Discount deal for new homes
Friday 18th June 2010, 3:00PM BST.
Hundreds of Islanders could benefit from a new housing discount deal
HUNDREDS of Island families are going to be given States help to get onto the housing ladder under radical proposals to increase the number of affordable homes.
In a joint statement, Environment Minister Freddie Cohen and Housing Minister Sean Power said that developers would be made to build homes that could be sold off by Housing at a 35 per cent discount.
The discount would be made possible thanks to States subsidies which would be repayable when the house was sold.
The ministers hope that the homes could be sold for £250,000 to £275,000.
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Great, wish I’d known before I spent £490,000 on my house, will this now be de valued?
I want a Ferrari but can’t afford one any chance of a 35% states subsidy. For all those people who worked hard and went without for years to scrape enough together to buy a house – serves you right, should have pi**ed it away and waited for the states to bail you out.
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does’nt that already exist where 1st time buyers own 60% and the State 40%
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A 35% stimulus package for developers!
Short-sighted. The reason prices are so high is the lack of available land for building. Increasing demand with subsidies will do nothing but drive up the price of whatever land is available.
Great for developers with a land back. Not so good for house buyers and the tax payer.
We need more land or fewer people. Ministers Cohen and Power need to do better than spend money the tax payer no longer has.
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“Hundreds of Island families”
Why is it just families who get a helping hand, what about couples with no children who are responsible enough not to get knocked up before being able to provide a suitable home, my partner and I work hard and have bought an apartment and would love to be able to afford to buy a house and start a family but unlike a lot of Jersey people we will wait to start a family until we can afford to.
Why do the states keep rewarding the irresponsible people who have children without being able to afford them!
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EXCELLENT IDEA…..maintain high values by getting the rest of us (taxpayers) to subsidise somebody else’s house purchase???
Keeps the market fueled and stoked and prices in the stratosphere.
Doesn’t address the land cost issue – which results in a 1st time buyer house being £450k (not ‘developer greed’ as many think).
The developere’s won’t be ‘made’ to do this – they’ll do it happily as they’re still getting £400k-£450k for a rabbit hutch.
Everyone’s a winner!
C’mon the States – dictate the land value when rezoning under the Island Plan. It’s ever so simple and effective and the maths is surprisingly logical:
£50k land
£150k build cost (1200 ft2 3-bed house)
£25k pro rata associated costs per house
= £225k house
Sell for £275k and make £50k profit @ a 22% return.
BRING THE LAND COST DOWN.
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Now Dandara can stay in Jersey and build those 35 per cent reduction homes for the moaners.
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Surely a subsidy of any sort goes, partly at least, towards boosting the developer’s profits??
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This is a great idea for some people who would not otherwise be able to get a toe on the property ladder but it is really just another case of treating a symtom and not the disease. Housing prices are totally unrealistic in Jersey. 1 bedroom flats with parking are now on the market at 250K and that is at a time when there are huge numbers of flats available. Unfortunately most people want a house not a flat which means that houses that are available are overpriced in the extreme.
Jersey is, or was, for me a wonderful place to live but the quality of life vanished when the struggle to survive took over.
I am currently in the process of buying a detached 3 bed with garage, parking for 6 cars and 1800 sqare meters of garden for the princely sum of 156K including fees. Yes you guessed, I now live in France where life is lived as it was in Jersey in the 60s and 70s.
Am I ever tempted to return? NO!
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People just don’t get it!
All these subsidies will do is artificially maintain the high property prices.
The developer will still get their inflated prices that the market could no longer sustain if there was no state intervention. It is just the SOJ will be paying upto 35% of this inflated price instead of the purchaser.
If Sen Ozouf truly believes in free-market economics he will vote against this and allow the market to dictate the true value of the property. Prices are stable/reducing at present because there is a lack of people being able to get mortgages etc so the result will be lower prices to make the properties economically viable in the present climate.
