Housing Minister Speech

Below is the extended version of the speech I gave today. It is unedited.
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Why I’m standing for the position






I know the difficulties of young people and families who face the prospect of never being able to afford their own homes in Jersey.



Very much Catch-22

They are paying rents which are higher than what the monthly mortgage repayments would be, but who cannot get a loan either due to a lack of a deposit and/or because the banks are not lending sufficiently.


(Point about student debts – no point in going to university and coming back with £30k in debt.)


This is why it is imperative that we take a joined up approach to the dual issues of providing truly affordable homes for those who might be able to purchase; and reasonable rental prices for those who cannot or don’t want to buy.
Before that, I want to talk about the Department itself.

The housing department manage 4, 500 homes and provide housing for some 13, 000 islanders.
It’s a very challenging and diverse portfolio – not just in terms of property, but also in terms of the individuals they serve.
The first thing to say, is that we are fortunate to have good staff. I have met with the Chief Officer. He is an individual who is clearly committed to tackling the pressing issues at housing; we are on the same wave length when it come making progress.
And the positive side is that the department is relatively successful.
Economically - It more than washes its own face – it generates an income of £36m annually

It also provides a social function, housing the most vulnerable and least well off in society.


Therefore, social housing is something we should be proud of; it is something we should do more of: - it makes economic and social sense.


However, the department has been hampered with making progress and, as a consequence has under-delivered.
Fundamentally this is due to political failings and poor decision making by past assemblies and past presidents; more fundamentally, there is a structural failing in the way the department has been allowed (or not allowed to work).

There is an £48m maintenance Backlog

Some of the properties are substandard. – Recent Whitehead report stated that 27% of States owned social rented homes would fail the UK Government’s ‘Decent Homes Standard.’

Of the £36m income, the majority (£24m, I think) is returned to the Treasury – leaving insufficient funds for maintenance – let alone new building or property acquisition.

As a result waiting lists for social housing have been increasing year on year. (see second hand out)
There are currently 425 applicants on the waiting list – and this does not include those who are considered ineligible by the department. This figure has increased steadily from the 2005 figure of 192.


Positive steps have been taken more recently, and the recent draft residential tenancy law was generally positive. Security of tenure is something that is lacking for many in both the private and state sector.

For private tenants, the notice period will be increased to 3 months. I would look to increase this for long term tenants.
The Whitehead Report noted that it was also very unusual that social tenants in Jersey have no security of tenure. This is a consequence of the lack of adequate housing stock available to the department.
I am unhappy about the provision made for those in the non-qualified sector.


1) they will not be covered by the deposit protection scheme. A way must be found to include them.


2) Substandard accommodation is also a problem. Lodging houses are inspected regularly, there are no such checks for other landlords – in either A – H or non-quals.

This is why I favour the extension of the landlord registration scheme, administered independently, so that ALL units of accommodation can be regularly checked to make sure they meet the required standards. It would also have the advantage of separating the roles of the department as regulator and landlord.

I am supportive of the social housing gateway, it makes sense to consolidate all providers of social housing under one roof.



We also need to consider radical schemes such as ‘buy as you rent’, where part of the monthly rental can be ring-fenced and after a certain time, the property can be offered to the tenant with the accrued money acting as a deposit. This will assist the transition from renting to buying.



Steps such as the reduction in stamp duty and a potential loan scheme are useful but do not address the fundamental issue of high cost property.

Indeed, an unintended consequence may be that it keeps prices high.



Homebuy

Uncertainty over the homebuy scheme needs to be resolved very quickly. It has been divisive and families have been let down. However, we need to make sure that any given scheme is viable and more important, legally enforceable.



I may be unpopular for saying this, but I have my reservations about shared equity, for various reasons. People who buy want to own their own homes, not 2/3 of it.



It is much better if we can build property on land owned already by the States or recently acquired, sell the properties without the profit motive, so long as those homes remain ring fenced for adherents to the scheme.



Similarly, first time buyer homes must remain so if they are sold on.



Tackling the affordability of housing prices in a system where those prices are dictated by market forces is not an easy one – and there are all sorts of contradictions (and potential unintended consequences – for example the creation of a two teir housing market, negative equity) – however, just because it is a complex area, does not mean it not something the States should shy away from. States policy can and does influence the market.



