Heading for dire straits

WE URGENTLY need to talk about housing.

As everyone will know, this a huge problem for Guernsey and an accessible and well-functioning local property market is key to being able to keep families and skilled individuals in the island. It is also essential for attracting the people we need to come and work here.

In terms of rental property, the lack of availability is shocking. We currently can’t even adequately house those who are already contributing by working in key roles and making tax and social security contributions, and we risk losing these people in the medium term.

Every now and again I take a look at the local market rental properties on our estate agents’ websites. Currently there is next to nothing available, no matter your budget.

It is widely known that reasonably-priced properties fly off the shelves before many have had time to even spot the listings and this is putting an excessive amount of pressure on many islanders.

The restrictions that many landlords put in place to avoid having to house children and pets are hugely problematic. I have a good friend who has struggled to find accommodation with her small, well-behaved dog and know of at least one family with young children who are struggling to find a secure long-term rental that works for them, relying instead on holiday lets and other short-term arrangements with the added cost and stress that comes along with that. I know from talking to others that my friends are not alone and that this is a common issue across the island. There are others living in appalling conditions in shared houses and other poorly maintained accommodation who have no choice but to tolerate it.

The UK government announced last week that it is introducing the Renters’ (Reform) Bill which, among other things, will abolish a landlord’s right to action ‘no fault’ evictions and give tenants more security when raising concerns. It will also give all tenants the right to request to keep a pet in the property and the landlord will not be able to unreasonably refuse this request. An owner can however request that some form of insurance is paid for by the tenant, which sounds pretty reasonable to me. Critically, it will also bring forward legislation to make it illegal for landlords and agents to have blanket bans on renting to tenants in receipt of benefits or tenants with children. Conversely, the bill also increases protection for landlords, making it easier to evict tenants who are not paying the rent, behaving in an anti-social manner or who have damaged the property.

There is huge demand for rental property here right now as a result of a growing population, a shortage of working age people to fill local jobs and high interest rates putting people off buying homes, for example. Legislation takes time to draft and implement, yet there are things we can do now to improve this dire situation.

A voluntary code for landlords and tenants could be drafted by a representative group of agents, landlords and tenants to address the most common issues of security of tenure as well as families and those with pets being unable to find homes. A collaborative approach could also address poorly behaving tenants as bad experiences can understandably discourage landlords from renting out property in the future. Agreements could be worked out on best approaches to increases in rent and creative solutions for families priced out of the market in the short term. Not all landlords need income in the same way and deferring payments for some tenants could be a good solution in some cases, for example. Landlords keen to sell in the medium term could propose arrangements with interested tenants to sell properties to them at a future date when mortgages are more accessible to them and at reduced cost, taking into account rent received over time. This already happens informally and works well for both parties in these cases. Tenants who improve properties over time could be given an option to buy these or receive a credit back for these contributions at a later date if that suits the landlord. The more creatively we think about this, the more we will find outcomes that protect all parties, maintain our local properties and give locals choices about how and where they live. This will also make being a landlord an interesting and more sustainable option for more islanders.

We should also provide support for those who are currently sitting on empty properties which could be let out but are not, as they require renovation or else the owner just does not have the time nor appetite to become a landlord. Letting go of a property in any way can often be emotionally challenging, so providing support to those who need this could help everyone involved. We need to be making best use of the properties we already have and helping each other to settle where we can. Incentivising people to put properties on the rental market would be well worth our while.

With interest rates at their highest level for 15 years, many people have no choice but to delay a house purchase until mortgages become more affordable and accessible again. Without innovation in the mortgage market (which is achievable here with a bit of creativity and vision) many are either permanently excluded from buying a home or else will need to wait a long time before this again becomes an option for them. Introducing longer term loans and better approaches to how we assess affordability – how much you can afford to pay each month – will help. High rents for those who do find a home are preventing these people from saving for a deposit too.

For most people, a mortgage is most expensive when you first take it out. Over time, these payments, as a result of inflation, increased earnings and other factors, become a smaller portion of your income. What if we made this a more flexible journey? Why not introduce products with lower initial payments which increase annually in line with earnings and can be readjusted to a standard model at any time when the customer feels they can afford it? These would enable families and those just starting out to be able to balance their budgets at an expensive time, while also knowing they have a secure home for the future.

If the States considered allowing document duty to be paid in instalments or deferred until a first home on the island is sold and a second one purchased this would remove some of the barriers for first-time buyers. Lower deposit mortgages or mortgages with additional secured ‘deposit loans’ in some cases could be considered too.

We currently penalise working parents with young children by lending them less as they are paying expensive nursery fees. In a market such as we have here in Guernsey, that means many have to delay buying the house they need for their family until children are much older, which is madness.

There are also issues here with older properties in need of renovation – these can often only be bought in cash, yet many younger people who need mortgages are exactly the people with the interest and energy to take on these projects and improve properties over time. Innovative lending products that take this into account would ensure quicker sales for many older islanders selling their homes and would increase supply.

Government has an important role to play in influencing and supporting the housing market but I don’t think landlords, agents and lenders need formal legislation here to start making positive changes.