Common Strategic Policy (P.98/2022): sixth amendment

STATES OF JERSEY

COMMON STRATEGIC POLICY (P.98/2022): SIXTH AMENDMENT

Lodged au Greffe on 8th November 2022 by Deputy S.Y. Mézec of St. Helier South Earliest date for debate: 22nd November 2022

STATES GREFFE

COMMON STRATEGIC POLICY (P.98/2022): SIXTH AMENDMENT

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1  PAGE 2 –

After the words "report of this Proposition" insert the words ", except that, on page 11 of the report –

1. in the third paragraph, the words "Housing matters" should be substituted with the words "Jersey has a housing crisis";
2. in the fourth paragraph, after the words "housing ladder." there should be inserted the following words –

"We will do this by:

- Increasing the proportion of homes required to be designated as affordable' in large private sector developments;

- Introducing a first right of refusal' for private sector tenants to purchase their homes when their landlord decides to sell; and

- Establishing a shared-equity scheme to support first-time-buyers attempting to purchase their first homes in the private sector, using the £10m fund set aside in previous Government Plans.";

3. in the fourth paragraph, after the words "housing stock." there should be inserted the following words –

"We will do this by:

- Requiring all homes built on publicly-owned land to be for first- time-buyers, social rental housing or downsizers; and

- Introducing an Empty Property Tax."

4. in the sixth paragraph, after the words "improve the quality" there should be inserted the words "and affordability";
5. in the sixth paragraph, after the words "tenants and landlords" there should be inserted the words –

"We will do this by:

- Re-introducing  the  landlord  licensing  scheme  originally proposed by previous Environment and Housing Ministers;

- Proposing  a  new  Residential  Tenancy  Law  to  provide  for European-style rent stabilisation and open-ended tenancies;

- Moving to a means-tested system for calculating social housing rents; and

- Implementing  the  recommendations  of  the  Homelessness Strategy"

2  PAGE 2 –

After the words "report of this Proposition" insert the words –

", except that, on page 18 of the report –

1. in the Continue to improve' section of the table for Housing and Cost of Living, the words "Increase the % of Islanders who are very satisfied with their housing" should be substituted with the words "Increase the number of private rental homes with 5-star accreditation with Rent Safe"; and
2. in the Turn the curve' section of the table for Housing and Cost of Living, after the words "housing that is affordable" there should be inserted the following words – "

- Decrease the proportion of renters classed as living in rental stress';

- Reduce  the numbers  of  homes  left  vacant  without  adequate excuse;

- Increase the proportion of young adults who own their home; and

- Decrease  the  average  waiting  times  for  those  listed  on  the Affordable Housing Gateway for rehousing."

DEPUTY S. Y. MÉZEC OF ST. HELIER SOUTH

Note:  After this amendment, the proposition would read as follows –

THE STATES are asked to decide whether they are of opinion

in accordance with Article 18(2)(e) of the States of Jersey Law 2005, to approve the statement of the Common Strategic Policy of the Council of Ministers as set out in the report of this Proposition, except that on page 11 of the report –

1. in  the  third  paragraph,  the  words  "Housing  matters"  should  besubstituted with the words "Jersey has a housing crisis";
2. in the fourth paragraph, after the words "housing ladder." should be inserted the following words –

"We will do this by:

- Increasing the proportion of homes required to be designated as affordable' in large private sector developments;

- Introducing a first right of refusal' for private sector tenants to purchase their homes when their landlord decides to sell; and

- Establishing a shared-equity scheme to support first-time-buyers attempting to purchase their first homes in the private sector, using the £10m fund set aside in previous Government Plans.";

3. in the fourth paragraph, after the words "housing stock." should beinserted the following words –

"We will do this by:

- Requiring all homes built on publicly-owned land to be for first- time-buyers, social rental housing or downsizers; and

- Introducing an Empty Property Tax."

