Site cost scarcity fuels high prices

Build cost can be similar to UK, or anywhere else for that matter, if enough homes are built at the same time – allowing for best procurement of materials and labour, either locally or more likely from overseas.

It is the site cost that has produced scarcity and thus high price. Guernsey has a substantial number of wealthy residents (local as well as immigrant) that have chosen to invest in property, generating demand and raising prices. This has been ‘enhanced’ by overseas investors, non-Guernsey residents, jumping-in on the profits to be made. Even the most dilapidated buildings in the island and most difficult parts of St Peter Port have been bought and refurbished.

The only way for government to reduce site cost is either to build upwards – putting many more homes on a small area, splitting the site cost, or to introduce a ‘leasehold’ scheme that would spread the capital sum for a site over say a 25-year period. Such a scheme would require safeguards to prevent profiteering.

Of course, the assumption that the only way to live is by joining the home-owning ladder might be misplaced. Throughout Europe, private owned rental housing has been a stalwart for residents and investors alike. There rent rates have been controlled by adequate space for competition. Not possible in a small island.

Local rents could be simply controlled by the States preventing landlords from charging more than property maintenance plus a reasonable mark-up of that, say 10%, for rent. Repayment of capital investment (purchase and restoration or new build) would be left to the natural inflation of property over time. The practice of buying property to rent with a loan or mortgage and expecting the tenant to pay off the full cost should be stopped. This might result in a short period of negative equity for some, but all would balance out in time.

It has never been easy to house Guernsey’s population. In the Victorian era immigrant workers lived in the most appalling housing and their demand lowered standards for locals too. Since the end of the First World War, in just over 100 years, the population’s housing has been changed from family communities that included three or four generations in one building, or from overcrowded slums with totally inadequate facilities, to beautifully built and furnished homes for small families, but more often single people. We now average 2.5 people per home.

Without a major economic disaster causing a mass exodus, Guernsey will continue to enjoy prosperity and have to be more dynamic about providing housing for its residents.

ROY BISSON