These subsidies will be “nice” for the new home owners but at the cost of distorting the true value of the property market. In the end ALL people wanting to move/purchase will lose out and the developers will be laughing all the way to the bank having sold their properties for vastly over inflated prices and pocketing a VERY big mark up thanks to SOJ.
And Freddie wants to know why a portion of the public believe his relationship with some developers is “unhealthy!!”
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Yes it may seem unfair to those of us that have saved and bought a full price house (myself included) but to get a house with today’s prices is incredibly difficult. Couples and/or families need help if they are not on really high salaries. Why should owning your own home (after many years of paying a large mortgage) be something just for the well off?? Let’s be a bit positive about something that’s being planned to help the less well off in this island eh?
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Could not have said it better myself BR!
Well done
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i thought there was a deficit? so why is taxpayer money being used to subsidise the housing market?
you should be subsidising those on low incomes. what is the argument put forward by Cohen and Power for this crazy scheme?
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BR @ 4
Excellent post!!
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10. Wayne
The only sensible comment on here, and remember the deal is the difference has to be paid back when sold. If the States request 35% back and not the £ discounted then the tax payer will benefit if the house price increases.
The problem in Jersey is that as the prices are high so are the deposits required by banks. If you live on the average wage or below and are renting then you have no chance of saving 10-20% deposit (Unless you were born with parents who pay for everything). As the rents are out of control how can anyone have spare cash to save?
Those that moan about this scheme are more than likely the ones earning above average wages and can afford (or have mommy and daddy to help) to purchase a house.
The States and the developers need a scheme for first time buyers to keep the housing market a float.
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I am just amazed at how many people seem to think that it is their right to own a house. It is not an entitlement and people should not expect to have a subsidy.
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about time there was something for families. It will empty out some states housing.
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To the moaners.
No First Time Buyers…. No Housing Market.
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If you think that we should not help first time buyers then read this statement from a recent report in a paper.
” The last decade has seen the ratio of house prices increase much faster than incomes. The effect of this is that many first time buyers struggle to buy. The effect of this is particularly felt in areas like London and the South East. The shortage of affordable housing has caused a shortage of key public sector workers, such as; teachers, nurses and policemen. This is having an adverse effect on local economies. Councils are increasingly look to immigration to fill shortages of nursing. Thus a fall in house prices, or an extended period of flat house prices, would enable the house price to earnings ratio to become better.”
The report was made sometime ago….sounds a bit like Jersey.
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I don’t agree with subsidising the price of houses and especially not for families only. As a couple who have chosen not to have children we already pay an increased tax burden to support those that have kids who ironically pay less tax even thought they take more from the system( education, healthcare ) we are also 2nd class when we shop at the supermarket as those with kids get the best parking.
If this scheme is to be itnroduced ( and I would prefer my tax not be used for this purpose) then it should be for anyone who wants to buy a house, not just families.
The problem is people want to drink, smoke, drive nice cars and have 2 holidays a year and still expect to buy their own house.
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“that developers would be made to build homes” – thus guaranteeing that the quality will be even worse than those currently being built !!!
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so the states is going to take money from taxpayers and give it to private companies to be paid back (hopefully) by people who cannot afford to pay market prices.
intelligent?
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#5 Puzzled, again…
Don’t know where you get your figures from as a more realistic return for 1st time buyers houses, after 3 -5 years of negotiation, planning and building is around the 20 – 25% mark. Not sure what the AER is for that, but it is not excessive.
Plus, despite what the JEP says on page 1 about “State’s subsidies”, there is no State’s subsidy. They just get the share of the profit when the houses resell. On page 2 it says the correct “developers… will be required to deliver homes at a significant discount”. This is what happens now anyway. Risk free for the States and they get a pat on the back for being the good guys for a change.
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5.Puzzled again…..Spot on…could you be persuaded to stand in 2011.
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The problem here is the land prices. No developer can build for that price if the land values remain the same.
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These are homes for life – because if you only have 65% of the sale proceeds you will never be able to move up the housing ladder.