4. in the sixth paragraph, after the words "improve the quality" shouldbe inserted the words, "and affordability";
5. in the sixth paragraph, after the words "tenants and landlords" shouldbe inserted the words,

"We will do this by:

- Re-introducing the landlord licensing scheme originally proposed by previous Environment and Housing Ministers;

- Proposing  a  new  Residential  Tenancy  Law  to  provide  for European-style rent stabilisation and open-ended tenancies;

- Moving to a means-tested system for calculating social housing rents; and

- Implementing  the  recommendations  of  the  Homelessness Strategy";

and except that on page 18 of the report –

1. in the Continue to improve' section of the table for Housing and Costof Living, the words "Increase the % of Islanders who are very satisfied with their housing" should be substituted with the words "Increase thenumber of private rental homes with 5-star accreditation with Rent Safe";
2. in the Turn the curve' section of the table for Housing and Cost ofLiving, after the words "housing that is affordable" should be inserted thefollowing words – "

- Decrease the proportion of renters classed as living in rental stress';

- Reduce  the  numbers  of  homes  left  vacant  without  adequate excuse;

- Increase the proportion of young adults who own their home; and

- Decrease  the  average  waiting  times  for  those  listed  on  the Affordable Housing Gateway for rehousing."

Page - 4

P.98/2022 Amd.(6)

REPORT

Summary

This amendment, if adopted, would insert into the Common Strategic Policy a greater level of detail on the measures the government should pursue in order to achieve the ambition of improving access to affordable housing and enabling Islanders to achieve a decent standard of living.

These measures are those contained in The Reform Jersey – Housing Crisis Action Plan which was published during the 2022 general election. Most of the content of this action plan itself originated from the 2020 report of the Housing Policy Development Board.

Introduction

Jersey has a housing crisis.

The Common Strategic Policy report makes one brief reference to this fact, and then lists some laudable high-level ambitions on how this will be resolved but provides little detail on how this will actually be done.

It is all well and good to say, "we will promote and support home ownership" or "we will improve the quality of rental accommodation", but what matters is the detail on how these things will be achieved. What will the government actually do to realise these ambitions?

This amendment seeks to provide clear proposals for the Assembly to agree to, which will have a tangible impact in achieving the ambitions set out in the CSP.

Many of the proposals contained in this amendment originate from the work of the Housing Policy Development Board[1].

This board was established in 2019 and spent a year conducting research and engaging with stakeholders to inform a set of recommendations to deal with Jersey's housing crisis. Its political membership was cross-party but was chaired independently by Michael De La Haye MBE and included John Scally as a lay member.

The Board's report[2] was published in April 2021, many months after its completion. The then Housing Minister made reference to it in his "Creating Better Homes" report[3], but faced criticism for the lack of tangible action proposed and the lack of clarity as to whether the details of the HPDB's recommendations were actually accepted. Sadly, this report appears to have been forgotten about and instead the preference of the government appears to be to re-run this exercise and hold more reviews and consultations before committing to action. This is an indulgence which simply wastes more time whilst many people in Jersey continue to see their quality of life decline.

In accepting this amendment, the States Assembly would finally be confirming its political support for a tangible package of policies, rather than more empty rhetoric or prevarication.

"We will promote and support home ownership, aiding those looking to get on the housing ladder."

This stated ambition in the CSP will no doubt command universal support from our community, especially those younger Islanders who are fearing for their futures in Jersey, due to their growing sense of dread that they will never have the opportunity to own their homes.

The 2021 census showed that 54% of households were owned by those who lived in them, which was the same proportion recorded in the previous census a decade earlier. So there has been no improvement. The equivalent figure for the UK is 63%.

There are measures which can be taken to increase the supply of homes exclusively for first-time-buyers, and provide support for those buyers to make the homes more affordable.

This amendment proposes:

- Increasing the proportion of homes required to be designated as affordable' in large private sector developments;

Following my successful amendment to the Bridging Island Plan, there is now a requirement in private developments of over 50 homes for at least 15% of them to be designated as affordable.

This was an important start, and finally established this principle in planning rules after a decade of inaction from successive States Assemblies. But it does not go far enough. If we are to require the private sector to make a meaningful contribution to the supply of affordable homes for first-time-buyers, this percentage must be increased.

- Introducing a first right of refusal' for private sector tenants to purchase their homes when their landlord decides to sell;

This proposal was not featured in the HPDB's report. It would introduce a right of first refusal, so when a private landlord decides to sell their property, they are required in the first instance to offer to sell it to the sitting tenant at market value. If the sitting tenant does not want to buy it, then it can be offered on the open market.

