Housing Policy Development Board Final Report

STATES OF JERSEY

HOUSING POLICY DEVELOPMENT BOARD - FINAL REPORT

Presented to the States on 19th April 2021 by the Chief Minister

STATES GREFFE

2021  R.63

REPORT

Chief Minister's Introduction

I  am  pleased  to  publish  the  report  and  recommendations  of  the  Housing  Policy Development Board (HPDB).

I am glad that the Board has been able to bring together the views of Ministers, States Members and stakeholders to produce its detailed recommendations.

As set out in the Covering Note, the Coronavirus pandemic delayed the Board in the completion of its work. I am, however, particularly grateful that the Board showed good judgement and diligence in re-convening last autumn to re-examine its conclusions in the light of the economic impact of the pandemic.

Whilst the recommendations are not policy, and do not commit the Council of Ministers to a particular course of action , the work of the Board provide a good foundation to inform our considerations of this important topic. The issue of adequate housing touches all Islanders, and crosses several ministerial portfolios. Accordingly, a Political Oversight Group is in the process of being formed with key Ministers to ensure the recommendations are carefully considered.

It is also important to note that the Government is already taking forward several of the Board's recommendations, principally through the Government Plan and Island Plan frameworks. The formation of the Central Strategic Unit to coordinate housing and the release of government owned sites also ties into the recently published Estates Strategy. These important work streams will ensure that we deliver genuine improvements in the quality and supply of housing for Islanders.

Whilst I do not underestimate the challenges ahead, issues around housing affect all Islanders without exception and are therefore among the most important priorities for government. This report will help us move forward in improving the situation for Islanders, which is something we all want to see.

I would like to thank the Board members and the executive support officers for their hard work in the preparation of this report.

John Le Fondré Chief Minister  

Covering Note

16 October 2020

Chief Minister,

1. On 11 September 2020, the Housing Policy Development Board ("the Board") was reconvened after the enforced hiatus caused by the coronavirus public health crisis. The Board had been nearing the completion of its work prior to lockdown in March, having reviewed a final draft of the Board report, prepared by Altair, the external consultant appointed to support the Board's work. Given the unprecedented and ongoing economic impact of Coronavirus, the Board felt it necessary to have an opportunity to discuss the impact on Jersey's housing market and to assess whether the crisis had materially changed any of the recommendations put forward in the Board's draft Final Report since it was last considered in February 2020.
2. To that end officers, drawn from the Economics Unit, Statistics Jersey and Island Plan Team, were invited to present to the Board evidence from their respective competencies on the impact of coronavirus and to aid the deliberations of the Board.
3. A final meeting was held on 16 October 2020 to confirm the final position of the Board and to conclude its work.
4. The Board's discussions at those two meetings are recorded in detail in the minutes of the meetings.
5. The Board agreed that, despite the disruption caused by coronavirus, the draft Final Report  prepared  by  Altair  (as  at  March  2020)  nevertheless  remained  broadly relevant, even though Altair had concluded its work in March and was no longer involved with the Board to update the Draft Report. The Board noted that in some key areas it was important to update the draft Final Report with information that was not available when the report was prepared. Added content is clearly indicated within the document using blue text.
6. The Board therefore agreed that a slightly amended version of the March 2020 Report should be submitted to the Chief Minister together with this Covering Note.
7. This Covering  Note  sets  out  the  broad  conclusions  and  captures  the Board's assessment  of  the  continuing  relevance  or  otherwise  of  each  of  the recommendations in the draft Final Report (set out in detail in the table below).

Board Conclusions

• The recommendations set out in the Board's draft Final Report continue to remain relevant in the wake of the coronavirus public health crisis;

• Available data shows a significant drop in local housing market activity during the lockdown period, with signs of recovery post-lockdown;

• It is too early to know what the long-term impact of coronavirus on the local housing market will be. Activity in the housing market is influenced by a range of factors, including employment levels, income levels and migration, all of which come with a high degree of uncertainty at the present time.

• However, it remains the case that a shortfall of housing supply relative to high demand remains a significant challenge inherent to Jersey's housing market. The Board is therefore of the view that a government-sponsored strategy to deliver a significant number of new homes should be at the forefront of the island's housing policy  over  the  next  decade.  This  housing  delivery  programme  should  be coordinated with policies set out in the Bridging Island Plan (and subsequent Island Plan), as well as the release of surplus government-owned sites for housing where appropriate.

• The Board is particularly concerned by challenges around affordability within Jersey's  housing  market.  As  such,  the  Island  Plan  should  articulate  policies designed to boost the supply of affordable housing. Complementary to this is the need to introduce policies to improve affordability across the rental sector and increase the opportunities for people to access social rental and assisted purchase.

Review of HPDB Draft Final Report Recommendations

rightsizers' should be  recommendation should be retained within introduced.   the  body  of  the  Altair  report,

recommendation  S5  should  be  removed from the summary of the report.

R1. Utilising GoJ legislation  The Board confirmed this recommendation  RETAIN to improve security of tenure  and the need to focus on measures to protect

and tenant rights:  the rights of tenants and ensure appropriate

security of tenure provisions exist so that the

Security of tenure and tenants'  private rented sector is a desirable long-term

rights should be enhanced by  housing option for islanders.

reviewing, amending or

creating new legislation and

enforcing changes made

through a resourced

programme.  

R2. Rent stabilisation:  The Board confirmed this recommendation  RETAIN

and  noted  that  funding  for  a  project  to

Rent stabilisation legislation  investigate  rent  stabilisation  policies  has

and a Rent Commission or  been included in the proposed Government

Board to monitor and decide  Plan (2021-2024).

on annual rent increases

should be introduced.

8. As the table above sets out, the Board was content that the recommendations in the draft Final Report remain relevant in the wake of Coronavirus. The most significant changes made by the Board was the addition of a qualifier to the recommendation on cross-subsidy (R2) and to strengthen the language of its recommendation concerning the affordability of social rent (R4). The redrafted Recommendations are set out as follows in the Final Report:

- S2. Government borrowing and cross-subsidy to fund additional new housing supply: The GoJ and/or its delivery agents should borrow funds, underpinned by  a  cross-subsidy  model  if  necessary,  to  finance Policy  Intervention  S4, following appropriate modelling.

- R4. Strong support for reform of social rent setting: The existing 90%' social rents policy is considered too high and has potential adverse effects on tenants and the housing market. It should, therefore, be changed in order for social rents to be set and maintained at affordable levels for tenants, whilst taking account of the need to maintain a sustainable funding model for investment in social housing.  

9. The Board is pleased to be able to submit this covering note alongside our Final Report for your consideration. The Final Report is a testament to the extensive work undertaken by Altair in supporting the Board.

R.63/2021

Government of Jersey Housing Policy Development Board

Final Report

March 2020

Contents

Chair's Foreword  5 Executive Summary  7 The Housing Policy Development Board  14 Key Challenges Facing Jersey's Housing Market  18 Development of the Recommended Policy Package  21 Overview of the Recommended Policy Package  23 Government-led interventions to increase the supply and availability of housing  28 Planning Measures to Facilitate New Supply and Affordability  46 Policies to Improve Affordability, Access and Quality in the Rented Sectors  56  Recommendations  69 Altair's Work to Support the HPDB  71 Board Roles and Responsibilities and Outputs  76 Board Meetings and Topics  78 An Analysis of Jersey's Current Housing Market  79 The Policy Options Development Phase  127

