‘Guernsey doesn’t need 300 new homes a year’
GUERNSEY’s housing needs are considerably lower than the States’ current targets, according to a long-awaited market review.
The housing market review, conducted by KPMG, concludes that between 486 and 783 additional local market units are required by the end of 2021 to meet the island’s demand for housing.
The current States target is to approve planning permission for 300 new dwellings per year, which Environment & Infrastructure president Deputy Barry Brehaut said was met regularly.
‘[However] in practice the States has no control regarding whether the homes are subsequently built by developers,’ he said following publication of the review.
Employment & Social Security president Deputy Michelle Le Clerc said the report’s findings would inform the development of new housing policy, which the committee is working on with E&I.
According to KPMG, only 146 to 209 new affordable housing units are required – just 40 to 50 per year.
There have been 458 units of affordable and supported housing introduced to the market since 2010.
KPMG said the development of Guernsey Housing Association properties since its inception has significantly reduced the level of outstanding demand for affordable housing.
The firm’s primary recommendations involve encouraging more first-time buyers and opening up the marketplace to new lenders.
KPMG said the States should look into removing document duty and bond fees for first-time buyers.
‘A flexible measure to stimulate the FTB [first-time buyer] market might be to remove document duty for that group,’ it states.
‘In contrast to some HTB [help to buy] schemes there is no ongoing commitment of government capital, is likely easier to administer and is not dependent upon support from the banking sector.
‘Given FTBs will have to fund a full deposit, there is less risk of negative equity should house prices fall.’
It also advises working with the GHA to develop a secondary partial ownership scheme that incentivises stair-casing 100% ownership over a defined period
KPMG said one of the other major problems in the current marketplace was the lack of competition in the lending market and restrictedion lending capacity.
‘Our analysis shows that in 2016, Guernsey reached a highly concentrated position of lenders,’ it states. ‘Concentration on a few lenders has led to increased systemic risk in the market and concentration risk to the active lenders. If one of the existing main lenders exited there would be significant pressure on the remaining lenders which, if not resolved, might risk a decline in credit availability and subsequent transaction volumes.
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The firm concludes that it is ‘important to increase and diversify the availability of mortgage credit in Guernsey’.
‘This could be achieved through increased lending from the wider population of existing lenders as well as attracting new mortgage providers. Our analysis suggests that an additional £20m of credit from new lenders, or those operating at a lower market share, is the minimum amount needed to move away from a highly concentrated marketplace of lenders.’
The States has been advised to approach potential new lenders to better understand their appetite for lending and their needs to operate successfully in Guernsey
In addition, KPMG also recommends applying planning conditions that encourage first home developments and providing more reduced-rent housing units for ‘key workers, such as nurses and teachers’.
The report cost almost £100,000 and was due to be released originally in April.
Guernsey’s total housing stock has increased from 24,175 units in 2010 to 25,310 in 2016.
Owner-occupied properties have remained at approximately 15,000 units over this period, while the number of rental properties has risen by 897 to 6,982 units.
The proportion of owner-occupied properties has reduced to 60% of total stock from 62% in 2010.