You may own the home, and be resonsible for all maintenance, but don’t ever consider moving if you buy one.
Good investment for the taxpayer – 35% equity with no ongoing maintenance bills and the benefit of any owner improvements. Very shrewd Sean / Freddie.
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How does this reconcile with proposed cuts in school milk, lifeguards etc?
House prices are determined by supply and demand Housing subsidies will boost prices, which means that money goes from taxpayers to developers and existing property owners.
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This is bizarre.
Where is the money coming from and how can Planning and Housing invest millions taking an equity risk on the Jersey property market when the States as a whole are running a deficit that requires structured cuts over the next three years of 10% and tax rises?
Sadly the CoM is not right or left wing, it is just bonkers and the left hand does not know what the right hand is doing!
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Jersey’s housing market does not require further ‘stoking’ by the States, it is already being boosted by the numerous Estate Agents who are talking up the market. Proof? Why are so many small properties on the market ‘wearing’ up to three Agents Boards.
Time was when the lower end of the market worked by word of mouth and smaller properties sold themselves at their true value. There is a small property near me with two agents boards outside and open viewings most Saturdays, and still it remains on the market !
How to value a house ? Obtain an up to date reinstatement value for insurance purposes, which doe include professional fees, and add the value of the land – And that is what it is worth!
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Why is it always 3 bedroomed homes for families. There are singles and couples out there with no children who cannot afford a decent sized apartment with parking. Why can’t the States incorporate decent sized two bedroomed or even one bedroomed maisonettes into their scheme?
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This is good news, I’ve just obtain my qualies and now I’m being offered a discount to get a Jersey gaff which is mine for eternity. can this be used by my family as a holiday home in the summer? yes presumably!
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As soon as J-cats were allowed to buy or rent property in the island house prices soared. This was largely due rich A-H cats buying properties to rent to them. As more and more J-cat licences are being given out, in order to boost the economy, I wonder what the States have put in place to stop this happening again when the market picks. Nothing I imagine!
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Great, I’ll be able to have a £250,000 debt hanging around my neck for the next 25 years!
I don’t see what the fuss is all about, as I never want to have that amount of debt to worry about paying off thanks very much!
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#4, 11, 13, 19, 29 Well said!
The word ‘family’ should include couples who do not have any children. I am not part of my partner’s family and he is not part of mine (even though we are treated as such), we are a new family in our own right.
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Julie comment 32
Great, I’ll be able to have a £250,000 debt hanging around my neck for the next 25 years!
I don’t see what the fuss is all about, as I never want to have that amount of debt to worry about paying off thanks very much!
You’ll pay that and more unless you are living on the street. Everyone pays a mortgage, only difference is it’s either yours or your landlords.
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Louise asked
“Why is it always 3 bedroomed homes for families. There are singles and couples out there with no children..?”
People with kids are easier to screw money out of. Many singles and childfree couples are tightwads like me and the old man.
Politicians need families. They are easier to control.
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I agree with post 10 and 14 – at the end of the day this scheme is setup to enable people to get their foot on the housing ladder. There are a lot of people earning sufficient salaries to obtain a mortgage, however struggle if they have children as for the first five years paying £1000per month upwards for childcare is a massive hit off your wage packet.
The problem with the Jersey Homebuy scheme is that the figures do not add up as:-
1. the properties can only be purchased by a couple with a child
2. the couple have to be earning a joint salary of £40 – £60k per annum (no more)
3. you need a 10% deposit on the property based on full market value to get the banks to lend (approx £45 – 50k)
4. the purchaser/s need to be first time buyers
Seriously, there are very little people that qualify as it is unrealistic to expect a family earning less that £60,000 per year, with a child (if under 5 paying £1000+ per month for childcare) – where is there room to save the massive deposit required? The only way to do this is if you have owned share transfer before (as you still qualify as a FTB), you have inherited funds, or you have parents that have sufficient cash and are willing to pay it for you.,,.. that is few and far between!