List of Tables and Figures

Table 1: Policy Package Elements, Interventions and Policy Recommendations  12 Table 2: HPDB Members and Support  16 Table 3: How the Policy Package Meets the Objectives of the HPDB  24 Table 4: Policy Package Elements, Interventions and References  26 Table 5: Housing Needs by Tenure  37 Figure 1: Delivery Required to meet OAHN Requirements by tenure / need group  38 Table 6: Anticipated Benefits, Challenges and Risks of GoJ-led delivery tenures  41 Table 7: Indicative Supply Delivery from Re-zoning  49 Table 8: Stages, Key Activities, Stakeholders Engaged and Outputs of the HPDB  76 Table 9: Comparing affordability across jurisdictions using proportion of housing cost to income approach  86 Figure 2: Factors Impacting Housing Affordability  87 Table 10: Median Housing Costs for Various Tenures, in £ and as a % of median net household income  90 Table 11: Median Housing Costs for Various Household Types, in £ and as a % of median net household income  91 Table 12: Housing Affordability Calculations by Occupation (1 br)  92 Table 13: Housing Affordability Calculations by Occupation (2br)  93 Figure 3: Population change in Guernsey  97 Figure 4: Average Property Price s in Guernsey and Jersey  97 Figure 5: Demonstration of Household Size Change and Housing Supply  98 Figure 6: Demonstration of Residual Land Value  105 Figure 7: Factors impacting property prices and new housing supply  106 Table 13: Impacts and Considerations of Restricting Access to Housing  115 Figure 9: Gross Value Added by Sector (2017 Figures £million)  117 Figure 10: Changes in House Price s and GVA (1999-2018)  120 Figure 11: Annual Changes in House Price s, Inflation and Earnings  122 Figure 12: Housing Supply Additions and House Price s  123 Figure 13: Mortgage Interest Rates over Time (Bank of England)  124 Table 14: Policy Considerations using Demand and Supply/needs led approaches  125 Table 15: Longlist Policy Interventions, their objectives, and how they apply to the demand/market-led and supply/needs-led approaches  131 Figure 14: Levels of intervention and primary actor (market or state) for each policy package 132

List of Abbreviated Terms

Chair's Foreword

"A home is a fundamental human need and a basic moral right, as vital as education or healthcare." (Shelter England)

The extent to which people in Jersey can or cannot access decent housing is undoubtedly one of the clearest indicators of the social divisions that currently exist in the Island. Many people in Jersey are fortunate enough to be well housed and owner-occupiers have often seen the value of their property increase considerably since they first purchased their home. The housing market is buoyant and, as indicated in the body of our report, house prices have increased faster than inflation and average earnings in recent years. Estate agents report that, for many properties that are put on the market, offers are made almost immediately with little need to advertise. Some reading our report may even wonder why there was any need for a Policy Development Board to be set up to consider the issue of housing in Jersey.

The reality is, of course, that, despite the fact that Jersey is an affluent island, far too many people are inadequately housed and in our view this problem can no longer be ignored. Growing up in poor housing has a long-term impact on a child's life and, although several of our recommendations require additional funding, the cost of doing nothing is no doubt even greater because of the consequences of poor housing on people's lives.

Although it would be unrealistic to suggest that everyone can or should aspire to home ownership, the prospect of owning a home is an unachievable aspiration for many people in Jersey. Some young people are fortunate enough to receive help from their families to get on the housing ladder but many others, even those in regular and relatively well-paid employment, can often not afford the required repayments for a mortgage, particularly if they are living in rental accommodation where high rents allow little scope to save for a deposit. Some young people have already sadly decided that they cannot see any future in Jersey and have moved elsewhere where property prices are more affordable. The island can ill afford to lose locally qualified young people in this way and the Government of Jersey's recently stated desire to encourage more local young people to return to Jersey to work after studying outside the island will also not be fulfilled if these young people feel there is no hope of accessing decent housing on their return.

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.

The Discovery' phase of the Board's work concluded that "Jersey's housing market is not fit for purpose and will not improve without bold action and significant change from the status quo". As can be seen we envisage an enhanced role for the Government in shaping the housing market in Jersey together with the Housing Trusts and Government's wholly owned delivery agents, Andium Homes and the Jersey Development Company. We have been very encouraged by the discussions we have held with Andium and the JDC throughout our work and are confident that, within the new strategic framework that we recommend, they will be able to deliver a significant new supply of housing. We recognise that some of our recommendations such as rezoning land for new housing may be controversial but hope that those islanders who are fortunate enough to be adequately housed will not adopt a not in my backyard' attitude and recognise the need for compromise so that others can aspire to the same standard of housing that they enjoy.

In closing I would like to thank all the members of the Policy Board for their input throughout the process. The members have inevitably considered the issues from different political starting points, but I am pleased to say that we have, almost without exception, found a wide measure of consensus at all our meetings which I have found extremely encouraging. In addition to the Ministers and Assistant Ministers on the Board I would like to thank Connétable John Le Bailly and Deputy Carina Alves who have both brought valuable insight to our work from different perspectives. I would also like to pay particular tribute to the contribution made by lay member John Scally whose wide experience in the property and charitable sectors has been invaluable. Our consultants Altair have been of great assistance in guiding us through the policy development work and the information they have provided about policies adopted in other jurisdictions has been particularly useful. We have been extremely well served by a number of officers from the Government of Jersey and I am grateful to them all.

Michael N. de la Haye OBE Independent Chair

 Executive Summary

1. About the Housing Policy Development Board

1. The Housing Policy Development Board (HPDB) was established in March 2019 to examine the housing market in Jersey and to develop comprehensive proposals that improve the supply, affordability, access to, and standard of housing on the Island.
2. Altair was appointed by the Department for Strategic Policy, Performance and Population in April 2019 to support the activities of the Board. Altair employed a three-staged approach to the research and policy development: beginning with an in-depth review of the current housing market; taking a structured approach to the consideration and development of policy ideas; and concluded with the presentation of recommended policy interventions as part of a coherent policy package to be administered by the Government of Jersey (GoJ).  
3. This report contains a summary of the key findings of this work and contains the Board's final recommendations to the Chief Minister.

2. Jersey's Current Housing Market

1. The conclusion of the research has confirmed that Jersey's housing market is not fit for purpose and will not improve without bold action and significant change from the status quo. The HPDB recognises the scale of this challenge, as well as the challenge facing the government to agree and implement comprehensive and impactful solutions.
2. The report sets out 5 key challenges and a range of possible solutions.
3. Key Challenge 1: Affordability in Jersey
4. The GoJ acknowledges that housing is expensive in Jersey and that housing affordability is one of the main challenges facing the Island's housing market. It also acknowledges that home ownership is increasingly out of reach for residents with average incomes.
5. Research into housing affordability, and its relationship with quality and supply, suggests:

Overall, housing in Jersey is unaffordable across tenures and among a range of  income groups.  Affordability  therefore acts as a barrier to  adequate housing for people in Jersey.

Because housing affordability is invariably linked to household earnings, recent house price growth at levels above the growth in earnings has meant that affordability pressures have become more acute in recent years.

Housing affordability in Jersey has an impact on households' ability to access homeownership, and on both the recruitment and retention of key workers.

Housing isn't considered affordable if it's not of a liveable condition, and at present, there have been many reports of sub-standard accommodation in Jersey, although work is underway to improve the standard of rented housing

on the Island.

6. Key Challenge 2: Current Barriers to Development
7. Open market developers and developers of affordable housing in Jersey face some significant challenges in Jersey's construction sector, namely land supply and costs. Some other challenges developers may face include the future of the construction market and workforce, particularly if construction in Jersey increases significantly and simultaneously (e.g. significantly higher housing supply outputs), planning-related delays and access to finance and funding.
8. Despite these challenges, to date developers of affordable housing have been successful in delivering viable schemes. However, as land values rise this is becoming increasingly difficult without support from Government, be that financial or in terms of land supply.
9. An analysis of Jersey's current barriers to development finds:

The most significant barrier currently facing housing delivery in Jersey is land supply, and its impact on land cost. Land costs, coupled with build costs similar to other jurisdictions with similarly high house prices (such as London and the South East of England), are key drivers of the high cost of housing in Jersey.

Due to delays in the release of government-provided land, affordable housing providers are currently competing with open market developers for land. This is a particular challenge for affordable developers (operating without development subsidy), since their below-market rental returns do not support the same cost of land as developers offering housing products at market rates and/or for sale.

10. Key Challenge 3: Housing Jersey's Ageing Population
11. Older people over 65 make up c. 17% of Jersey's population but account for about a third of all homeowners on the island and live in a quarter of the homes in Jersey. Estimates show that there will be c. 11,000 more pensioners living in Jersey by 2035.
12. There are currently two key issues relating to Jersey's ageing population and its interaction with a sustainable housing market:

There is significant under occupation of housing (living in accommodation with two or more spare' bedrooms) among older people.

The supply and options of housing for older people, are limited in Jersey, with a particular lack of extra-care style accommodation, which anecdotally, acts as a barrier to rightsizing into smaller properties.

13. Key Challenge 4: Jersey's two-tier housing market
14. Jersey currently has a housing market which restricts access to rental and owner-occupied housing through residential and work status, in effect creating a two-tier market' with a primary market, accessed by those with residential qualifications or "licensed" work status, and a secondary market which those without residential qualifications rely upon.

