Department ‘not fit for purpose’
Monday 21st September 2009, 3:00PM BST.
Maintenance of States housing is said to have been ‘seriously underfunded for many years’
STATES housing has been underfunded for many years and upgrading homes to decent standards is impossible under the current system, according to a damning leaked report.
The Housing Department-commissioned report, which has not yet gone to ministers, says that the goal of getting more Islanders to own their own homes is unrealistic, and that the department is ‘not fit for purpose’.
It recommends that department should be broken up, and a new ‘arms length’ landlord be formed to run the existing stock of States housing.
The report by the Cambridge Centre for Housing and Research was delivered to the Housing Department at the end of June, but has not yet been published, despite promises that it would be released in July.
But a copy leaked to the JEP has shown that its key findings are critical about the way that the Housing Department is structured and funded.
• Full report in Monday’s Jersey Evening Post
I’m not surprised there’s no money to upgrade housing stock, rents are subsidised with many paying little if any rent,it’s a financial black hole. If market rate rents were charged and those applying for subsidised rent were properly means tested, there would be more money to upgrade the portfolio.
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So the report recommends an “arm’s length” landlord to manage the housing stock, and the provision of new stock (States housing) is left to private developers, usually to be integrated as part of a first-time buyer scheme. How does that make anything better? It is States housing and the States should take full responsibilty for its provision – eliminate the middle-man, reduce the costs.
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For years the housing department has failed to maintain its stock. Regular and proper maintenance would have saved the States a fortune.
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Its not the housing department that stops the rent, its income support that pays the housing department the rent.in most cases people top the rent up themselves.
The reason that its not financially viable to upgrade the housing stock is because of places like the Cedars, La Collette etc, estates that havent been touched for decades that are falling to pieces and the cost of doing the buildings up and making them so they are habitable again is costing housing a fortune. The Cedars has now been done, but if you drive around housing owned estates a vast majority of them are having to be done up due to housings lack of maintenance. There is damp, mould and parts of buildings falling down because they havent been cared for by the landlords, ie housing!
As for market rate rents being charged, the whole point of housing is it is for means tested people. We were means tested to move into our flat, because we couldnt afford standard market rate. If the market rate was reduced there wouldnt be so many people in housing! Its greed on the part of the private landlords that cause so many people to go into housing in the first place.
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House prices over here are extortionate anyway!! No one can afford to buy or even save for the deposit required due to such a high cost of living! First time buyers dont stand a cat in hells chance these days!! The states continue to build these tiny flats that you cant move in and placing them on the market at unbelievable prices, no wonder no one owns there own homes!! Its an absolute joke! I dont know how they are going to mend this one unless they cut house prices in half!! I seriously doubt they will elp at all, infact they will probably up the tax to cover the cost in changes!!
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As usual the States have had their heads in the sand while everyone else has marched merrily onwards.
Willie Eckerslike is correct in so far as there is too little money coming as very few tenants are actually paying market rates. This has forced the department to sell off some of its property to fund refurbishment projects. Clearly this is unsustainable so the States would have find some serious money to sort out this situation.
Unfortunately over the long term, States policies have led to a significant increase in house costs and this is not particularly due to greedy developers. These policies have artificially lowered the cost of states rental houses buyer homes and inflated the cost of first time buyer homes. The Jersey Homebuy scheme does the same thing. It gives a few lucky people the chance to buy a house while the costs of this are recovered by the developer by selling the remainder of his houses at a much higher price.
Over teh years these policies have meant that an average house now sells at about £460,000 while the maximum mortgage that can be obtained is about £250,000.
Unfortunately this means that unless you already have a big pot of money or wealthy parents you may never be able to buy your own home. Unfortunately the gap between the house cost and the mortgage gets bigger and bigger. The States need to come clean on this and start looking seriously at the economics before they come up with their next hair brained policy.