If people do have the funds then it is a great opportunity! These schemes are likely to be taken up by young families who cannot afford a mortgage for £500,000 (you can only borrow about £300k a year on a joint salary of £60k and that reduces further if you have children). These families may live in these houses forever, they may sell them on and use the equity they’ve created during the time at the house and go on to purchase a property worth £500,000+ once career progression has kicked in and children get older. Then people wont be moaning, as these people would not have made it on to the property ladder at all if they did not have this opportunity! This would result in more people that live in States Housing, the maintenance of which is borne by the tax payer so what is the problem?!
At the end of the day, the States are likely to make money when these houses are sold on as no doubt the value of the house will increase and I imagine there will also be opportunity to purchase further %’s of the house at current market value! Surely this is quite easy money for the States rather than a negative!
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If subsididies have to be made, they should be made to everyone, children or not.It is difficult to pay high mortgage costs if you have young children, but one would hope that people planned their future and would not embark on having a family if they were unable to pay the massive costs involved. Sad but true. I know of many people who would love to have children but simply can’t afford to and did not see why the state should have to pay for them to be able to support them. Again, sad but true.
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Pip Clement (27) how can Planning and Housing invest millions taking an equity risk on the Jersey property market
Pip. This is the mega takeover deal from Housing. A controlling stake in ‘social housing’ and the dominant player in ‘domestic housing’, with the collateral being the inflated values against which the loans are secured.
Between themselves Cohen and Power must be seeking to outdo the twisted logic of the 2008 ‘global credit crunch’. Come on Treasury Minister Philip Ozouf , you said ‘cuts’ not ‘blank cheque’.
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I still don’t understand why people willingly put themselves into so much debt, especially these days, when no-one is guaranteed a job for life and you can never forecast what may happen in the future i.e. accidents or illness!
I know from past experience what can happen when you can’t afford to pay the mortgage and your home is repossessed, so I would tell most people not to do it, as it is a traumatic experience!
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I agree with 4 and 29.
Where is the help for single people or couples who would like to get on to the ladder but can’t
afford to ? Not everybody is fortunate enough to have parents who can lend a helping hand!
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I agree Julie #39. If you can’t afford something don’t buy it…applies to everything really.
I bought a house in Jersey five yrs ago as a single person on a low salary but only because I had saved every penny for 25 yrs (and was helped by high interest rates) and could put down a huge deposit, aided by the fact that I put in 60 hrs a week, drove old bangers, didn’t drink, smoke etc etc. Boring to some maybe but if you must buy a house in Jersey then its what you have to do. To those who complain of house prices whilst on combined salaries of 60,000 plus, then its learning to live within your means you need.
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No 39 Julie, so are so right. And the richer people are the more debt they often put themselves in because there is a naivete that it simply won’t happen to them.
I should explain that these houses are available to childfree people but only the 2-bed ones. Now given that a new 2-bed house will have bedrooms that counted together are only fractionally bigger than many current bedrooms in 1-bed houses, I don’t see how any couple could fit in one. Current 1-bed houses are not big enough for couples, when you add in another person to the equation another properly-sized room is needed, whether they sleep in it or not. And of course you will be living in an area with a disproportionate number of young families, so if that’s not your idea of a quiet life…
Anyway, my partner and I need a 3-bed (not 3-box) house because office rent has got so high that it is idiotic to continue to rent an office when we could move it into our house.
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If ‘Hundreds of families’ are going to get subsidies of around £140,000 each, where is the money coming from? (see other thread – another 50Million needs to be raised by taxes)
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Julie 39 –
I still don’t understand why people willingly put themselves into so much debt
I know from past experience what can happen when you can’t afford to pay the mortgage and your home is repossessed, so I would tell most people not to do it, as it is a traumatic experience!
Julie you have to live somewhere and you have to pay for it,you can either rent or buy but either way you will pay. If you buy then at the end of the term of the mortgage the property is yours and you will own an asset worth at today’s prices half a million pounds, you will also live for free from that point on.