15. Research into Jersey's and other housing markets which restricts recent migrants' access to housing reveals:

The two-tier market has a negative impact on access to quality, suitable accommodation for some portions of Jersey's population.

In international terms, Jersey and Guernsey are unusual in including restrictions on the occupation of rental dwellings in their local legislation.

16. Key Challenge 5: Housing's complex role within Jersey's wider economy
17. Housing-related market activity makes up a large portion of wider economic activity in Jersey, with housing income representing 15% of Gross Value Added[1]. However, the relationship between housing and the economy doesn't stop at the monetary value of housing in the macroeconomy. For instance:

The housing market may be stimulated by growth in the economy, as well as other factors, such as the expectation that the economy will do better in the future.

Recent years show that there is a variable relationship between house prices and supply, with house prices generally rising across periods with relatively high and low total supply additions per annum.

In addition to providing activity that requires jobs and spending, adequate and sustainable housing provides a platform for wider participation in the economy.

3. Policy Options Development

1. Following the discovery phase, the Board entered into the iterative Options' phase where Altair supported the Board to consider a range of policy interventions to seek to address the challenges identified in Stage 1. This phase was spread over two Board meetings and one all-day policy development workshop between September 2019 and the end of October 2019.
2. The Policy Interventions Longlist
3. A longlist of 29 relevant policy interventions was presented alongside a scoring exercise for the HPDB to decide which policies should be developed in more detail for consideration at the October 2019 meeting. As a result of this exercise, the HPDB excluded or amended a number of policy interventions.
4. Policy Packages
5. The policy interventions from the longlist that the Board felt should be considered further, were collected into four distinct policy packages', each with a central purpose or goal.
6. The HPDB agreed to combine a selection of policy measures from each policy package to create a new single policy package characterised by a significant GoJ- led building programme, with measures to encourage market delivery, as well as policy interventions to improve tenants' rights.

7. The HPDB Workshop
8. The HPBD were presented with the draft preferred Government Leadership' Policy Package (GLPP) at an all-day workshop on 29th October 2019.
9. The workshop provided the Board with the chance to explore the policy interventions being proposed in more detail and with consideration to the package as a whole, and to assess each intervention individually based on its suitability, feasibility, and acceptability (SFA).
10. Based on the SFA analysis and discussion, some policies were altered slightly, while others were excluded or significantly changed.

4. The Government Leadership Policy Package

1. The Government Leadership' Policy Package (GLPP) agreed at the December 2019 HPDB meeting, brings together twelve policy interventions which see the GoJ take an active role in shaping the housing sector on the Island to help address the four objectives of the HPDB as related to supply, affordability, quality and access to housing, with an overarching vision.
2. The Vision
3. In the future, Jersey has a housing market that provides choice, through:

Increased supply across a range of housing types and tenures;

Widened access to both affordable ownership and affordable rental;

A high-quality market rental offer, that is secure and stable, and which residents can access on an equal basis; and

Options for those looking to downsize.

4. Housing of all tenures is delivered by the market, GoJ's delivery agents (Andium Homes and the Jersey Development Company), and the Housing Trusts. With enhanced powers and a wide focus, the GoJ is the driving force behind the majority of new housing supply on the Island.
5. The key features of the GLPP are:

1. Government-led interventions to increase the supply and availability of housing;
2. Planning measures to facilitate new supply and affordability; and
3. Policies to improve affordability, access and quality for all tenants (whether in qualified' or registered' housing)

6. Recommended Policy Interventions
7. The key policy interventions which make up the policy package are summarised in the table below. The table also includes key policy recommendations for each intervention.

8. While groupings are used for clarity, each of the policy interventions has been developed with consideration to the wider policy package, and how all policy interventions in the overall package interact with each other.

Table 1: Policy Package Elements, Interventions and Policy Recommendations

 The Housing Policy Development Board

1. The Housing Policy Development Board (HPDB) was established in March 2019 to examine the housing market in Jersey and to develop comprehensive proposals that improve the supply, affordability, access to, and standard of housing in Jersey.
2. This section provides an overview of the context, membership and workstreams overseen by the HPDB.

2. Purpose

1. Consisting of nine States Assembly members, a lay member and an Independent Chair, the HPDB met seven times between April 2019 and December 2019. During this time, the Board considered a wide-ranging review of the housing market in Jersey to explore sustainable, holistic and coherent policy solutions that support the delivery of the strategic priority to reduce income inequality and improve the standard of living by improving the quality and affordability of housing" identified in the Statement of Common Strategic Policy 2018-2022.
2. Ministers have made a commitment to:

Secure a consistent supply of good quality homes that are affordable

Improve the quality of rented homes

Strengthen the rights of tenants

3. To address these areas, Ministers set up a Housing Policy Development Board. The HPDB is responsible for issuing a final report with its findings to the Chief Minister and Council of Ministers.

3. The HPDB in Context

1. The Government Plan
2. The States Assembly voted on and agreed the 2020 Government Plan in December 2019. The plan covers five strategic priorities that the States Assembly approved for the current Government's term of office, and it brings together the Government's proposals for both income generation and spending.
3. One of the key strategies of the Common Strategic Policy is to reduce income inequality and improve the standard of living by improving the quality and affordability of housing'. It acknowledges that poor housing can have a negative impact on health and education outcomes and that:

many migrant families live in overcrowded conditions

home ownership is increasingly out of reach of local families with average incomes

the high cost of housing can also make it difficult to attract health and education professionals to move to Jersey

4. The 2020 Government Plan proposes, among a range of other initiatives, to start to implement recommendations from the HPDB by earmarking £10 million in 2021 to support an affordable home ownership scheme.

5. In addition, funding is proposed from 2021 onwards to support agreed options, which include:

to ensure appropriate renting and ownership choices are available in Jersey

to help with housing costs

to increase the supply of land and finance

to maximise the use of existing stock

to consider options to reduce the cost of building new homes

6. The Island Plan
7. Running in parallel with the HPDB, the Island Plan development process for Jersey's new 10-year planning framework is underway[1]. The Island Plan seeks to consider how best to deal with the need for new homes among other factors.
8. The Island Plan Review Team is responsible for preparing the plan for adoption in 2021. The HPDB has actively consulted with the Island Plan Review Team throughout the policy development process and proposes policies for inclusion in the upcoming 2021 Island Plan.
9. The 2016 Housing Strategy
10. Former Housing Minister Deputy Anne Pryke published a housing strategy for Jersey in 2016 which sets out what the Council of Ministers intends to do to improve Jersey's housing situation.
11. The strategy sets out the government's ambition to make Jersey an inclusive place to live with suitable, high quality housing available to all residents. The key objectives of the strategy are:

balanced housing supply: ensuring the supply of decent homes meets the identified needs of the Island

best use of housing: making the best use of the existing and future housing stock

improved standards: improving the condition, security, energy efficiency and suitability of homes

stronger communities: creating strong communities and neighbourhoods

12. The Housing Strategy acts to identify areas for further action and proposes some housing policy responses.
13. The HPDB has utilised the strategy as a source for the identification and analysis of key issues facing the housing market and has considered some of its proposed responses as part of the policy development process.

4. Membership and Support

1.4.1. The table below contains a list of board members, and other supporting agents.

Table 2: HPDB Members and Support

5. Board Workstreams

1. The Board was made responsible for a wide-ranging review of the housing market in Jersey, to include:

Investigating challenges in Jersey's housing market

Examining the factors that affect the supply, affordability, access to, and the standard of housing affordability of housing in Jersey

Making recommendations for policy development in view of the findings in relation  to  the  above  2  items  with  particular  focus  on  the  funding arrangements required to deliver those recommendations

2. This work is in line with the long-term vision adopted by Future Jersey, which is in the final phase of the Shaping Our Future' public consultation to create a shared, long-term community vision for Jersey. In relation to housing, Future Jersey highlights a need to find solutions to home ownership; reduce rental stress; and improve the supply and quality of the island's housing through new development and making better use of the existing housing resources.

3. At the inception of the HPDB, the Chief Minister and the Minister for Children and Housing identified two specific workstreams for the Board to consider, namely the issue of foreign investment in property in the island and the impact of the present social housing rents policy.
4. These issues have been reported on separately to this report, as part of a series of workstreams led by Strategic Policy, Performance and Population (SPP):

The Board noted in September 2019 that an officer-led working group had been set up to review the social rents policy and would report to the Board with its findings.