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the cash that should of maintained housing stock.
has being flowing into private landlords pockets for years, so very little in the kitty to do much.
housing have done very well in the past years with the refurb programme, with the resources that they have .
i agree with you (2)(puzzled again)
i find the housing department fit for purpose, but in need of a few tweeks.
hope the public get to see a copy of the report
then we could draw so more informed conclusions
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Whilst agreeing with some comments about subsidised rents this does NOT apply to all tenants and the problem has always been that this department like ALL States departments is “penny wise pound foolish” and is never likely to change!
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Terry le Main has been the housing minister for a very long time so this must mean that he is also “Not fit for purpose”
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Rent rebate is one of the most widely abused parts of the benefit system and should never have been introduced.
The money should have gone to those who needed it the most. The system is widely abused and once again it is the people who suffer in silence and follow the rules that suffer the most.
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Once again ALL states tenants are put in the same pot and spoken about as if we are the arm-pit of Jersey society. I pay soc.sec, market rent and tax like a lot of states tenants but it is the few that scam the system that cause the problems which is not specific just to Jersey or even just to the housing situation. I would much rather be a home owner than any kind of tenant, lets hope I win a lotto of some sort so that I can be like some of you arrogant and lucky people who have posted some of these comments!
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Quite agree with 10. Rent rebate, which costs some 40 million a year is one of the worst things introduced. It is money taken off mid earning tax payers and put straight into the pockets of wealthy people, some of whom own in excess of 100 properties. In addition, it inflates the cost of property by making it a worthwhile investment.
If this was removed rents and house prices would fall
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States housing is really “SOCIAL” housing, and is necessary for those who cannot afford the rents in the private sector.
However, subsidized housing, reinforced by the present benefits system tends to encourage economic “inactivity” and States dependency. So perhaps the cost of unemployment benefits and States housing should be considered together.
States housing should be predicated upon life-long occupation (tenancy passing from parent to child) with the right-to-buy.
It takes the low-income group about a decade of paid employment to save a deposit for a house, so if States tenants pay a relatively low rent during this period they can save the required amount. The States should encourage tenants (whose circumstances have improved during this period, to move into the private sector by providing them with a parent-to-child/heir mortgage scheme.
However, if tenants decide to stay in the subsidized sector, they should be allowed to buy via a “tailored” mortgage with the obvious selling limitations.
This system would reduce the risk of States “dependency”, free many States places after only 10 years and give the low-income group the opportunity of owning a property. It would also provide direct funds for more housing and reduce maintenance costs.
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Mick #9. Too true. Does the Housing Minister reflect the view of his civil servants or vica vera, who can tell. Either way Terry Le Main should go, now.
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Completely agree allowing long term tenants to buy at a reduced cost reflecting the rent already paid is a great idea, works brilliantly in the UK.
It also encourages people to take better care of their houses and environment as well as passing on the maintenance burden to the individual, why is this policy not adopted?
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being president of housing,”is this a poison chalice i see before me “.
this is my take on being the guy at the top of this department .
it must be the worst commitee to be on” dammed if you do and dammed if you dont”
and is not for the thin skinned.
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Not renowned for being coy to say the least,How come Terry Le Main thinks he can get away with a “No Comment” call when asked by the media…..A man who usually can not be shut up suddenly has nothing to say………sure makes you wonder.and reflects badly on his possible successor.
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The time is right for the states to take responsibility for their stock of accommodation and ensure that it is maintained and repaired. After that they need to allow the privately owned section of society to improve upon their stock without being hounded and held back by the planning department.
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How many states departments are fit for purpose?
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The rent rebate scheme was a terrible idea. The concept was that as there wasn’t enough States housing this would save housing building some new stock and encourage landlords to rent to less well off people. It neither reduced the rents in the private sector or saved Housing money as they just ended up forking out more and more to the scheme. In the end they had little to spend on refurbishing old States housing and spent what they did have in the kitty on building new stock that was shoddy, not built to last and is costing an arm and a leg to practically rebuild now. Basically it is a history of total incompetence, pennywise and pound foolish.
Is the recommended approach in the above report right for Jersey? No – all that’s needed is a new broom and a lot of commonsense – probably not going to happen until after the next elections. Time for States tenants to get out and vote!