If you rent then you continue to pay a cost that increases year on year and never ends, you own nothing. If you take two 25 year olds, one buys one rents similiar properties, over their lifetime the renter would pay more and not own an asset worth half a million pounds.
If the worst happens the home owner can sell their asset and still be left with a sum of money, they would still both need somewhere to live.
Like Mulvie says, everyone pays a mortgage, either theirs or someone elses.
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I understand that I still have to pay rent every month, but at least I don’t have any extra expenses on top, such as maintenance costs, as my landlord is responsible for these.
I will never be able to buy a property here in Jersey, unless I win the lottery!
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If Jersey is to retain its character then, in my view, there is very little space left for new 3 bedroom houses.
There are plenty of empty flats and I am all in favour of developing town into a vibrant urban centre. All new development should be in town.
Green spaces are precious and we need to manage both the population and development so that we do not end up with a surburban island. If the outcome of that is that many people who would like to live in houses with gardens live in apartments then that is a price worth paying. As others have commented, there is no absolute right to own a house with a garden. And if you live in Jersey you have access to the cliffs, the beaches and miles of unspoilt lanes.
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if we all get slapped with more gst and higher taxes and social, we can kiss it all goodbye.
that” boat out in the morning” , may be full.
the “for sale” board maker , may well retire early on the exodus.
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9 Paul
I agree totally.
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I can not understand all this snobbery attached to owning your own house. If you take out a mortgage the bank owns the house.
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49 Toastedteacakes –
I can not understand all this snobbery attached to owning your own house. If you take out a mortgage the bank owns the house.
Not sure there’s any snobbery attached to it, just common sense. If you can afford to buy a house you have an appreciating asset, everyone needs somewhere to live so you gotta pay for accommodation anyway, might as well own it and have an asset worth a lot of money that you can liquidate if you choose. Yes the bank owns it until the term of the mortgage is complete but then it’s yours. Those who rent just continue to pay an ever increasing cost that never ends.
C’mon people it’s not complicated, if you can afford to buy you’d be mad not to, there is no downside. I bought 8 years ago and am now paying less on my mortgage to own a 3 bedroom semi than I would to rent it, and I’ve made £250,000 on the house, if I sold it tomorrow I’d walk away with £250K – still think renting is better?
I suppose I’ll now be accused of bragging or being a snob, I consider it a prudent use of resources, I worked hard in 2 jobs, saved hard and went without and am now reaping the rewards.
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This would appear to be a bailout for Dandara for all those unsold houses they have built.
I think we need to know why our government is bailing out this Irish building company
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If the answer is “more cheaply built low quality houses on green land” then I would suggest the wrong question is being asked.
While I disagree with most of “the vile blog” I would like to see a full, transparent investigation of the planning process in Jersey. The coincidence of huge profits and terrible planning decisions raises suspicions in many minds.
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#49 In some ways I agree, it used to be fine to rent all your life and it would be nice if it could be like that again.
People who rent are having to put their trust in someone they sometimes don’t even know. Given such a “money money” society how easy is it to trust in a landlord? Of course you also may not be allowed to make your rented house a home by decorating it.
There is a lot of psychological security in a mortgage, no worries about how extortionate your rent will be when you’re in your 80s! Given the choice I would definitely go with the mortgage nowadays, although in previous eras I may well have been happy renting.
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#46 Roger, of course the States could consider ways of managing population levels! There are alternatives to just building and building. The building won’t ever stop after all unless we tackle the population issue.
It’s all very well talking about cliffs, beaches and unspoilt lanes, but people need their own space not just public space. In the sticks you get your nice room sizes AND your garden, in town you get neither!
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Robert Foster your comment ‘I will walk away with 250 thousand pounds’. You are just in time to take up the 35 per cent reduction house cost offered by the States of Jersey. You can buy yourself another house.
