Subsidy for key workers is impacting on rental market
THE local rental market is not as simple as black and white, the Guernsey Landlords Association chairman said.
Jeff Guilbert was speaking after official figures showed a near 5% increase in rents recorded over the three months to the end of June.
That put the current average monthly house rent in Guernsey at £1,864, which is up by 42.3% from this time in 2018, however is smaller than the 46% increase in the housing market recorded over the same period.
Mr Guilbert said this was largely due to legal procedures surrounding the majority of rentals.
‘Most have contracts with a lease in them meaning the prices can only increase by RPI, so they are restricted to a finite increase,’ he said.
‘We’re seeing such huge rises because there is a lack of properties in the island.’
Currently there are a number of non-local key workers who have been given a States subsidy of 20% on their rent as part of their relocation package to incentivise taking up important roles in Guernsey.
While Mr Guilbert admits it has achieved its purpose, he also believes it has played a big part in the sharp increase seen in rents.
‘There’s a knock-on effect where you will have five or so people chasing a property and willing to pay full price, but a key worker can come in and even up the price, as they will have the difference covered,’ he said.
‘At the end of the day landlords are running a business and it would take extreme moral fibre to not take the higher offer.’
He added that targeted fees were reducing the pool of landlords in a local market where demand was only getting higher.
‘The States have gone out of their way to add a 2% “second home tax” as well as making it so landlords have to pay 30% deposits on houses rather than 10% like everyone else,’ said Mr Guilbert.
‘It’s not all black and white when it comes to rent prices, the landlord has got to cover his mortgage somehow and a lot of the time the rental won’t come anywhere close to the borrowing.
‘There’s no encouragement to keep current landlords in what is a dying demographic, where many are selling up and trying to get out as quick as possible.’