A review of buy-to-let and foreign investment: The Board was informed in September 2019 of work undertaken setting out the likely effects of foreign ownership. They were also made aware that the size of the issue is not satisfactorily understood locally, and that changes were underway regarding future data capture that would provide better accuracy on the size and nature of the foreign buy-to-let market in Jersey

In addition,

A review of homelessness in Jersey has been undertaken and a homelessness strategy to be published in early 2020.

5. A full list of the roles and responsibilities of the Board, and the outcomes to date, is contained at Appendix 2.

7. Board Meetings

1. An inception meeting, six monthly board meetings and one policy development workshop were held between April 2019 to December 2019.  
2. Board meetings were organised according to the programme's phases:

April 2019: Inception to determine the Board's brief and responsibilities

May, June, July 2019: Discovery phase and presentation of briefing documents by Altair

September, October 2019 (and October Workshop): Policy Options Development supported by Altair

December 2019 and January 2020: Recommendations Development supported by Altair

3. A full list of board meetings and their topics are provided at Appendix 3.

 Key Challenges Facing Jersey's Housing Market

1. Overview
   1. The Discovery phase identified that housing affordability is a key challenge among different household groups and tenures, and that this is compounded by the lack of supply of affordable, high-quality housing options in the market. The research also identified that land availability is a significant barrier to the delivery of new supply, and that the lack of supply of suitable housing for Jersey's ageing population may be driving under occupation of existing homes.

3. Current Housing Policy in Jersey

1. There are a number of key active housing policies in Jersey, including:

The Gateway, which administers access to affordable housing

Social rental and affordable homeownership products, offered by affordable housing providers such as Andium Homes and Housing Trusts

Income Support, a government welfare system which supports rental costs as part of an overall means tested benefit system

Planning Policy, which zones Category A' land for affordable housing

2. There are also a number of smaller planning, legislative and fiscal policies that address particular areas in the housing market. For example, the government's voluntary scheme Rent Safe is currently used to encourage landlords to meet the minimum standards. Details on some of these policies are presented in Section 6.

4. Key Challenge 1: Affordability in Jersey

1. The GoJ acknowledges that housing is comparatively expensive in Jersey and that housing affordability is one of the main challenges facing the Island's housing market[2]. It also acknowledges that home ownership is increasingly out of reach of local families with average incomes.
2. Research into housing affordability, and its relationship with quality and supply, suggests:

Overall,  housing  in  Jersey  is  unaffordable  across  tenures  and  income groups. Affordability therefore acts as a barrier to adequate housing for people in Jersey.

Because housing affordability is invariably linked to household earnings, recent house price growth at levels above the growth in earnings has meant that affordability pressures have become more acute in recent years.

Housing affordability in Jersey has an impact on households' ability to access homeownership, and on both the recruitment and retention of key workers.

Housing isn't considered affordable if it's not of a liveable condition, and at present, there have been many reports of sub-standard accommodation in Jersey.  However,  work  is underway  to  improve  the  standard of  rented

housing on the island.

4. Key Challenge 2: Housing Jersey's Ageing Population

1. Older people over 65 make up c. 17% of Jersey's population but account for about a third of all homeowners on the island and live in a quarter of the homes in Jersey. Estimates show that there will be c. 11,000 more pensioners living in Jersey by 2035.
2. There are currently two key challenges relating to Jersey's ageing population and its interaction with a sustainable housing market:

There is significant under occupation of housing (living in accommodation with two or more spare' bedrooms) among Jersey's population, with a quarter of all households under occupying their home (according to 2011 census data). Under occupation is concentrated among older people.

There is a lack of suitable housing for older people on the island, which may act as a barrier to rightsizing into smaller properties.

5. Key Challenge 2: Current Barriers to Development

1. Open market and affordable developers in Jersey face some significant challenges in Jersey's construction sector, namely land supply and costs. Some other challenges developers may face include the future of the construction market and workforce, particularly if construction in Jersey increases significantly and simultaneously (e.g. significantly higher housing supply outputs), planning-related delays and access to finance and funding. Despite these challenges, developers have generally been successful in delivering viable schemes.
2. An analysis of Jersey's current barriers to development finds:

The most significant barrier currently facing housing delivery in Jersey is land supply, and its impact on land cost. Land costs, coupled with relatively moderate comparative build costs (similar to other jurisdictions with similarly high house prices, such as London and the South East of England), are key drivers of the high cost of housing in Jersey.

Due to delays in the release of government-provided land, affordable housing providers are currently competing with open market developers for land. This is a particular challenge for affordable developers (who do not receive grant subsidy), since their below-market rental returns do not support the same cost of land as developers offering housing products at market rates.

6. Key Challenge 4: Jersey's two-tier housing market

1. Jersey currently has a housing market which restricts access to rental and owner-occupied housing through residential and job status, in effect creating a two- tier market' with a primary market, accessed by those with the appropriate residential status, and a secondary market which those without qualifications rely upon.
2. This is primarily driven by the desire to create migration controls within the constraints of the freedom of movement allowed within the Common Travel Area.

3. Research into Jersey's and other housing markets which restricts migrants' access to housing reveals:

The split market has a negative impact on access to good quality, suitable accommodation for some portions of Jersey's population.

In international terms, Jersey and Guernsey are unusual in maintaining a two-tier rental market.

7. Key Challenge 5: Housing's complex role within Jersey's wider economy

1. Housing-related market activity makes up a large portion of wider economic activity in Jersey. However, the relationship between housing and the economy doesn't stop at the monetary value of housing in the macroeconomy. For instance:

The housing market may be stimulated by growth in the economy, as well as other factors such as the view that the economy will do better in the future.

Recent years show there is a variable relationship between house prices and supply, with house prices generally rising across periods with relatively high and low total supply additions per annum.

In addition to providing activity that requires jobs and spending, adequate and sustainable housing provides a platform for wider participation in the economy.

2. Each of these challenges is explored in greater detail in Appendix 4, which provides summary versions of the papers received by the HPDB during the discovery phase.

 Development of the Recommended Policy Package

1. Overview
   1. This section of the report details the policy options that were considered by the Board and the process through which policy interventions were assessed and ultimately excluded from further consideration or included in the recommendations.

3. Key Tasks

1. Following the Discovery phase, the Board entered into the iterative Options' phase where Altair supported the Board to consider the full range of policy interventions available to seek to address the challenges identified in Phase 1, and to narrow these options down into a single, coherent suite of policies for recommendation. This phase was spread over two board meetings and one policy development workshop between September 2019 and the end of October 2019.
2. At the September 2019 HPDB meeting, Altair presented a longlist of potential policy interventions which could address the identified challenges facing the whole housing market in Jersey, namely those related to improving affordability, quality, supply and access. These policy interventions were presented as summaries for the Board and included detail on where they were used elsewhere in the world and what the potential benefits and implications were from each.  
3. As a result of the meeting, the Board requested Altair to commence more detailed work on a number of potential policy interventions that it had indicated it wished to consider further.
4. At the October 2019 HPDB meeting, Altair produced a report which set out four policy packages', combining and refining the policy interventions' previously reviewed by the Board, and addressing the points for further consideration, identified through the workshops. These packages represented different approaches in terms of both the level of intervention that is required to implement them, and whether they focus on the state or on the market as supporting the solutions to the housing challenges faced by Jersey.
5. In the October meeting, the HPDB agreed to combine a selection of policy interventions from each policy package to create a new single package. This new policy package was characterised by a significant GoJ-led building programme, with measures to encourage market delivery, as well as policy measures to improve tenants' rights. As a result of the meeting, the Board agreed to consider the policy package in more detail at a forthcoming workshop, at which it would further refine it.
6. At the 29th October Policy Workshop, Altair presented the refined policy package following feedback from the October HPDB meeting. At the 29th October workshop, the HPDB assessed each of its selected policy interventions according to their:

Suitability – how effective the policy would be in addressing the HPDB's objectives for the Jersey housing market

Feasibility – how simple or complex, and how likely it was that the policy

would be successfully implemented

Acceptability – how acceptable the policy would be to stakeholders (e.g. States Assembly members, business interest groups, existing and future residents etc.)

