Law "significant hurdle" to reducing JDC buy-to-let investors

Thursday 15 July 2021

Jersey’s taxpayer-backed development company would like the law changed to allow it to sell more properties to people who will live in them.

Currently, the Jersey Development Company is legally obliged to sell enough properties off-plan, before construction starts, to fund the first phase of that scheme.

This, it says, caters for buy-to-let investors – meaning that there are fewer owner-occupiers and first-time buyers in its developments, such as Horizon on the Waterfront.

JDC Managing Director Lee Henry told a Scrutiny hearing this week that the “pre-sale” condition enshrined in the 2010 law that established the company was a “significant hurdle”. 

He said: “We are assessing the level of pre-sale that we require, in order for us to commit to construction projects. Under P.73/ 2010 that established JDC, that hurdle is very high - certainly higher than the commercial market would expect. 

Pictured: JDC Managing Director Lee Henry.

“If that were to be reduced, there is an opportunity for JDC to refocus solely on first-time buyers, in terms of the pre-sale component. 

“We could also support ‘right-sizing’, with the last Census of 2011 identifying that 41% of owner-occupiers in Jersey are under occupying by two or more bedrooms.”

Mr Henry said that this “significant hurdle” had led to 50% of its 280-apartment Horizon development currently being built on the Waterfront being sold to investors, although he stressed only four of these were not based in Jersey.

“Looking to the future, we are promoting a focus on owner-occupation and first-time buyer, and indeed, down-sizers, and so, if there was a revision on the level of pre-sale, we could then ensure that we focus on owner-occupiers only,” he said. 

“Given the low-interest environment that we’re in, the buy-to-let opportunities provide islanders with a greater return than they’ll otherwise receive in the bank.

Pictured: Half of the 280 units at Horizon on the Waterfront have been sold to buy-to-let investors.

“When we are releasing these units for sale there aren’t sufficient owner-occupiers to achieve our level of pre-sale but during the build period there would be more owner-occupiers coming onto the market, so it is a question of reassessing the pre-sale hurdle and JDC focussing on owner-occupier in the first instance, and only when the development is complete, if there are any units remaining, the buy-to-let investors would be given an opportunity to purchase.”

Mr Henry added that its South Hill development – a plan to build around 150 low-carbon apartments on the site of the former Planning Office – would be sold by flying-freehold rather than share transfer, meaning that only locally qualified residents could buy there. 

Former Housing Minister Sam Mézec is asking the States to back his plan to ensure no homes built on the publicly owned land will be sold to buy-to-let investors and the maximum possible will be “affordable”.

JDC is hoping to submit a planning application for the development later this year.