This would only apply when a landlord voluntarily wanted to sell their property and would not inhibit them from disposing of it when they wanted to. It would simply ensure that the first potential customer was the one who would benefit by being able to keep the home they lived in and were comfortable.

Currently, many private sector tenants face insecurity when their homes are sold by their landlord. Many investors prefer to sell their properties as vacant, to make it a more attractive purchase. This often sees tenants who are content with their living arrangements forced to leave their homes. Were they offered an opportunity to turn their rental home into a home they own, many would snap up the opportunity.

- Establishing a shared-equity scheme to support first-time-buyers attempting to purchase their first homes in the private sector, using the £10m fund set aside in previous Government Plans.

The £10m pot for first-time-buyers has been in successive Government Plans for several years now. Unfortunately, the Covid pandemic delayed work being done to construct a scheme to most effectively direct this money. The time has come now to commit to it being used.

Many Islanders look back fondly on the historic States loan scheme, which they credit for helping them onto the housing ladder. Times have changed, and an identical scheme is no longer appropriate, as it would risk inflating the market, and simply gives more debt to those prospective homebuyers. A more appropriate solution would be to allow buyers to purchase a large proportion of the home with a mortgage they can afford, whilst the government (either through an ALO or directly) purchase the rest of the property.

Whilst Andium's Home Buy scheme (which provides homes to be bought by first-time- buyers with a deferred payment) is extremely popular, it is consequently also drastically over-subscribed. This proposal allows the same principle to be extended into the private sector.

Ultimately, this funding will end up being recycled, as the government would be able to realise the value of the home either when it is sold by its original buyer, or when the original buyer is in a position to purchase the outstanding balance.

"We will increase the supply of new affordable homes and make more homes available for our key workers to secure our most important public services for the future."

Again, this ambition superficially appears to command universal political support. However, previous Assemblies have rejected opportunities to provide more affordable homes on government-owned land multiple times. Their words did not match their actions.

We can correct his mistake by:

- Requiring all homes built on publicly-owned land to be for first-time-buyers, social rental housing or downsizers;

The previous government provided guidance[4] to the States of Jersey Development Company to determine how they should contribute affordable housing as part of their wider programme of building homes. This came about as a result of the debates around the plans for homes on South Hill and the Waterfront. The guidance is that only a measly 15% should be guaranteed for affordable housing.

To use publicly-owned land for housing developments in which 85% of the homes delivered are unaffordable is completely unacceptable, and directly at odds with the apparent position of the current government.

- Introducing an Empty Property Tax.

The States Assembly has already agreed to a proposition from Deputy Tadier that options for a mechanism to bring vacant residential properties back into use should be presented. The Housing Minister is still preparing these options.

If just a proportion of the c.4,000 homes which were declared to be empty at the last census were brought back into permanent use, it could increase the supply of homes without expanding the footprint that our housing stock takes up and allow us to meet more of our housing needs without destroying more of our green spaces.

"We will improve the quality of rental accommodation and introduce more protection for private rental tenants, increasing security of tenure and fairness for both tenants and landlords."

This statement is the most contentious part of what is proposed for housing in the CSP. Whilst it states that it seeks fairness for tenants and landlords, the simple fact of the matter is that on many issues these two groups have interests which are irreconcilable. More protection and affordability for tenants will sometimes necessarily mean less flexibility and opportunity for landlords. The States Assembly will have to decide whose interests will take priority when those interests are not aligned.

Jersey does not provide anywhere near as many rights for private tenants as they do in countries such as Germany or Austria which have a more common culture of renting. Yet, Jersey has a proportion of renters to homeowners which is closer to those countries than it is the UK.

We can redress this balance by:

- Re-introducing  the  landlord  licensing  scheme  originally  proposed  by previous Environment and Housing Ministers

Various iterations of a landlord licensing scheme were brought to the Assembly during the last term. There was extensive consultation with stakeholders on this which had a direct impact in shaping the finer details of the proposition.

