Property lawyer raises concerns over housing boom

Friday 16 April 2021

A top property lawyer has expressed concerns around the consequences of a recent housing boom which has seen islanders buying property at a rapid rate, saying that subsequent soaring prices could see young islanders and families leaving.

Philip Syvret, Head of Benest & Syvret’s property team, has said that the “impact” that the uptick has had on supply, and subsequently prices, is something the island needs to urgently tackle.

Mr Syvret expressed that the last 12 months have been “the busiest of the 25 years” since he has been in the property market, with Benest and Syvret alone dealing with more than £110m in property transactions in terms of worth of gross sale and purchase values during 2020. 

On why there had been such a rapid increase during a pandemic, he credited the way in which the covid outbreak has forced people to spend more time in their homes, both in their work lives and leisure time.

“Everyone’s focused on their living space, and as a consequence the demand for residential change has increased dramatically,” he said. 

“As a result of that are looking for office space within their homes, proper useable working space, people want to have open space, garden space which perhaps they didn’t have, even down to exercising.”

Pictured: Mr Syvret said that factors of the pandemic, such as working from home, had made people focus more on their living spaces. 

He added that new lenders into the market has also helped, alongside interest rates that go as low as 1.4%, relatively small deposits, and stability in those interest rates.

“The arrival of Santander has shaken things up a little bit,” he said. “They’re being very progressive in their lending terms – so we’re seeing people able to afford based on those who’ve retained their incomes, and are able to afford and be in the marketplace.”

However, he warned that this sudden burst of buying has led to a scarcity of properties on the market now, which in the long term, could have big ramifications for first-time buyers.

“You see flyers from the estate agents - ‘Can we come value your property, do you know how much your property is worth?’ -  because they’re desperate for stock,” he said.

“A lack of supply almost becomes self-perpetuating because people don’t put their property on the market unless they think they can find something that they’re going to like. 

“So their property doesn’t come onto the market, and the chains that are needed to be able to move on are not being created.”

Pictured: Mr Syvret expressed how house prices will continue to rise if the lack of supply in housing is not addressed.

He pointed out that with increased demand and little supply, comes an inflation of prices too - and, in Mr Syvret’s eyes, it is the younger generation of families who will be most impacted if action is not taken to halt this.

“We have invested as a community in educating these people, and making them valuable contributing members of the community,” he said. 

“Yet we’re not making a proper planned provision for their housing, so that they can have reasonable expectations of being housed on this island in order to contribute to our community and pay back all of the investment that we’ve made in them.” 

Giving an example, he said: “People that you've invested in are not able to meet their perfectly reasonable aspirations of owning a simple home, because three-bedroom houses, even on sites limited to first time buyers, are now sailing way beyond the £700,000 mark. 

“By the time you’ve paid your stamp duty and you’ve made a little bit of investment in property to make it your own, you’re looking at three quarters of a million pounds."

Pictured: "“People that you've invested in are not able to meet their perfectly reasonable aspirations of owning a simple home."

He continued: “If you then translate that into an ability to borrow, to access the reasonable rate, the best rates in the market – you still need to come up with a deposit of £150,000 for 20% of a £750,000 property.

“You’re asking a young couple, bringing up their first baby, renting… to save £150,000 for a first time buyer three-bedroom property – my goodness, that’s an ask.”

On how to address the issue, Mr Syvret called on the Government to take action, saying that the new interim Island Plan “can’t come quick enough.”

“Fixing supply or limiting demand is something that Government’s got to step in and deal with,” he explained, highlighting in particular the need to rezone previously restricted areas, to enable construction of a range of homes around the island, not just one-bedroom apartments St Helier. 

“We don’t want to see green sites built over in swathes to produce first time buyer housing, but equally we can’t simply say that every family forevermore is going to be city dweller in a one bedroom flat in St Helier."

His other point was that an immigration plan is key, saying the Government has "got a responsibility in terms of addressing demand, and that comes with the immigration policy that has been proposed and set aside for so long, that they’ve now really got to address.

Acknowledging it was a "difficult" task, he outlined a strategy which would be "about work permits and making sure that the people that the people who are coming to the island and buying properties are those that the island needs."

The Government's approach to its migration policy was recently called out in a report by the Migration and Population Review Panel as having a lack of detail, with the panel citing a need to balance stable migration with quality of life for islanders already in Jersey.

“We have, over a long period of time, become more reliant on a migrant workforce to fill these gaps, and this will continue to be the case but we need to find a way to make sure that this doesn’t come at the cost of a lower quality of life for those already living and working here," Senator Steve Pallett said in the report.

Mr Syvret expressed similar sentiments in relation to the housing market, highlighting the urgency to address these issues: "Planning, immigration and proper structuring by joined up thinking by Government is going to be so important; they’ve got to get on with it, because the consequences of not dealing with it are now bringing real effect on the market."

He added: "If we allow this market to run without those new adjustments coming in shortly, we’re going to see this problem escalate."

Concerns about increased prices for housing have become a hot topic of the conversation on the island in recent weeks, following ex-Housing Minister Senator Sam Mézec's demands for a report he claims has been "gathering dust" for six months from the Housing Policy Development Board to be published, which informed his recent proposition to declare an official 'Housing Crisis' in Jersey.