Housing policy committee heads warn over short-term measures
INTERVENING with short-term measures such as a help-to-buy scheme would risk an inflationary effect on the housing market, according to the committees in charge of housing policy.
Employment & Social Security president Michelle Le Clerc and Environment & Infrastructure president Barry Brehaut were speaking following the release of the KPMG housing market review.
The report makes a series of recommendations, such as removing document duty for first-time buyers, more reduced-rent housing units for key workers and opening up the marketplace to new lenders.
However, it advised against any form of help-to-buy or deposit scheme.
‘I think it is quite frightening when you think that we were lending 15 times income and we are still lending at 13 times income,’ said Deputy Le Clerc.
‘I think that is quite a startling fact that comes out of this report. Another thing we do have to be very careful about is a help-to-buy scheme, which has had an inflationary effect on the market in the UK. We have seen some settlement in the market, prices have come down, and the last thing we need is to see them increase rapidly by us intervening with a scheme that is not going to be of long-term benefit to the island. That is one of the things we had to understand and we needed to have an independent report to say it was correct.’
Deputy Brehaut said ‘land-banking’, where developers do not act on planning permission to develop a site, is an issue.
Although he personally felt there was a role for covenants, he said there had not been an appetite for this among States members in the past.
‘The report touches on some developments being aimed at the luxury end of the market, when what we need is smaller units on the affordable side and also on the owner-occupied side.’
The current States target is to approve planning permission for 300 new dwellings per year, however KPMG concluded that a maximum of 783 additional housing units are required by 2021.
Deputy Brehaut said the review would act as a foundation upon which future policy will be developed. However, he said that fluctuations in the housing market, and the time elapsed since such a review was first approved two years ago, did have to be factored in.
‘If you view the housing market as a rollercoaster, when it is in a trough everyone wants to understand why we got there,’ he said. ‘But when you are back again on the rise and you are at the top, people aren’t interested in historical dips.
‘This report was commissioned while the housing market was flat, but actually the housing market has pushed up since it has been written, so I think it is a fair observation. The only real correction for the housing market is for prices to drop and wages to rise – and that is not a reality.
‘The report gives a clear steer in some areas – for example, zoning land for first-time buyers, which will always present a challenge as that land is at a premium. We have struggled historically with the definition of key workers and this should be considered.’
Deputy Le Clerc added: ‘I think there are some nuggets in here for us to explore and develop, especially the suggestions for first time buyers and over-55s. We have to remember we have an ageing demographic with some people living in unsuitable accommodation.’
‘These are all good keystones for work that needs to be carried out in the future,’ said Deputy Brehaut.
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