The States Assembly originally approved a proposition5 to request the Environment Minister to introduce this scheme, but then then U-turned when the regulations were proposed6. The debate was of a poor standard, where many members cited the lack of consultation to be their reason for opposing it, despite this claim being false.

The  implementation  of  this  scheme  would  provide  the  Environmental  Health Department with the tools they need to target bad landlords who are failing to keep their properties safe and habitable for their  tenants and crack down on illegal tenancy practices which are currently causing many Islanders to suffer in silence.

- Proposing a new Residential Tenancy Law to provide for European-style rent stabilisation and open-ended tenancies

5/assemblypropositions/2021/p.20-2021.pdf 6/Pages/Propositions.aspx?ref=P.33/2021

There is only one effective way to protect tenants from inflationary rent increases, and that is to ban them. Combined with the abolition of no-fault evictions and introduction of open-ended tenancies, these policies would see Jersey's rental protections much more closely resemble those which exist throughout Europe and enable private renters to enjoy their homes with security and affordability, whilst providing certainty for landlords.

These policies were advocated by the Housing Policy Development Board. In fact, similar policies are even being suggested by the UK Secretary of State for Housing, Michael Gove MP, in his A Fairer Private Rented Sector' white paper[5].

Work is already going on to construct a new Residential Tenancy Law. We will not know exactly what it contains or how tough it will be until it is published. Recent Housing Ministers have confirmed when pushed under questioning that this RTL will be based on the HPDB proposals but have been weak in proactively promoting this policy. This gives rise to doubt as to whether the final law will be robust enough.

- Moving to a means-tested system for calculating social housing rents

The States Assembly made a historic mistake in 2014 when it chose to introduce a new social housing rents system to peg rents to 90% of the market rate. This was done to provide Andium Homes with certainty on how they would fund their home building and renovations programmes, after decades of the States failing to invest in its housing stock. But the effect has been to put many tenants into rental stress and provide an unhelpful benchmark for private rents.

This system also means that social renters are subsidising the Treasury by around £10m a year, rather than the social housing system itself being subsidised, as social housing is meant to work.

At the start of 2022, Andium's rent system was altered to have rents charged at 80% of the market rate instead. This realignment provides an opportunity to take a more wholesale look at the rent system for wider reform.

The current Housing Minister stated this in his election manifesto -

"Whilst the cost of investment has to be covered, I question the rational that pegs public sector rents to the private rental market. As rents have become more unaffordable, the demands made on social security to plug the gap becomes ever greater. Taxpayers money is I believe inadvertently being used to support higher than necessary rental levels in the public sector. We urgently need to review this."

He is right.

- Implementing the recommendations of the Homelessness Strategy";

Finally, the Homelessness Strategy8 should be specifically referred to in the CSP. There have been numerous political statements made in support of this strategy. It should therefore be uncontroversial for it to be confirmed as a priority in this document.

Key Performance Indicators

The final page of the CSP lists measures by which their success can be judged.

One item listed is "Increase the % of Islanders who are very satisfied with their housing". This amendment seeks to remove that indicator as it is not tangible enough. Instead, we are proposing replacing it with ones which are much more tangible:

- Decrease the proportion of renters classed as living in rental stress'

- Reduce the numbers of homes left vacant without adequate excuse

- Increase the proportion of young adults who own their home

- Decrease  the  average  waiting  times  for those  listed  on  the  Affordable Housing Gateway for rehousing

Financial and manpower implications

There are no direct financial or manpower implications arising from this amendment. Any subsequent propositions that arise as a result of the ambitions sent out in this amendment will detail the financial and manpower implications then, which will be examined by States Members at the appropriate moment, before a final decision on whether to proceed or not is made.

8https://homelessness.je/wp-content/uploads/2022/09/Jersey-Homelessness-Strategy_January- 2022.pdf

This document constitutes our action plan to resolve Jersey's housing crisis. It will be delivered to senior government officers immediately upon the establishment of a Reform Jersey-led government, along with instructions that an emergency task force is to be established to oversee the implementation of this plan as a matter of urgency.