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Robert Foster – you are very fortunate to be in that position, but there are lots of people living here in Jersey who don’t have well paid secure jobs and are struggling to be able to afford to pay their bills and ordinary everyday items, which will only get even more difficult now they are planning on raising GST!
I have no hope of ever being able to afford to buy a property and I’m fed up with people telling me how great owning a property is, when it is impossible for me to ever do so!
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No32 D’OH!
The sum you mentioned works out approx £833 per month (cheaper than States top rent for a 3 bed house) plus interest on top so what approx £1300 per month, plus maintenance (which is hardly a lot, you also get house insurance which pays for the unexpected things)
No, it’s definitely not worth getting a mortgage is it??
The glass is half full dear…
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The trouble is that “starter homes” are always rabbit hutches and as soon as the purchasers get a chance they sell them off which keeps the prices going up. Senator Cohen and Deputy Power should be building “homes for life” which would help keep prices more stable.
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53 Leah your comment as to what your rent will be when you are 80 years old. Quite honestly, if you own your own house you will be more concerned that it will be sold from under your nose to pay for your elderly care.
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Rent rebate went straight into landlords pockets,then indirectly to builders,developers and money lenders,the tenant of course is no better off as the rents are artificially hiked up….this same principle applies to subsidized house purchase,artificially hiking up prices…..
The rent control tribunal used to be able to rectify overcharging…and the States Loan was structured to act as a brake on prices…Things were fairer and folks were under less pressure….but the fly boys have been at work…and all in all the ordinary person loses…again.You vote them in and mostly you do it by not voting..by not voting you are actually voting loud and clear to be controlled.
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BR at No. 4.
Well if you want kids that much like my Wife and I did your only option is to move from Jersey to another country. Ireland is very nice!
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#59 Of course Toasted, but since I don’t have any children to leave an inheritance to I don’t have any great objection to selling my house to pay for care in a home (if I need to go into a home). I would have a problem paying extortionate rent though with only a pension.
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62. Leah your comment ‘I won’t have any objection to selling my home to pay for my old age care’. What if your husband/partner has an objection. He too will need somewhere to live.
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all we will need is unbroken employment per couple to pay for the house, for the duration of the mortgage.
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Hello..
If things sound too good to be true they usually are..
I am in this scheme where the states put 25% deposit down for me, repayable upon the first sale.. all sounds great..
The forget to mention one thing… If you try to move your mortgage to a different lender and put in breakage fees no more than £10,000, the states will refuse the new lender to increase the mortgage to include the fees as the states insist you buy more of the 25%.. hang on a min… did they not say this is repayable upon the sale? my house has increased in value so the extra £10,000 for the fees would bring the LTV to 71% so not going to put the publics 25% at risk.. I could not move to my new lender unless I had a personal loan for the fees! I decided not to go ahead as this is too much money a month for this personal loan on top of a mortgage.
It is a great help with the states paying the 25% as it keeps your mortgage payments lower and the states will make a nice profit when you sell, however people must understand that the states will always have control over your mortgage finance as I have just learnt the hard way.
all I wanted to do was move from paying 6.5% fixed to a tracker of 3.19%, add in the fees which are less than £10,000 and the states of Jersey said no you can not increase your mortgage!
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#63 Toasted there are places where couples can move into care. That aside my partner has a very close family with a history of looking after each other. Mind you neither of us has ever had a single family member ill enough to need go into care, not even those who made it into their 90s, so there is a good chance that neither of us will need to either. You can’t plan for every eventuality but we have as many covered as seems reasonable. Of course we could both be in an accident tomorrow and end up quadriplegic, that is just the reality of life.
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thankyou jersey girl posted 24 june well thats about right states of jersey dont seem to want to help those who want to improve there situation ,does this mean you do not have control of your mortgage situation? with out state s sticking there nose into your buisness YES YOUR RIGHT IF IT SOUNDS TO GOOD TO BE TRUE THEN IT PROBALY IS thanks for the warning, WHAT A CHEEK TO STOP YOU FROM IMPROVING YOUR FINANCE SITUATION
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