Using public money for private homes ‘would be an own goal’

Senior politicians with responsibility for housing were horrified by a call this week from one deputy for the States to look again at using public money to fund private housebuilding and home ownership.

Sasha Kazantseva-Miller wants the States to consider modern versions of subsidy schemes it ran for most of the 20th century which helped thousands of islanders onto the housing ladder.

But Environment & Infrastructure president Lindsay de Sausmarez said reviving taxpayer-funded subsidies would be ‘an own goal’ and Employment & Social Security president Peter Roffey was opposed to ‘squandering public money’ on the idea.

‘Further fuelling demand when housing is still in short supply would have a very negative impact,’ said Deputy de Sausmarez.

‘Interventions which inject money into the purchasing side of the equation have an inflationary effect on the market and make homes even more expensive.’

The States’ last major subsidy scheme for private homeowners was scrapped in 2009.

Since then, the average purchase price has increased three times faster than average earnings, leaving Guernsey with the least affordable housing in Western Europe.

Deputy Roffey urged the States to focus on alleviating the worsening crisis by increasing supply of housing rather than ‘aggravating the situation’ by boosting demand for it.

‘Where there are 10 potential buyers for every eight or nine properties on the market, one is effectively in an auction situation,’ he said.

‘Trying to help by providing the bidders with States' cash does not make house purchase more affordable but rather fuels inflation in house prices.

‘A far better approach is to focus on bringing supply and demand into closer equilibrium.’

Deputy Roffey bought his first home with a States loan and was ‘deeply sad’ when the States closed its final subsidy scheme, which had enabled home ownership of about 4,000 homes across the island.

He was still uncertain about whether it was wise to close the scheme, but rejected calls to turn back the clock.

‘Recreating a meaningful loan fund now from scratch would take absolutely massive investment,’ he said.

‘The sums involved are such that if the same amount was instead spent on actually building homes we could get a far bigger bang for our buck.’

The States has agreed that the island will need nearly 1,600 additional homes by 2027, but last year only 94 were built.

Deputy Roffey said his committee was doing its best to accelerate the construction of social housing – including an expansion of the partial ownership sector – within the constraints of money, land and planning policies.

Deputy de Sausmarez said she understood that ‘younger generations face a whole host of housing challenges’ and that buying their own home had become ‘an unrealistic aspiration for so many’. She insisted that her committee’s Guernsey Housing Plan could assist if given time to work.

‘Deputy Kazantseva-Miller might be pleasantly surprised to know that we are working on the kinds of things she suggests around the States playing a more direct role,’ she said.

‘For example, we are already progressing joint ventures, with several housing sites being developed jointly between the public and private sector, and that’s proving to be really successful.

‘We are also looking at establishing a delivery vehicle so that the States could play a more direct role in the development of housing, plus we’re examining the suitability of modern methods of construction specifically in the Guernsey context.

‘These interventions are all designed to accelerate the supply of new homes.’

• More information about the Guernsey Housing Plan is available online at gov.gg/GuernseyHousingPlan.