We will:

- Lower the threshold at which point private developers have to reserve a proportion of the homes they build to be sold to first-time-buyers and downsizers rather than buy-to-let investors

- Change planning rules to require all the homes built on publicly owned land to be for affordable housing, instead of being sold to investors

- Require the States of Jersey Development Company to review their proposals for developments on South Hill and the Waterfront to maximise the contribution of affordable homes delivered

- Introduce a right of first refusal for private tenants when their landlord decides to sell the home they live in, so the tenant has the first offer to buy it, and set up a fund to support them to purchase their homes through shared equity

- Release government-owned land to our affordable housing providers to increase their projected supply of new homes over the coming years

- Introduce European-style rent stabilisation' by banning inflationary rent increases and setting up a Rent Tribunal

- Improve long-term security for tenants by legislating to make tenancies open-ended by default

- Review moving to a means-tested system for setting social housing rents

- Introduce a landlord licensing scheme and regulation of letting agents, to secure basic health and safety standards across the rental sector and remove bad landlords from the market

- Tax homes which are left empty for too long, to get them back on the market

Housing is a human right. Everybody in Jersey should be supported to have a secure and affordable roof above their head, which gives them the stability they need to be able to thrive and enjoy a happy life.

By ensuring that everyone's housing needs are adequately met, our society will benefit on multiple levels. By relieving Islanders of the stress which is brought about by the unaffordability of housing, we will be supporting an improvement in mental health and wellbeing. By ensuring that children grow up in good quality homes which are secure, we will be supporting their developmental needs. Both of these things will further act as economic enablers, providing a happier and more productive workforce as well as stronger communities where people feel settled.

But right now, Jersey has a housing crisis. Our housing market works in the interests of investors, not for ordinary Islanders. Every House Price Index report published in recent years has shown that housing of all tenures has become more unaffordable.

We are seeing more and more young people leaving the Island, having lost hope that they will ever be able to own their own homes here. Business leaders are frequently speaking out about the impact the cost of housing has on recruitment. If these issues are not resolved, Jersey has a bleak future ahead of it.

Some commentators say that this is simply a problem of supply and demand', which could be resolved merely by increasing supply. This is the same flawed thinking which is largely to blame for the fact we have a crisis in the first place. Increasing the supply is only part of the solution. Resolving the crisis will require more intelligent government interventions where the market alone is not capable of meeting the public need.

The foundations for this Housing Crisis Action Plan can be found in the work of the Housing Policy Development Board, which Reform Jersey members served on. This board provided evidence-based recommendations after deep engagement with stakeholders and examination of policies used in other jurisdictions. Nothing in this plan is radical or untested.

As well as pledging to go further than any other party is proposing, we believe that Reform Jersey's record over the last term of office shows that only we can be trusted to have the courage to do what is necessary to resolve this crisis, including standing up to vested interests which have held back progress in recent years.

We will; expand homeownership, improve tenants' rights and work towards ending homelessness in Jersey.

With this plan, we are aiming to give Islanders hope that things will start getting better and convince those who are considering leaving Jersey that they can have a prosperous future here.

The government must take action to increase the opportunities for Islanders to get on the housing ladder.

Homeownership has fallen further out of reach for Islanders in recent years, including for those on above-average incomes. Whilst buy-to-let investment has proliferated due to low interest rates and easier access to mortgages for those who already own a home, many Islanders have been squeezed out of the market.

Andium's Home Buy' scheme (where homes are sold via shared equity to applicants through a means-tested gateway) is extremely popular but is unable to meet the current demand because of a lack of access to sites to build these homes. Despite this, the government has become part of the problem by using publicly-owned land to build expensive investment apartments, rather than affordable homes.

Reform Jersey will expand the number of homes provided for first-time-buyers and downsizers by requiring that all homes which are built on publicly-owned land must be for sale through shared equity, rented at a sub-market rate or provided as sheltered homes. This will include requiring the States of Jersey Development Company to withdraw its current proposals to develop on South Hill and the Waterfront, and reconsider how it can maximise the proportion of affordable homes on these sites. We will work with Andium to provide a pipeline of government-owned sites so they can increase their target for new homes from 3,000 to 5,000.

The release of more publicly-owned land for affordable housing will also reduce the increased pressure we have seen in recent years to rezone green fields for housing. We will also ensure that housing projects are considered alongside public service and infrastructure provision, to ensure that children living in newly built homes have safe and easy access to schools, and amenities are nearby to reduce pressure on traffic.