7. As a result of this assessment by the Board, some policy interventions were excluded as either less suitable, unfeasible, or not acceptable to key stakeholders.
8. The resultant suite of policies was then presented in summary to the HPDB in December 2019, alongside draft recommendations for both the HPDB and the Chief Minister. Discussion at the December meeting led to further refinement of the policy interventions and the creation of this report, which sets out the final recommended policy package.
9. Appendix 5 provides an overview of each stage in the policy development process; starting from the key policy development considerations from the discovery phase, through long and short-listing of policy interventions, to the all-day workshop where the HPDB agreed the suite of policy interventions for inclusion in the recommended policy package.

 Overview of the Recommended Policy Package

1. Introduction

1. The Government Leadership' Policy Package (GLPP) brings together twelve policy interventions which see the GoJ take an active role in shaping the housing sector on the island.
2. The Vision
3. In the future, Jersey has a housing market that provides choice, through:

Increased supply across a range of housing types and tenures;

Widened access to both affordable ownership and affordable rental;

A high-quality market rental offer, that is secure and stable, and which residents can access on an equal basis; and

Options for those looking to downsize.

4. Housing of all tenures is delivered by the market, GoJ's delivery agents (Andium Homes and the Jersey Development Company), and the Housing Trusts. With enhanced powers and a wide focus, the GoJ is the driving force behind the majority of new housing supply on the Island.
5. The policy package is comprised of three key elements:

Government-led  interventions  to  increase  the  supply  and  availability  of housing;

Planning measures to facilitate new supply and affordability; and

Policies to improve affordability, access and quality across the rented sector

6. Each of these elements contain a number of policy interventions. Each intervention contains policy recommendations for the Chief Minister and Council of Ministers.

2. The Objectives of the HPDB

1. The HPDB was established to examine the housing market in Jersey and to develop comprehensive proposals that improve the supply, affordability, access to, and standard of housing on the Island.
2. The evidence gathered by the Board is clear – Jersey's housing market is not fit for purpose and will not improve without bold action and significant change from the status quo. The HPDB recognises the scale of this challenge, as well as the challenge facing the government to agree and implement comprehensive and impactful solutions.
3. To meet these challenges, the policies recommended in the package draw inspiration from successful international approaches but are designed with careful consideration of Jersey's unique context.
4. The policy package recommends the following key actions:

The GoJ should deliver new supply through, and ensure clear strategic alignment across its delivery agents such as Andium Homes and JDC and the Housing Trusts

Significant  borrowing  should  be  undertaken  to  invest  in  a  GoJ-backed development programme that seeks to provide new housing across a range of tenures, and to a range of need groups

The GoJ should act to make renting better for people in Jersey, such as through legislation to improve tenants' rights and regulating rental increases and by addressing issues related to access and affordability in the social rented sector

Whilst the GoJ should play a lead role in addressing Jersey's housing challenges, it should also encourage the private sector to play its part in new housing delivery by rezoning land for specific residential classes, ensuring new development responds to local need and through developers' affordable housing contributions

For Jersey to maximise its current housing stock, the GoJ should provide personalised  support  for  right-sizers,  and  review  the  existing  planning framework to better encourage conversion of large  rural properties into multiple homes

Table 3: How the Policy Package Meets the Objectives of the HPDB

3. Policies included within the Package

1. The policy package contains twelve policy interventions, each grouped according to the package's three elements:

Government-led  interventions  to  increase  the  supply  and  availability  of housing

Planning measures to facilitate new supply and affordability

Policies to improve affordability, access and quality across all rented sectors

2. Policy interventions are coded with respect to the policy package element by which they are grouped, as summarised in the table below.

Table 4: Policy Package Elements, Interventions and References

4. Policy Interactions

1. While groupings are used for clarity, each of the policy interventions has been developed with consideration to the wider policy package, and how all policy interventions in the overall package interact with each other.
   2. Within the packages there are a number of interventions which should be considered core' to the package; meaning that several other policy interventions would not be possible without their implementation.
   3. There are also a number of ancillary' policy interventions. While these have been developed to address key challenges and to work in parallel with other policies in the package, they will not have a significant effect on the success or failure of other policy interventions.
   4. If policies are to be accepted or rejected separately, these interactions should be considered closely. To enable this, each policy intervention section outlined below contains a list of interactions with other interventions in the package. This section indicates if and how the intervention impacts on, and is impacted by, other interventions.

6. Presentation of Recommendations

1. The following pages contain the Board's recommendations for the GoJ regarding the approval, administration and delivery of the policy package. For clarity, the recommendations have been arranged into two categories, including:

Policy Recommendations: for the Chief Minister to consider approving, determining whether or not the policies will be advanced and administered

Recommended Actions: for the Chief Minister to action to provide greater clarity on feasibility or administration of the policy, which fall beyond the remit of this review. These may be actioned before or after the Council of Ministers are asked to consider the package, depending on the level of detail required to enable decision making.

2. Policy Recommendations are compiled at the conclusion of this report.

 Government-led interventions to increase the supply and

availability of housing

1. Overview

5.1.1. An essential part of this policy package is the key role that the GoJ and its delivery agents will play in the supply of new housing on the Island, as well as actively encouraging more efficient use of existing housing. The policy recommendations directly related to Government-led supply are:

S1 – Estate strategy and strategic alignment of GoJ delivery bodies

S2 - Borrowing and cross-subsidy to fund additional new housing supply

S3 – The use of Compulsory Purchase powers for both site-assembly and to discourage land banking'

S4 - Delivery of new homes across a range of tenures and need groups

S5 - Encouraging rightsizing' to improve the availability of family-sized accommodation

This section provides detailed policy recommendations for each of these policy interventions.

2. S1 – Estate Strategy and Strategic Alignment of GoJ Delivery Bodies

1. Policy Recommendation: A GoJ estate strategy should be created which sets out how public land should be used for housing. The GoJ should also provide an overarching residential delivery and management strategy for GoJ-backed housing organisations such as Andium and JDC, which also encompasses its relationship with the housing trusts.
2. Context and Drivers
3. The HPDB has previously expressed its concern that there is a lack of strategic direction from GoJ for both Andium and JDC, and as such both organisations operate in a policy vacuum, and the decisions they make may not be aligned to wider GoJ policy agendas.
4. In addition, JDC and Andium's activity may overlap or in places compete, for example in the different affordable ownership products offered by each organisation.
5. Having an effective and clear strategy, both guiding the activity of GoJ backed delivery agents, and setting out the best use of land in public ownership should promote efficient decision making and help unlock greater housing delivery.
6. Policy Description
7. This policy consists of two elements:

An  overarching  residential  delivery  and  management  strategy  for  GoJ- backed  housing  organisations,  encompassing  Jersey  Property  Holdings (JPH), the GoJ estates manager, Andium and JDC and the housing trusts; and

A GoJ Land Strategy, which addresses all of the demands on public land on the Island and includes housing delivery as an area of focus. The strategy should specify what land will be released for housing, to whom it will be released, the terms and conditions of releasing land to developers / GoJ providers, and what returns (financial and otherwise) the GoJ expect.

8. These two elements are described in more detail below.
9. Residential delivery and management strategy
10. A single strategy should be developed by the GoJ which addresses the objectives GoJ is seeking to achieve in its housing development and housing management. This should include:

Objectives sought by the GoJ

Desired tenure mix

Funding and subsidy available

Hurdles for assessing opportunities

Standards for delivery and housing management

Responsibility for different elements of delivery

How the delivery agents are expected to work together

The future role of the Housing Trusts

11. The strategic alignment of GoJ housing delivery should lead to the delivery agents of the GoJ working together under an agreed strategic vision to deliver housing suited to the sites available, and the needs of the residents of Jersey.
12. The GoJ could also consider amplifying this strategic alignment through addressing the governance of its arm's length bodies, and through unifying the scrutiny and oversight of JDC, JPH and Andium in a single location.
13. The strategy should also provide guidance on the GoJ's expectations of Housing Trusts in the delivery of new housing supply.
14. A GoJ Land Strategy
15. This strategy should seek to address the future uses of GoJ-owned land, including a specific focus on housing delivery to ensure that land is clearly designated for delivery, and to enable GoJ's delivery agents to move sites forward.