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Reduce the rents a bit and make the tenants responsible for some light maintenance, It might give them some incentive to look after the properties they have the privileged to live in
One only has to compare the condition of the privately owned houses/flat built at Les Quenavais in the early 60s to those states rentals built at the same time, if they have not been demolished due to being uneconomical to repair..
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Reference #20 remarks about Rent Rebate, I agree that this was a terrible idea, and dates back to the days when Jersey had money flowing out of its ears, and it was easy to chuck money at the problem, rather than address the underlying issue, this being a shortage of suitable housing.
Consideration to scrapping the Rent Rebate scheme should be a priority, as this would have the effect of reducing rents in the Private sector, allowing thouse States tenants who can afford it to move into the Private Sector, thus freeing up states rental properties for thouse who are really in need.
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Sorry,must come in again,The rent rebate was for the bankers and landlords and had nothing to do with helping tenants,the power players wanted the property bonanza to explode and with steady prices it could not…up went the rents and hey presto they all went up as the landlords had wanted ,and so pleasing the bankers who would loan more based on the rentals being easily achieved.we sol;d ourselves out and had nothing left to build proper places with and so got the rubbish which is now in bad shape.Answer: A Firm and proper RENT CONTROL TRIBUNAL.with teeth…but the boys in the banks and at the lodge would fight it tooth and nail…the answer is always within reach….but will the bullet ever be bitten…? not unless we all make it known and insist upon it.
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Rents are high in Jersey due to property prices being high. Property prices are high because Jersey is densely populated and many of the population are relatively well off due to finance.
I have a lot of sympathy when people on this forum complain about monopolies overcharging them but there are hundreds of private landlords in the island. The rent they charge is determined by market forces.
#11 Gail: re your paying ‘market rent’, a recent report from the auditor general stated that States’ housing charge 25 per cent less than market rent. This is without taking into account income support top up. States tenants are subsidised by the rest of the population and this distorts an already complex picture.
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Its not just this department that isn’t fit for purpose as far as I am concerned. The whole lot is a shambles.
Rents should be reduced by the States they need to stop landlords making as much money. Paying them to house tenants is a recipe for disaster in my opinion. All it is doing is transfering money from our taxes into private landlords pockets who may be paying little tax themselves due to use of tax avoidance schemes.
People should be encouraged to buy their own properties to do away with needing landlords as much as possible. Why rent and throw one’s money away when people could be buying an asset to hedge against future financial insecurity?
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#25 Adrian: I’m going to regret asking this but here goes. I’d like you to give an example of a ‘tax avoidance scheme’ that allows private landlords to avoid paying tax on rental income from a Jersey property.
I’ve asked a simple question. Will you provide a simple answer?
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Michael are you saying that all companies/landlords, whether local or overseas, that own and rent out property out over here get no allowances to set against rental income and therefore pay 20% on all rental income?
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M Neal.. a property holding company…..?
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Re #25 – Adrian, as a landlord, I am allowed to offset expenses such as insurance, loan interest and repairs, like any business does. I do however pay tax on my income after expenses, like any other business person. Are you really saying that I should pay 20% tax on the gross rent ? That is not how business works, my freind !
Incidentally, my tenant is very happy with the arrangement. He is a very good tenant, looks after the property, and pays the rent on time, to a point that I do not have to pay a managing agent, which would be a tax deductable expense.
The result is that as a good tenant, he enjoys a discount on the properties current market value, my property is in safe hands, and we all sleep happy !
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Interestingly, I was reading today that commercial rents (I haven’t checked on residential ones) in the UK had dropped in the last year, as one would expect in a recession.
Can anyone explain why so many places in Jersey have increased theirs? In some cases increasing them by 80%
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On the subject of so called Greedy Landlords not paying tax, how many Jersey residents have in the past taken in lodgers, collect the rent in cash on a Friday and not declared the income ?
The case I am aware of, the couple basically renovated their house with undeclared income from lodgers.
