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If something is 'affordable', it's priced reasonably, and you have enough money to buy it... The adjective 'affordable' can either mean 'cheap' or it can imply that, even if it's expensive, you have enough money to easily buy it.
As Statistics Jersey has helpfully proven beyond all reasonable doubt this week, there is a crisis in the provision of affordable housing both to rent and buy. Housing in the islands is neither 'cheap' or easily available to 'buy' or 'rent'!
The Jersey Government appears to be wedded to the idea that the ‘market’ should determine and inform its economic policies. Only recently we heard Housing Minister Russell Labey discuss the challenges he faces trying to tackle the problems of affordability in housing.
The main social housing providers are required to use a percentage of market rate in order to set rents thus making the term ‘affordable’ an utterly pointless term!
Just a cursory read through of the recent housing affordability survey by Statistics Jersey confirms the failure of the Government of Jersey to provide affordable housing over decades blindingly obvious despite the protestations of some members of the Council of Ministers as recently reported!
The cost of living, including high rents and soaring housing prices, is already resulting in people moving away from the island or choosing not to come. This is leading to the problems of staff shortages in key areas in the island's workforce, not least in Health and Social Care.
Pictured: The cost of living is making people leave the island.
So, what will those considering or already committed to stand for election in June 2022 be offering up as a solution to the housing crisis?
So often, Gov.je looks to the UK for answers - however, Boris Johnson’s government and its immediate predecessors introduced a number of housing policies, with 'Help to Buy' the most hyped. This claimed to help younger lower income households get access to home ownership. The most popular among the various Help to Buy offers has been the Equity Loan scheme. This provides a loan for up to 20% of the house value (or inside London, up to 40%) to buy new build properties. Buyers of such properties also do not pay interest for the first five years after purchase.
The intention may have been to help would-be buyers to overcome their credit constraints, but the effective outcome according to leading experts is this policy has pushed house prices up further, without any measurable impact on construction, in those markets that are least affordable and where the productive jobs are concentrated – such as Greater London.
The trouble is that in these markets, housing supply is extremely unresponsive, so when the government stimulates housing demand, this only makes existing houses even dearer, making existing homeowners better off.
Pictured: Policies are making existing homeowners better off... but what about everyone else?
And, of course, there is one other group that benefits: the policy helped to push up the profits of developers registered in the Help to Buy business. While Help to Buy did increase construction in more remote areas where it is easier to build, these were not the places abundant in good jobs. The ultimate outcome is that young would-be buyers are even more ‘priced out’.
The current housing model – one in which renters effectively pay the mortgage for private landlords – must also be addressed. In the context of rising price-levels, property accumulation through buying to let can increase wealth inequality, sometimes allowing older generations to capture even more housing wealth. Changes to discourage buy-to-let mortgages must be a priority.
Reform of the rental market to improve security for tenants would allow renters to live more like stewards rather than slaves of the property investors. Again this has only recently been rejected by the government.
From a policy perspective it has been reported that , economies which are more successful at managing housing effectively can be described as taking a stewardship approach.
At a household level, there is an opportunity for example, by intergenerational cooperation. Many first-time buyers can only often afford a deposit if the ‘Bank of Mum and Dad’ can help.
Pictured: Many first-time buyers can only often afford a deposit if the ‘Bank of Mum and Dad’ can help.
However, there is scope to develop a culture in which more sources of non-bank finance become available.
Shared equity arrangements, involving multiple purchasers, may be possible within an extended family. Zero-interest loans, especially within families, churches and local communities, may also be a positive option, particularly when utilised to allow multi-generation families and extended families to co-locate.
Some churches are also landowners and they could become property developers offering housing using a whole new model of qualification based on family income affordability rather than the current non-affordable market rate.
Housing is not just about physical houses: it is about homes, and Jersey is in the midst of a housing crisis that requires imaginative thinking by a panel of experts in order to influence government policy, because clearly the current government has no answers to address the crisis other than its obsession with the market determining how it reacts if at all!
Pictured: Zero-interest loans from community groups and churches could be considered.
Alas, an assembly overwhelmingly populated by landowners and landlords cannot be expected to ignore self interest. Many of our current crop of politicians have done extremely well out of the property market and continue to do so!
So then, who will tackle this major crisis post-election June 2022? And perhaps more importantly who has the courage to do so?
