Amendments to the Jersey Homebuy scheme enabling young Jersey families to gain access to the housing market

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WRITTEN QUESTION TO THE MINISTER FOR HOUSING BY DEPUTY G.P. SOUTHERN OF ST. HELIER

ANSWER TO BE TABLED ON TUESDAY 2nd DECEMBER 2008

Question

In the light of the results in the latest House Price Index which show the price of a 3-bed house at £540,000, annual house price inflation of 21% but the volume of sales one third lower than the long-term average, what steps is the Minister taking to ensure that young Jersey families can gain access to the market?

In particular, will he undertake to:

1. am  end the Jersey Homebuyscheme;
2. a d dress the availability ofmortgages following the withdrawalof Jersey HomeLoans from the market, including the feasibility ofrenewed States involvement similar to the old States LoanScheme
3. b ringdown the ratio ofhouse prices overaverageearnings, now standingat a factor of16

and work with the Minister for Treasury and Resources to:

1. f u rt her amend stamp duty levels;
2. re s tore the level ofmortgageinterest tax relief, andto index ittohouseprice inflation;
3. s u spend the "20 means20" implementation phasing out such relief?

Furthermore what measures, if any, are under consideration to assist those who wish to downsize following retirement to release larger family houses onto the market, in accordance with the Housing Strategy?

Answer

The average house prices reported recently are of course averages and to use the 3 bedroom example in the question will be made up from the prices of all 3 bedroom houses sold during the period but importantly excludes those in the first time buyer only category. The numbers of first time buyer homes transacting is relatively low in comparison to the overall market and statistics on these are only produced by the Statistics unit on an annual basis. Statistics for 2008 will not be available until February next year, however, some recent price comparisons provided by a firm of local chartered surveyors has suggested that recent transactions of new first time buyer 3 bedroom houses have been at prices of £420,000 - £440,000. That said, these prices are still too high, particularly given the present and almost unprecedented financial climate in which the World finds itself. Making first time buyer homes affordable is therefore one of our major challenges.

In relation to Deputy Southern 's specific questions:-

1. I will belookingtomakesomechanges to Jersey HomebuyandmyDepartment has been indetailed discussions with lenders and developers in this regard. These negotiations are not yet complete. The first phaseofHomebuy homes will not inanycasebe available until the NewYear. I will ensure that Members of this house are advised of the changesas soon as I amin a positionto confirm what they will be.
2. Reintroducing the States loan scheme would in my view be a retrograde stepandwould require massive and unsustainable States funding. It would involve government in somethingwhich the marketis far better placed to provide. In any casesuch a step is whollyunnecessary. Despite rumours to the contrary lenders are still lending and with interest rates at historically low levels borrowing money is still relatively inexpensive. Whilst it is the case that lenders have tightened their lending criteria, ourongoingdiscussions with them has demonstrated a real willingness to lend particularly on those affordable housingschemes such as Homebuy and the Housing Department's own scheme to sell rental homes to tenants. The

Economic  Development  Minister  has  commissioned  a  mortgage  market  review  and  we  should  await  those

findings before deciding that it is necessary to make significant changes to the Jersey mortgage market.

3. Asmentioned earlier, the figures presented in the question relate to the nonfirsttimebuyer market.  In actual fact a realistic price at presentfor a 3 bedroom first time buyerhomeis approximately £430,000 sometimesless,andon this basis represents twelve and a half timesaverageincome. House pricesat such high multiplesof average income are a productof past house price growth associated with a high levelof demand in the market.  It isthedevelopmentofHomebuywhich will bring down theseratio'sconsiderably.

Deputy Southern has asked what else can be done and has highlighted three particular suggestions.  Later today we will debate the first of these as part of proposed amendments to the Business Plan which include a proposal to remove the payment of stamp duty for those purchasing a home through one of the shared equity schemes approved by this House.

As Housing Minister, I have vigorously pressed for affordable housing policies to be at the heart of government policy,  and  with  my  colleagues,  in  particular  the  Ministers  for  Treasury  and  Resources,  Planning  and Environment, and Economic Development, have delivered on policies which include shared equity, a sizeable expansion in planned life-long homes, improvements in social housing, and in response to the recent market changes, a review of mortgage finance in Jersey.  This approach shall continue in the context of rapid market change and an overall fiscal policy response on which the Fiscal Policy Panel will no doubt advise.

Finally, turning to the final part of the question in relation to meeting the aspiration of those wishing to down size in the owner occupied market.  This is something that I have been keen to pursue with the Planning Minister and the house will recall that a number of sites were approved for rezoning earlier this year.  4 of these sites are proposed for life-long homes as follows:-

With regard to the further provision of life long homes, the latest Housing Needs Survey identified a total 5 year shortfall of up to 400 life-long (over 55's) homes. These rezoned sites will go some way to addressing that shortfall, however the Island Plan will need to continue to make further future provision to meet the demands of the Island's ageing population.  Bringing forward sites for rezoning is of course in the remit of the Planning Minister rather than mine, however, the Planning Minister and I enjoy a good working relationship and he can always rely on my unwavering support in his efforts to bring forward sites for housing.