In response to #30′s enquiry, re UK residential rents, Central London i.e. Kensington/Holland Park have dropped back by 15% – The properties which I am involved in are in the £1,500 to £2,000 PER WEEK sector though
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#27 Adrian
Local and non-local companies, and non-resident individuals, pay tax at 20 per cent on rental income with no allowances. As #29 Private Landlord states, this is payable on rent net of deductible expenses, eg mortgage interest payments, utility bills paid by the landlord, etc.
Locals receive the usual personal allowances, which I understand from other threads you claim, but receive no additional allowances because they rent out property. Again, certain expenses are deducted for tax purposes.
To repeat my question, can you provide me with an example of the kind of tax avoidance scheme you describe.
#28 Vicki
I don’t understand the point you’re making. All companies, where local or non-local, pay tax at 20 per cent on rental income.
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Michael as I have stated before it would be better to get rid of tax allowances and tax income as is. This would stop tax avoidance would it not and the multitude of grey areas?
As per private landlords they get the internal part of their property looked after free of charge. They also can claim for repairs and maintenance of their property which is not available to owner/occupiers. They can also claim mortgage interest against income. Owner occupiers are capped at £300,000 are private landlords also capped as well? I have also been led to believe that mortgage relief for owner/occupiers will be phased out.
Tenants pay rent which they can’t claim against tax whereas someone paying maybe less out on a mortgage can claim for mortgage interest. Tenant income can then be used by the landlord to pay the mortgage which gets a tax allowance.
I am also led to believe that things like cars and petrol could be claimed as well. Has this practice been stopped yet?
I view anything that reduces tax liability as a tax avoidance scheme.
As per 1.1k’s what happens if they have a property portfolio are they exempt as their tax is set each year?
As per UK holding companies for property aren’t they subject to 0-10 or have I missed something?
Private landlord yes I am saying landlords should pay tax on income without allowances. Why shouldn’t they?
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#33 Adrian
Private landlords are running a business. The criterion for expenses being deductible for tax purposes is that they are wholly and exclusively for the purposes of the trade. All expenses that relate to renting the property are therefore allowable, including interest paid on mortgages greater than £300k. They are not allowances. You appear to be suggesting that businesses should pay tax on their turnover rather than on their profits!
Re cars and petrol, these would not be allowed because they fail the ‘wholly and exclusively’ test mentioned above.
Re 1(1)(k)s, it depends on their individual arrangements. However, the current 1(1)(k) agreement demands that tax is paid at 20 per cent on all Jersey-source income, so rental income received from Jersey property would be taxed.
Re Zero/ten, this applies to trading companies not companies that receive income from property. Such income is taxed at 20 per cent.
Re private landlords not receiving allowances, the personal allowance is received by everyone. Are you saying private landlords should be the only ones excluded?
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To answer my own question, your only examples of tax avoidance schemes used by ‘private landlords…who may be paying little tax themselves’ are the allowances claimed by Jersey-resident private individuals (allowances that are available to everyone and that you have stated in the past that you claim) and the expenses deducted from turnover that meet the ‘wholly and exclusively’ test.
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I wonder if there should be criteria for the quality of tenants in states housing. It seems to me that some are not worthy of any sort of social housing. You only have to walk the perimeter of Grasett park to see a property that would be more worthy of being situated in Beirut than Jersey.
When tenants seem to have a deliberate intention to ruin their environment of for those around them why should they be in subsidised housing being supported by the tax payer. Why do these people feel that they do not need to show respect to others.
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Deputy Sean Power is looking into protection for tenants in the private sector. A large hotel owner who owns many properties came on the radio demanding that private landlords ( 5 or less ) should spend a fortune on fire systems, certification etc etc well he would would’nt he. Check how much rent he charges but sit down while you are doing so.
The point being I know a single lady (divorsed) who rents out one room to make ends meet and to help to pay for her kids needs. Dad is long gone the authorities would have to give her more benefits, but she likes to be as independant as possible,and saving the taxpayer money.
Thank god for the good small private landlords,who do need the money and are keener.
Casual labour would not be coming to Jersey to work if they had to pay the rates that some of the commercial big landlords charge.
Davey.
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