By Colin Lever
BACK in the day, factory owners built better, affordable houses for their workers because they knew they had to in order to keep their workforce. It was not philanthropy – it was pragmatism. If Jersey wants to maintain a talented, working population, it must do likewise.
There appears to be a blind acceptance that rents and housing costs are higher in Jersey because the Island is “more expensive” than elsewhere. We are told that it is a simple case of cause and effect, one of lack of supply and increased demand.
But Jersey is not alone in seeing rents and house prices spiralling upwards. It is happening in the UK, in Germany, Poland, Eastern Europe, Australia – almost everywhere around the world.
We get that it has become a seller’s market, and that building more should temper any excess, but this does not happen, or at least certainly not in Jersey.
The logic is flawed because the set-up is flawed. It is biased because the open market is skewed to favour those with deeper pockets. Basic economics says that if you control the product, you control the supply and the price. Those with more spending power buy more, hoovering up properties, often buying them unseen. Private equity has moved into the housing market as it offers a good return on investments. This, in turn, stymies supply which bumps up demand, keeping prices at a premium that many Islanders struggle to afford.
Over the years Jersey’s government has been complicit in this sell-off. New builds only had to have 15% that were affordable, leaving 85% for open market sales. Now they have split this 50:50.
Of the 45,000 properties available, Andium, the States-owned housing association, only has a 10% share of total housing rentals – 65% are owned by private equity. Without a definitive register of landlords, it is impossible to know how many of these are owned by large equity firms but with rents and houses on Jersey commanding a high price, one can be certain that the number is considerable.
There is no need for rents to be so high. Andium set their mark at 80% of the private rents. The figure is an arbitrary one based on estimated cost of outlays. Yet in 2024, they returned a profit of around £28 million to the States. A not-for-profit company should be re-investing its income, lowering the headline figure in respect of affordability.
The government once controlled house sales but that was circumvented by the ability of individuals and companies to buy via share transfer, which still operates.
Having numerous equity firms established in Jersey means that they get direct access to local property. They even give their employees favourable mortgage rates and rent subsidies. Compare that with mortgages given to non-employees, which are set at 1% above that in the UK. When house prices rise, rents tend to rise with them – yet when house prices fall, rents do not follow suit.
Since a peak in 2022, average price of housing has fallen by 14%, according to Statistics Jersey, yet rents have remained largely unchanged. Private equity and vested interests seek to keep rents at a premium.
The government could do more to control rental prices. It should consider restricting or even stopping buy-to-let schemes.
If private landlords choose to leave the market, this will open opportunities for the government to add to its social housing portfolio and further control rents.
With over 700 properties lying empty, Andium could add to its collection without the expense of having to build from new, in order to increase supply for locals.
Until the government steps in to implement housing control measures, the cost of rents and houses will continue to impact Islanders, especially the young.
In the debate on housing prices, estate agents are rarely mentioned. Many of them are also property developers and landlords themselves. They have a vested interest in keeping house prices and rents at a premium, turning a profit, which is usually between 1%-2% of the market value.
There is a concern that the estate agent business is not properly regulated. The gross operating surplus for real estate on Jersey was £714 million. This is only surpassed by finance and is almost as much as the gross operating surplus of all other Island businesses put together.
Selling houses and property in Jersey is a lucrative business. We have no information on what the economic multiplier is for estate agents. We should be asking:
- To what extent do estate agents contribute to community wealth building?
- How much of their capital do they re-invest locally?
- Do they support other local businesses? If so, to what extent?
- Do they support local art, culture and events? If so, to what extent?
Estate agents are a powerful lobbying force when it comes to influencing government on housing, as is shown in the debate over the cost of stamp duty. One UK-based company is not only a house builder and property developer, it is also an estate agent and is offering “deals” on buy-to-let properties.
Here is the how the government could go about plugging the leaks:
Nominal cost
- List of all landlords and number of properties they own/rent.
- Stop selling to off-island companies and individuals.
- Limit the number of properties one person/company can buy/own.
- Remove discounts for those working in finance, etc.
- Match mortgage rates to those of the UK.
- Restrict buy-to-let.
Larger investment
- Refurbish and buy all 700 vacant properties.
- Commit 5% of States pension funds to social housing.
- Increase the number of social housing stock to over 50%.
- Build more affordable housing.
Obstacles
- Vested interests keeping rents and housing prices at a premium.
In respect of community wealth building, if the Island increased its locally grown produce it would:
- Reduce cost of living with respect to rents/mortgage.
- Increase household spending power to use in local retail.
- Reduce debt burden and improve mental wellbeing.
- Support local SMEs – small and medium-sized enterprises – within construction.
Colin Lever is a retired teacher and education specialist, SEND consultant, and commentator on educational and community issues. He also contributes musically to Repair Cafés and charity events and is currently writing and producing a comedy sitcom podcast