17. The strategy should consider the competing needs for land on the Island, and clearly designate appropriate land for the different types of housing that need to be delivered in the short medium and long term.
    11. The strategy should, alongside the Island Plan, set the framework for the tenure, type, and location of housing across the Island. A comprehensive estate strategy would influence the rezoning of land (see P1 - Rezoning of land for specific residential classes).
    12. Policy Objectives and Benefits
    13. The objective of this policy is to make the most effective use of both public land and the GoJ's delivery agents, particularly, in the context of residential delivery, Andium and Jersey Development Company (JDC).
    14. There are three main benefits of the policy:

Ensuring the efficient use of public land for housing (and other) delivery

Coherent working across government agents and delivery bodies

Improves pace of delivery through having a clear strategy for all parties to adopt

21. Through taking a strategic approach, duplication and wasted effort should be reduced enabling a faster rate of housing delivery by the delivery agents, both on public land, and on sites acquired to achieve the GoJ's objectives.
22. Cost Implications
23. Developing strategy will require staff resource, as will the ongoing monitoring of the implementation of the strategy. This ongoing oversight and scrutiny will be important to ensure that the benefits sought from a strategy are achieved, and any issues resolved promptly.
24. Challenges
25. Potential challenges to achieving the objectives of this policy include:

Time being spent developing strategy, rather than moving forward with

delivery

The need for stakeholder buy-in (particularly of the delivery agents) to ensure that the strategy works in practice

The need for the GoJ to agree its strategic priorities, and for these then to remain relatively fixed over time to provide certainty to work towards

26. Policy Interactions
27. This policy is closely linked to other policies in the policy package in that it sets out the overall strategy for their use by GoJ delivery agents. While many of the policies in the package may be delivered without S1 – Estate strategy and Strategic alignment of GoJ delivery bodies', their intended objectives and outputs may be mismatched. These interactions are outlined below.

S2 - Government borrowing and cross-subsidy to fund additional new housing supply: The GoJ or its delivery agents may borrow to enable its housing delivery strategy. Within the strategy the approach to using market product to subsidise affordable housing delivery should be set out, this may include cross-subsidy,  if necessary, across different GoJ backed organisations.  

S3 – The use of Compulsory Purchase powers for both site-assembly and to discourage land banking': GoJ may use CP powers to acquire land to be developed by either of its delivery agents, in line with the agreed strategy

S4 - Delivery of new homes across a range of tenures and need groups: an overarching strategy will support effective GoJ housing delivery

P1 - Rezoning of land for specific residential classes: Land that is rezoned may be GoJ land and rezoned in line with the Land Strategy or may be private land that is acquired by a GoJ backed delivery agent.

3. S2 - Government Borrowing and Cross-Subsidy to Fund Additional Supply

1. Policy Recommendation: The GoJ and/or its delivery agents should borrow funds, underpinned by a cross-subsidy model, if necessary, to finance Policy Intervention S4, following appropriate modelling.
2. Context and Drivers
3. There is capacity for the GoJ and/or its wholly owned companies, as well as Jersey's Housing Trusts, to borrow to fund housing delivery programmes. The GoJ has precedent for borrowing funds to finance some initiatives in the housing market, primarily exemplified through the issue of the social housing bond. The GoJ Government borrowed £250m through the issue of a bond to invest in building more social housing in 2014.
4. The proceeds from the bond went into a ring-fenced fund for social housing, bringing existing homes to the decent homes standard and building new homes. Andium accesses this loan and makes annual loan repayments of £5.7 million and loan interest payments of £5.9 million.
5. In addition, Andium pays c. £28.7 million to the Treasury per annum as a return for the transfer of GoJ-owned properties to Andium.
6. An analysis of the potential merits of a similar policy in the future indicate:

Investor interest in the market for long term investment in the social housing sector  where  Government  backed  long  term  returns  match  investment requirements is high

The 2014 housing bond was 2.5x oversubscribed reflecting strong interest in housing in GoJ

The spread achieved at 52 basis points was very low. Although spreads have widened slightly in the run up to Brexit gilt rates are currently very low with the UK 2047 Gilt yield at 1.10% (23/08/19) indicating an all-in rate of well under 2% could be achieved.

7. Jersey also has some precedent for a cross-subsidy model, given Andium uses rental income and property sale proceeds to fund their activities.
8. Policy Description
9. The financial enablers in the Government Leadership' policy package are:

Government-backed borrowing to draw the funds necessary for GoJ delivery agents to build new homes

A cross-subsidy model enabling market products (sale and market rent) to support costs of affordable products (across delivery agents)

10. These policy interventions would enable significant long-term investment by the GoJ into housing in Jersey.
11. The HPDB considered a range of tax measures at the September 2019 meeting (including increasing stamp duty, increasing rental income tax, and land value uplift capture), which were rejected at that stage by the HPDB as being likely to be politically unacceptable. As a result, the policy interventions included within this policy package assume nil to low revenue subsidy by the GoJ to fund a

government-led build programme, in favour of loans to support the programme. If the outcome of policy R4 (strong support for reform of social rent setting) is to implement social rent reform which reduces rental income and Income Support revenue spend, some of those funds could (subject to modelling) be used to provide capital subsidy.

12. To provide circa 5,000 homes (see S4 below) it would require circa. £720m for build costs (at present value) plus any costs of land (e.g. for the acquisition of private land required to assemble sites).
13. We understand that Andium already have a pipeline of circa. 1,100 homes in development, with plans to deliver a total of 3,000 homes over the 2021- 30 period.
14. Andium has committed all of the original £220m States Bond. It has recently entered into a revolving credit facility of £150m for its existing projects, which it will start drawing down in Q1 2021.
15. JDC bank borrowing is forecast to reach £101m to complete its current pipeline of 280 residential units.
16. The profit/surplus from market sale units could be used to cross-subsidise the programme by circa £100m (assuming circa. 1,740 market sale units, as suggested in S4)[3].
17. In total, this would leave £470m[4].
18. This policy intervention would entail bond issuances from the GoJ itself, or through Andium or JDC undertaking the borrowing through a private placement, so as to fund the delivery programme. Housing Trusts can also borrow commercially and do not impact directly on the GoJ balance sheet.
19. The level of borrowing, and how repayment is funded will be developed by GoJ Treasury and delivery agents. It is assumed the level of repayment will be determined by a combination of rental income and capital receipts.
20. Recommended Action: Andium and GoJ Treasury should undertake modelling on how borrowing on this scale might be drawn and repaid.
21. Policy Objectives and Benefits
22. The objective of this policy is to increase available capital funding for housing proposals contained in the policy package. There are two main benefits of the policy:

Increased capacity for the GoJ to deliver new housing without any subsidy from taxes

The ability to service the costs of affordable housing through the surplus generated from sales of market sale housing (estimated to be in the region of £100m based on assumed figures in S4), reducing the overall amount of

long-term government borrowing required

23. Cost Implications
24. The financial costs to the GoJ could include:

Cost of borrowing: The repayment profile of the loan will determine actual costs of borrowing.

Carrying Costs: There would be a cost of carry for the funds generated through any bond issue up until funds are utilised (i.e. the borrowing amount at present values may be worth less' purchasing future goods)

Fees, administration and resource costs of preparing a bond issue and going out to market, and then administering it to GoJ delivery agents (if required)

25. If the GoJ itself, rather than its delivery agents, borrow the funds, there may also be an opportunity cost: funds drawn may limit the GoJ's borrowing capacity, which may interfere with the GoJ's ability to borrow for other or future policies.
26. Challenges
27. Some of the challenges to this policy could be:

The 2014 bond proceeds have not yet been fully utilised

Great Britain's exit from the European Union poses two potential risks:

   It could have an impact on Jersey's wider economy and housing market,

which could impact the programme

   It may impact Jersey's tax revenues, which could affect GoJ borrowing

capacity

   Bank of England bank rates may change in the future, making borrowing

rates less favourable

The cross subsidy also poses some challenges, including:

   It exposes GOJ delivery agents to market downturn and sales risk    It links affordable delivery to cyclical housing market delivery

   It creates an incentive for GoJ to keep house prices high, since surpluses

determine the level of subsidy available for affordable housing

28. Policy Interactions
29. This policy is closely linked with two other policy interventions in the policy package.
30. The level of borrowing required will be determined by:

S1 – Estate strategy and Strategic alignment of GoJ delivery bodies: level of borrowing required will depend on land provided by the GoJ for the build programme, a form of subsidy as well as the financial plans of GoJ delivery agents

31. It provides the capital funding necessary for:

S4 - Delivery of new homes across a range of tenures and need groups: it provides the upfront funding necessary to construct homes, with tenures offered conducive to the cross-subsidy model

