensure that housing-related support services are consistent and sustainable.
    • Strengthen the role and supply of social housing to ensure that it is better able to meet housing needs.
    • Support private sector tenants and landlords to promote positive relationships.

 

These recommendations seem eminently sensible and should be implemented with urgency, including the introduction of a statutory definition of homelessness and a review the provisions of Residential Tenancy (Jersey) Law 2011 to determine whether there is a need to provide greater security of tenure for tenants or at least protection from eviction for any residential occupier.

Help for First Time Buyers

It is a commonly held view that buying a home is more expensive than renting, with renting sometimes being seen as the tenancy for those who cannot afford home ownership.

In fact, owning a home should be cheaper than renting for two reasons: the owner, unlike the tenant, is responsible for his or her own management and maintenance rather than paying a third party to do it and the homeowner can generally borrow more cheaply than a landlord.

The obstacle to home ownership is not so much the cost of meeting the mortgage but rather the inability to provide the necessary deposit. Schemes that help first time buyers with deposits can make a significant contribution to helping people into home ownership.

There are already schemes in place to help first time buyers. Andium runs the Homebuy scheme by which first-time buyers are able to defer up to 25% of the purchase price.

Eligibility for this scheme is limited by income, with a ceiling of £45,000 for those seeking a one-bedroom flat and £75,000 for those seeking a two-bedroom house. 58 people were able to purchase their homes using the scheme in 2020. Andium currently expects to sell 1,200 homes to first-time buyers by 2030, which will be of huge help to a significant number of Jersey families.

However, the scheme is not only limited to people with incomes under the threshold but also to Andium’s housing stock, the sales contributing significantly to the resources that Andium needs to continue its house building programme. There seems no reason why the scheme cannot be extended to units purchased on the open market.

The Jersey Development Company, like Andium owned by the government, aims at a different market, that is those whose incomes are too high to qualify for the Andium Homebuy scheme but not sufficiently high to enable them to meet the deposit requirements in the private market.

On the Horizon development, its scheme enables first time buyers to pay the deposit over an extended period rather than in one lump sum. The scheme has worked successfully on both the College Gardens scheme and the current Horizon development with over 100 purchasers having taken advantage of it.

The Jersey Development Company is currently working with the government to design a new shared equity scheme that will help which will be used in all new developments by the company.

Longer term, the link between housing, education and the economy is important. The various schemes to help first-time-buyers are necessary, but ideally, economic productivity is increased so increasing incomes and the ability to pay for housing.

Housing qualifications

A second area of unfairness is in respect of people who have come to the Island making a significant contribution by working in the businesses on which the Island depends. They are currently treated as second-class citizens.

While it is absolutely right that strict controls are maintained on people coming to Jersey there is less justification for such differentiation when people have been here and have made a demonstrable contribution to the economy.

There are two measures that would improve the position of people without full residential qualifications but in a way that would not adversely affect the market.

    • For permanent entitled status, there is currently a distinction between those born in Jersey where the requirement is for 10 years’ residence and those not born in Jersey where the requirement is for 30 years’ continuous residence with some modest exceptions. This is unfair and paradoxically can actually deter people from leaving the Island because they want to have their “quallies”, even if in practice they may not use them. The impact of equalising the 10-year requirement for permanent entitled status between those born in Jersey and those born elsewhere should be analysed, and if it is clear that equalising the requirements would not have an adverse impact on prices that should be done in a measured way.
    • The position of people in the unregistered sector must be improved. Here one can do no better than quote the words of the report of the Housing Policy Development Board.

 

Unfortunately, it is not only those who aspire to home ownership who are not adequately served by the current housing market. In the past, government policy in relation to housing has concentrated disproportionately on the qualified sector and often ignored the needs of those who, because of their residential status, are required to live in unqualified (‘registered’) accommodation.

The two-tier housing market creates a huge social division in the island and, because those in the unqualified sector often have little public ‘voice’, the problems they face in accessing decent accommodation at a reasonable price often go unnoticed. Jersey’s economy is heavily dependent on migrant labour and those coming to the island to work and live should have the right to be properly housed.

At present many live in crowded conditions and in properties that are not maintained in an adequate condition. Although our Policy Development Board recognises that migration controls of some kind will always be required to regulate the numbers of those who can come to live in Jersey it is our hope that, in the not-too-distant future, new forms of control can be introduced that would allow everyone who has the right to work in Jersey to access the rental market on an equal basis.

Our recommendations, if implemented, will hopefully make renting a far more attractive option in Jersey and, in the interests of community cohesion, it is only right that everyone allowed to work in Jersey should be able to access the rental market on an equal basis.

This recommendation should be implemented. The number of people in the Island would not be changed as a result and the people who would benefit are currently living in Jersey, often paying more than what would otherwise be a market rate and in some cases in sub-standard housing.

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