Reform Jersey will secure a greater provision of affordable homes from the private sector by revisiting the recently approved Bridging Island Plan document and amending the policy that requires that private developers reserve a proportion of the homes they build for exclusive access for first-time buyers, rather than investors, on large developments. This currently only affects developments of 50+ homes. We will lower this threshold.

Reform Jersey will introduce a right of first refusal' for private sector tenants when their landlords choose to sell the property. This will require the home to be offered at market rate to the tenant in the first instance to offer them the chance to buy it, before it is offered to another investor. This will also prevent investors from pre-emptively issuing notice to their tenants to leave their homes so they can sell the property as vacant possession'.

We will establish a fund (to be administered by Andium) to support young people to purchase homes through shared equity. Those homes will then become first-time-buyer homes in perpetuity.

The recent Census data revealed that last year there were 4,000 empty residential properties in Jersey. Whilst many of these would have been empty for legitimate reasons, those that are left empty without good reason are exacerbating the crisis. Reform Jersey will introduce an empty property tax, to incentivise those who leave properties empty for long periods of time without a reasonable excuse to put them back on the market.

Lastly, we will investigate ways to reduce the number of homes owned by foreign investors. During this term of office, future foreign buy-to-let was banned through the ending of new share transfer properties. But this does not affect older properties which were sold in this way. We must ensure that over the coming years, ownership of those homes is transferred to on-Island owners.

For those renting, either with the intention of renting long term or with the desire to buy their own home one day, the experience of renting must be improved to offer tenants security of tenure and affordability to enable them to live with a level of comfort equivalent to that of homeownership.

Legal protections for tenants in Jersey currently fall well short of that which is provided in nearby jurisdictions where there is a more common culture of renting. This has led to rampant rental inflation and many tenants refraining from complaining about their housing conditions in case they are subjected to a revenge eviction.

Reform Jersey will pass a new Residential Tenancy Law to establish open-ended tenancies as standard practice, where tenants can expect to enjoy long-term security in their homes, without the risk of being asked to leave at short notice for no reason. This will also include rent stabilisation' where rent increases are capped at either inflation or the rise in average earnings (whichever is lower). We will also establish a Rent Tribunal to adjudicate on rent disputes. These policies are commonplace in many parts of Europe which have succeeded in maintaining housing affordability in the rental sector. They will also provide long-term certainty for both tenants and landlords.

Reform Jersey will pass regulations to introduce a landlord licensing scheme, to ensure that all rental homes meet basic health and safety standards and provide support to landlords whose properties are at risk of falling beneath minimum standards through no fault of their own. These regulations have already been written and the Environmental Health Department stands ready to implement them, but they have been rejected by the current States Assembly in favour instead of a landlord's register', which would simply act as another bureaucratic system for data collection, rather than a tool to improve rental housing standards.

Reform Jersey will consult with letting agents and tenants to introduce a regulatory framework for letting agents to improve standards in the industry and prevent those with no experience or qualifications from entering the market.

Lastly, the restriction which prevent non-qualified residents from having access to the whole rental market is discriminatory and is putting increasing pressure on those residents who are restricted in their options for renting a home. When people move to Jersey in line with our population policy, they should be able to rent in all parts of the market.

Jersey must provide better support for those facing homelessness. The Jersey Homelessness Strategic Board identified many sensible recommendations which would help prevent people from becoming homeless in the first place and provide better support for those who do lose their homes.

The measures we have proposed to improve affordability and security in housing will help many avoid the circumstances which can lead to them becoming homeless. But we must put in place better support for those with vulnerabilities which see them risk losing their homes.

Reform Jersey will support expanding the government's Housing Advice Service to provide dedicated key workers who will bring together the relevant government services to support those facing homelessness and respond to crises when they occur.

Concerns have been raised about vulnerable people who are facing domestic violence but cannot leave their home because they do not possess housing qualifications and cannot find somewhere alternative to rent. In particular, this can have devastating consequences for children. Reform Jersey will support a new housing qualification which can be issued by social services in emergency circumstances, to assist those having to leave homes which are unsafe for them and their families.