4. S3 - The Use of Compulsory Purchase Powers

1. Policy Recommendation: The GoJ should use existing Compulsory Purchase powers to unlock sites for new development as part of Policy Intervention S4.
2. Context and Drivers
3. The GoJ has Compulsory Purchase powers under existing legislation (Compulsory Purchase of Land Law 1961). These powers enable the GoJ to compulsorily purchase land (and any built assets on the land) on behalf of the public, from landowners where an agreement between the GoJ and landowner cannot be reached. Under current legislation, land cannot be acquired by compulsory purchase unless the GoJ approves plans showing the land to be acquired and the amount to be paid to acquire the land. Historically, the GoJ has not exercised its Compulsory Purchase powers to their full potential effect.
4. Policy Description
5. Existing compulsory purchase powers could be used more readily by the GoJ to assist site assembly for new development. Working within existing legislation, GoJ should establish a new approach to the use of Compulsory Purchase powers, which sees a greater preparedness to use them and is complemented by the means (through the GoJ's own development programme (or those of its agents)) to develop the land it purchases.
6. In practice, Compulsory Purchase powers would only be used as a last resort, if agreement with landowners is not forthcoming.
7. Policy Objectives and Benefits
8. Primarily, this policy is intended to facilitate site assembly for GoJ-led development projects, making it easier to identify and unlock' development sites which would otherwise be prohibitively difficult to develop, due to multiple landowners on the site or site access.
9. There is also the anticipated benefit of discouraging land banking' by existing landowners.
10. Cost Implications
11. Assuming that the GoJ does not compensate landowners at above the market rate (as laid out in Compulsory Purchase of Land Law 1961), the financial cost of this policy is neutral, with the cost of implementation restricted to officer time in preparing applications for Compulsory Purchase to the GoJ.
12. Challenges
13. Some of the challenges to this policy could be:

Achieving agreement by States Assembly for applications for the exercise of Compulsory Purchase powers

Exercise of these powers may expose the GoJ to possible legal challenge from landowners

14. Policy Interactions

15. This policy is closely linked to three other policy interventions in the package:
16. Its use will be defined by:

S1 – Estate strategy and Strategic alignment of GoJ delivery bodies: GoJ may use CP powers to acquire land to be developed by either of its delivery agents, in line with the agreed strategy

17. It enables the following to meet their objectives:

S4 - Delivery of new homes across a range of tenures and need groups: having the means to develop the land itself as part of a larger building programme will likely increase the need to use compulsory purchase powers

P1 - Rezoning of land for specific residential classes: Land that is rezoned may be subject to compulsory purchase by the GoJ. Compulsory Purchase therefore allows the GoJ a mechanism to ensure land rezoned is built on to meet key housing need.

5. S4 - Delivery of New Homes Across a Range of Tenures and Need Groups

5.5.1. Policy Recommendation: A significant GoJ-backed development programme should be mobilised, following an appropriate feasibility study.

1. Context and Drivers
   2. The key driver behind this policy intervention is the housing need (as assessed in the 2018 ARC Objective Assessment of Housing Need (OAHN)). Based on a net inward migration of +1,000, the OAHN found that 7,010 new homes would need to be provided over the Island Plan period 2021 – 2030. The identified split of tenure need is:

Table 5: Housing Needs by Tenure

3. It should be noted that due to not having up-to-date census information, and uncertainty over the migration position for the Island Plan it is possible that these figures underestimate delivery requirements. Further, the OAHN did not consider changes to the Gateway recommended by HQN and being taken forward by the GoJ which will likely increase the proportion of housing that needs to be delivered as affordable rental.
4. Jersey has three different affordable home ownership products currently in operation: First Time Buyer Housing, HomeBuy, and Assisted Purchase; two of which contain explicit discounts to purchasers. These are covered in detail in Appendix 4.
5. Policy Description
6. This policy is about establishing a major state-led building programme which sees the GoJ (through its delivery agents such as Andium and JDC, as well as Jersey's housing trusts) leading the extensive development of new housing on the Island. This delivery would be largely based on state-assessed housing need and should provide housing in a range of locations, housing types, and tenures.
7. This programme will include GoJ-sponsored delivery of homes for:

Social rent

Market rent to create mixed-tenure communities and where necessary for site viability

Affordable home ownership

Outright sale

Retirement and specialist extra-care/supported accommodation

8. Private sector housing delivery for the last Island plan 2011 – 2020, is estimated to be 2,390 homes. We have assumed that the private sector will contribute a similar level of housing in the next Island Plan[5]. This leaves c. 5,000 homes to be delivered by the public sector. We expect this to be predominantly delivered by GoJ delivery agents. Housing Trusts will likely also deliver some new homes, with the GoJ working with them on smaller sites and in particular tenures that may suit some Housing Trusts (e.g. Trusts specialising in supported housing).
9. Recommendation: The GoJ should conduct a feasibility study and modelling on the required levels of additional housing delivered by GOJ. Delivery Agents should be engaged, and it should consider housing need on the Island, the 2021 Island Plan, the current development programmes of the GoJ's delivery agents, and the funding requirements of such a programme.
10. It is assumed that the private sector will predominantly deliver both open market sale and rental products[6]. Despite the inclusion of the Affordable Homes Contribution policy included elsewhere in this policy package (policy P3), we have not assumed any contribution from the private sector, given the uncertainty about how the level of contribution will be profiled as it is introduced slowly.
11. In recognition that the Housing Minister has already approved, in principle, an expansion of the Gateway (as recommended in the Review of access to social housing in Jersey' HQN report in April 2019) and that work is yet to be completed on the impact of these changes, a single figure for rental housing' has been used to cover both affordable and market rental homes delivered by the GoJ.
12. Given these caveats, the chart below shows the approximate level of delivery required for the GoJ to meet the OAHN requirements if the private sector does not increase its output above previous Island Plan levels.

Figure 1: Delivery Required to meet OAHN Requirements by tenure / need group

13. Any additional units delivered through conversions (policy intervention P2) have not been considered. Additional units delivered through conversions would add to the overall supply total and may reduce the amount of delivery required from the GoJ or change the profile of property sizes required.

14. Construction
15. The scale of this delivery represents a significant increase on historic figures for new housing supply on the Island, which have averaged at about 300 net housing supply additions per annum[7].
16. The HPDB recognise that the Island's social housing stock has seen a significant amount of refurbishment work, with over 1,000 units improved to achieve Decent Homes Standard. It has been suggested that the capacity and capability of the Island's construction sector that has been engaged in this work, can be directed towards the construction of the new homes required over the next decade, now that the Decent Homes programme is largely complete.

5.6.

1. The HPDB received reporting that research suggests that labour and skills shortages are not currently a significant barrier to housing delivery on the island at current delivery levels (with the exception of some less-frequent, large scale projects such as the St Helier Waterfront project). It also noted the ability to access both UK and French supply chains (for example the use of a French contractor, Groupe Legendre for the Horizon Jersey Development Company scheme at St Helier Waterfront).
2. Nevertheless, increasing the supply of new homes in line with this policy recommendation poses a significant challenge for the Island's construction sector. As such, there should be engagement with construction companies, both on and off the Island, about the plans for the GoJ and its delivery agents. The GoJ and its delivery agents should seek to give assurances of construction requirements including unit numbers and timescales when it seeks to procure construction partners.

1. Recommendation: The GoJ should establish an initial draft of its development programme showing consistent supply for the next ten years and engage with the construction market as part of a feasibility study into the increased housing delivery proposed in this report.
   2. Delivery Across a Range of Tenures
   3. It is the view of the HPDB that each of the tenures referred to above should be delivered in accordance with the description below:
   4. Affordable home ownership is an existing housing product offer in Jersey delivered through two schemes (Assisted Purchase and Andium HomeBuy). It is the view of the HPDB that expanded delivery of home ownership should be focussed on a single affordable ownership scheme (as opposed to the number of schemes which currently exist on the Island), with the intention of providing clarity

and consistency to consumers. £10 million has been earmarked in the Government Plan for 2021 to support home ownership schemes for households who are unable to purchase a home in the open market.