Here are some steps we can take:

The rental component of Income support must be phased out. It is completely unsatisfactory, particularly in a time of austerity, that we should be giving £7.0m of tax payers money to private landlords. This simply maintains up prices and is a perverse form of economic redistribution in which the tax payer is subsidising – probably wealthy – lanlords. There are even cases where speculative landlords are having their mortgages paid for by the tax-payer. This phasing out will be achieved by the building of and acquisition of more social rented housing. I think we can all agree that that £7m of taxpayers money is better of in the pockets of Housing than in that of private landlords





The loophole which allows foreign landlords, who do not have housing qualifications, to purchase local properties and rent them to those who do must be closed. This may not be such a common practice as it was in the past, but even if these buy-to-lets only represent 5% of such purchases, it still needs tackling.



Similarly, if prices are to come down, both for rents and buyers, buy-to-lets should be discouraged in general. I propose a sliding scale tax on homes which are not a person’s primary place of residence, small taxes for second homes, going up for 3rd, 4th and 5th. This won’t be popular with rentiers or some estate agents, but frankly, I can live with that. My main concern is bringing prices down for ordinary islanders.





We should also consider capital gains on homes which are ‘flipped’, as is the case in France. So that if you sell a home within 1 – 5 years of purchasing, which is clearly for speculation purposes, any uplift is taxed – again on a sliding scale.



Empty Property taxes.





Of course these are ultimately matters that would need to be taken up by the new treasury minister and approved by the assembly, but it is still important that any housing minister is central when it comes to bringing ideas to the table to tackle the very pressing issues of affordable housing.



Savings

One of the key suggestions of the Whitehead Report, which I think needs to be critiqued somewhat (will do shortly if I have time) was the creation of a Housing Association. This has pros and cons, and would very much depend on the detail, but one consequence of this would be a reduction in revenue for the Treasury, at a time when we seem to have more black holes than the entire milky way.



Some of the revenue raising measures above could go towards meeting this shortfall.



Talking of Savings, there are other common sense steps we can take to make savings.



One very simple example is working more closely to avoid duplication of work.



Give examples of Property Holdings vs Housing in Le Clos des Sables

Sharing of resources makes sense – genuine efficiency savings. I can deliver genuine savings if necessary.

‘Piece of grass across the road is not mowed because it belongs to a different department. This is nonsense.



Other positive steps I would take



In terms of new builds, I would seek to gradually increase the % of houses that developers are required to allocate to first time buyers AND social housing.



I would make sure that local contractors are given priority, that we use as much local labour as possible; and that companies whose shareholders do not pay tax locally should be avoid where possible.



We should also use a carrot and a stick (depending on which way you look at it) to prioritise the companies with apprenticeship schemes.



Critique of the Whitehead Report



The Whitehead report was a long overdue piece of work. It would not have been necessary if we had been managing our portfolio property properly in the past



It has pointed out very clearly challenges facing the department and the urgent need for its relationship with Treasury to be review.



Two areas I am concerned with are:



Whether a the creation of an ‘association’ is in fact needed to resolve the problem. There are pros and cons – clearly, it would be easy for the roles of regulator, policy maker and landlord to be separated under an association or similar. However, I have grave concerns that the association should not be allowed to become a mechanism for privatisation. The condition should be that it remain always in public ownership, but managed at arms length.



I acknowledge Prof. Whitehead’s analysis that social housing ranges from 60% - 90% of market rates, however, I do not agree that it follows that rents should be put up automatically.



Nor is it correct to talk of social housing being subsidised. It is only so if viewed in relation to private sector prices – which are highly inflated. The rents themselves more than cover the costs, so that they make money.





However, there is no reason why housing – either as a department or as an association – could not be extended their portfolios to the higher end of the market. There is no reason in the future that housing – once it has met the demands of urgent housing needs, that it could not look to cater for J cats, non-quals and luxury accommodation, if it were cost effective. This is of course a long way off, but blue sky thinking has its place and it does pay to think outside the box.



Conclusion



With that in mind, I am asking for your support today as Housing Minister. In this new (false) spirit of inclusivity, I believe I would bring much needed dynamism and energy to the council of Ministers, as well as a young perspective, from someone who knows the issues by experience.



Moreover, I have no property of my own and I am not conflicted in anyway about wanting the value of my property to increase or hoping that my green field will be rezoned. My priority is and will remain housing the population in all sectors in a satisfactory and affordable way, so that all can lead a fruitful and contented life in our beautiful island.



I thank members for their attention and ask for their support.