5. Recommendation: The GoJ should maintain, and modify if necessary, a single existing Affordable Ownership product which should be extended to Housing Trusts and should be formally constituted in legislation, to leverage the £10m of funding earmarked in the Government Plan for 2021.
6. Outright market sale is a tenure both in demand and a potential source of cross- subsidy for the GoJ's wider housing delivery programme. The surplus from circa. 1,200 market sale units, based on land and build costs in Jersey, is estimated to be circa. £70m. Successful delivery of market sale housing could result in the GoJ borrowing less capital to fund its ambitions for affordable housing and housing for older people.
7. The supply and options of housing for older people, is limited in Jersey, with a particular lack of extra-care[8] style accommodation. The GoJ should take the lead in the delivery of modern, purpose-built housing for older people across a range of tenures and types. This may take the form of some mixed-tenure, mixed-age and purpose-built retirement living solutions.
8. Market rented accommodation, should be considered on a site-by-site basis to aid in site viability and to create mixed-tenure communities. Market rented properties could be managed by Andium and integrated into its existing housing management service.
9. Policy Objectives and Benefits
10. The objectives of this policy are to increase supply and access to a range of housing types and tenures, in order to meet a broader range of housing need across Jersey. The specific objectives for GoJ provision of each tenure / type are as follows:

Social rent – to meet the projected demand for social rental accommodation on the Island, as well as additional demand that may be stimulated through broadening the Gateway

Market  rent  –  to  meet  the  projected demand and  create mixed-tenure communities. Market rental accommodation will also be delivered where necessary for site viability. Delivering a good quality market rent product, could  also  encourage  some  private  landlords  (through  competition)  to improve the quality of the homes and services that they offer;

Affordable homeownership – to meet the projected demand and deliver housing that private providers do not typically supply. GoJ provision of affordable ownership can improve access to homeownership and the supply of new homes;

Outright  sale –  to  generate  capital  returns that  can be  used  to cross-

subsidise social rental housing; and

Retirement housing – to provide attractive and suitable accommodation to older people and encourage under occupiers to move out of larger family- sized  accommodation  which  could  increase  access  to  suitable accommodation for families.

11. The anticipated benefits and challenges of GoJ-led delivery of these tenures is explored in the table below:

Table 6: Anticipated Benefits, Challenges and Risks of GoJ-led delivery tenures

12. Cost Implications
13. The cost implications of this policy are explored as part of Policy Intervention S2 - Government borrowing and cross-subsidy to fund additional supply.
14. Policy Interactions
15. This policy intervention is closely linked to the other supply-orientated policy interventions and well as those interventions which seek to reform the rental sector.
16. The strategy for the build programme will be determined through:

S1 – Estate strategy and Strategic alignment of GoJ delivery bodies: An overarching strategy will support effective GoJ housing delivery, ensuring that the objectives of the GoJ are aligned with outputs delivered by delivery agents

17. To build new supply, GoJ Delivery agents require funding delivered through:

S2  -  Government  borrowing  and  cross-subsidy  to  fund  additional  new housing supply: The GoJ will need to borrow to enable its expanded housing delivery programme. The programme may be facilitated by using market products to subsidise affordable housing delivery, this may include cross- subsidy across different GoJ backed organisations.

18. Delivery agents will also require land for their build programmes. Land may be acquired on the open market through:

S3 – The use of Compulsory Purchase powers for both site-assembly and to discourage land banking': GoJ may use CP powers to acquire land to be developed by its delivery agents

P1 - Rezoning of land for specific residential classes: Land that is rezoned according to needs group and may be developed by the GoJ as part of its expanded build programme

19. The policy may enable other policy interventions, namely:

S5 - Encouraging rightsizing' to improve the availability of family-sized accommodation: GoJ provision of retirement housing for older people may encourage older under occupiers to move from their under occupied homes to more suitable, and easily managed accommodation. This in turn releases these under occupied homes into the market for families to buy.

R3 - Reform social housing allocations policy (expanding the current Gateway): Access to social housing is in part dependent on the supply of available housing, so this policy would help ensure any expanded access to the Gateway is met with an increased number of homes  

R4 – Strong support for reform of social rent setting: Any changes to revenue models for social housing providers will impact social housing providers' ability to fund their current and future programmes, including capital build programmes. This impact on the level of finance required may be offset by changes to the scale of build for market-rate tenures.

5.7.  S5 - Encouraging rightsizing' to improve the availability of family-sized accommodation

1. Policy Recommendation: A GoJ delivered personal support and advice service for rightsizers' should be introduced.
   2. Context and Drivers
   3. 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.
   4. 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.
   5. 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 down-sizers in social housing. In some English local authorities that have implemented similar measures, each specialist post facilitates over 50 moves per year.
2. Policy Description
3. This policy consists of including a right-sizing support service'. This service could be delivered or signposted through the new Housing Options Service, which is being developed in 2020. Facilitating moves can be resource-intensive and therefore it is recommended that dedicated resource is used to deliver this service (specialist allocations/housing officers to deliver a personalised service).
4. The Right-sizing Officer(s)' provides practical support to under occupiers by taking the time to meet in person, understand the needs and aspirations of the under occupying owner (and tenant if relevant), and supporting them with finding alternative suitable properties, arranging removals and offering advice on updating address details with banks and utility companies, for example.
   2. Policy Objectives and Benefits
   3. The objective of the policy is to increase the number of rightsized' moves amongst under occupying owner-occupiers, that bring larger homes onto the market, improving the availability of family-sized accommodation, and (over the longer-term) achieve a more efficient use of existing housing on the Island.
   4. Based on the experience of local authorities and housing associations in England, depending on the implementation, Jersey could expect between 25-50 family-sized homes to be released' per annum
5. There are three main benefits of the policy:

Finding older people more suitable accommodation can result in better housing and health-related outcomes

Release existing family-sized homes on to the market, reducing cost pressures on existing and new supply on the market – leading to potentially less new supply being required

Could stimulate demand for specialised housing for older people

13. Cost implications
14. It is assumed that initially, no more than one dedicated officer would be required (potentially less) depending on the exact scope of the service. This would represent the only cost implications of this policy.
15. Challenges
16. Potential challenges to achieving the objectives of this of the policy include:

Could be politically unpopular - viewed as redirecting funding for people who may have benefitted already from the uplift in the housing market

Would represent a cost to the GoJ that would not be recouped

Does not directly contribute to more suitable housing for older people

Partly reliant on the new supply of suitable and attractive accommodation for older people

17. Policy interactions
18. This policy intervention is closely linked to one other policy intervention in the package, as it assumes housing options are delivered by:

S4 - Delivery of new homes across a range of tenures and need groups: The objective to facilitate right-sizing may not be achieved without sufficient attractive alternative options for older people, which are currently insufficient in the market.  

 Planning Measures to Facilitate New Supply and Affordability

1. Overview

1. The package includes three key planning measures which are designed to facilitate the delivery of a Government-led development programme, require a contribution to affordable housing numbers from private developers, and enable residents to make better use of existing residential assets through conversion into multiple dwellings.
2. The planning measures included within this policy package are:

P1 - Rezoning of land for specific residential classes

P2 - Encourage conversion of large residential dwellings into multiple homes

P3 - Affordable Housing Contribution

3. This section provides policy recommendations for each of these policy interventions.

2. P1 - Rezoning of Land for Specific Residential Classes

1. Policy Recommendation: Planning policy, including the 2021 Island Plan, should use expanded rezoning as a tool to help enable the delivery of priority housing tenures.
2. Context and Drivers
3. The States Assembly already rezones land for housing through the Island Plan. In the revised 2011 Island Plan polices H1, H2 and H5 zoned land for affordable housing with 18.8 acres across four sites being rezoned. The target mix for the sites was 20% affordable ownership and 80% affordable rent. Re-zoning of sites in the Revised 2011 Island Plan was done as a specific response to the cancelled implementation of Policy H3, which would instead have seen affordable housing delivered as a planning obligation on private sites.
4. Previous Island Plans in Jersey have generally focused on increasing supply through conversions, redevelopment and infill development within the Built-up Area and through provision of new homes on brownfield land. This means new development has been concentrated in and around established centres, such as St Helier, the Island's commercial centre and home to a third of Jersey's population. Over time, the town centre has seen continued population and economic growth, and as a result overspill has occurred beyond the boundaries of the parish into the parishes of St Saviour and St Clement.
5. As a result of these pressures, in developing the 2021 Island Plan, GoJ has consulted Jersey residents on a number of re-zoning options, including:

expanding St Helier

expanding other built up areas

creating a new settlement or significantly expanding an existing settlement