Jersey Landlords Association 10 October 2019
Public Health & Safety (Rented Dwellings)(Licensing)(Jersey) Regulations RW interview with BBC Radio Jersey and general comments to media
BBC Radio Jersey – Cameron Ward – “Hot Seat” – Friday 11 Oct 2019, 9am – 10am
1. The Rented Dwellings Licensing Regulations are due for debate in the States Chamber on 12 November 2019.
2. I hope to take this opportunity to address the bigger picture of how our housing needs, and particularly rented housing needs, fits into the Island’s economy.
3. A pit of red tape, despite all politicians who recently stood for election, having declared that they wished to see an overall reduction in the volumes of red tape, with which Islanders and Island businesses now have to cope.
4. These regulations, if approved by the States, are not just for registered lodging house proprietors. They will now extend to ALL privately rented self-contained units of accommodation in Jersey.
5. So, how long will it be before these Regulations are extended further to include ALL homeowners, on the grounds that ALL Island residents and their families are equally entitled (and required) to live in a “safe” and “healthy” home. This standard is not a luxury reserved just for families who are tenants!
6. Doing the maths on 8,000 to 10,000 privately rented dwelling units in Jersey, some 14 more full-time Environmental Health inspectors will be needed to implement these Regulations. So, how can the Planning Minister assert in this proposition that there will be no manpower implications for the economy?
7. The new regulations will be inflationary, as we real so the Deposit Protection Scheme, the Health & Safety Regulations for registered rental homes, the Tenancy Law (2013) and more recently the suggestion that rent controls should be brought back. Recent reductions in supply (due to landlord concerns and their consequent departure from the industry) has already increased rents by 10% or so. However, even with these law changes, rents in the last 30 years, have increased by an average of less than 4% pa. In other words, market forces have prevailed without the imposition of rent controls.
8. “these new Regulations will only punish those who break the law” is a JEP quote from Housing Minister Sam Mezec. It is not true in practice. The new Regulations will financially affect EVERY landlord of privately rented self-contained accommodation and those costs payable by the landlord will simply be passed on to tenants by way of increased rentals. Surely this is wildly counter-productive to the best interests of tenants generally.
9. The only real offences under the Law should be for refusing either to permit entry to and inspection of the premises or refusing to comply with an official notice to maintain a defective dwelling property up to a basic minimum standard of health and safety. It should be policed not by ubiquitous annual inspection but by complaint, as used to be the case. On receipt of a complaint, an appropriate inspector would have the right of entry by appointment and the right to issue an appropriate enforcement notice. This is how the hospitality industry is regulated in Jersey.
10. But once so maintained, the landlord must be permitted to increase the rent to market value, so as to reflect the improved quality of the property and provide the landlord with a reasonable return on his investment.
11. Not every landlord is a good landlord but, similarly, not all tenants are good tenants. Regrettably, requesting tenant references is not always a reliable method of avoiding bad tenants. Sometimes references are forged or written by friends. As far as immigrant tenants are concerned, obtaining references from distant lands can be very time-consuming, if not impossible.
12. Consequently, there should be changes to the relevant Laws, specifically to protect private landlords – eg. if tenants do not pay their rent – it should be possible to evict them much more quickly than at present. Also, if they materially damage or otherwise fail to maintain their accommodation to a reasonable standard, in accordance with their tenancy contract, speedy eviction should also be possible.
13. Tenants are rarely (if ever) “bullied” out of their accommodation, as suggested by certain politicians who are overly cautious or idealistic. In practice, no investor landlord will ever evict a good tenant – why would they? The income from the tenant is the landlord’s livelihood; whereas voids in occupancy or having to search for a replacement tenant inevitably reduce landlord profitability.
14. Many short-term immigrant workers search for the lowest rent possible and will move home for a few pounds less rent per week, regardless of the quality or condition of the accommodation on offer. Understandably, their priority in Jersey, is often to avoid higher quality housing with higher rents, so they are able to send back home as much of their earnings as possible, in order to support their families and pay the mortgage on a house in their home country. If Jersey opts to provide no low-priced accommodation at all, this omission would more than likely deter people from coming to Jersey for seasonal work in the first place.
15. Yet there is a desperately urgent need for immigrant labour to help run Jersey and to pay a proportionate share of Jersey taxes and Social Security. In many cases, these workers are “short-term” employees such as seasonal agricultural and hospitality staff. Nevertheless, there are presently 200 vacancies at the Hospital, 20 teachers for Education, 70 chefs for Hospitality, an unknown number of other vacancies in the Civil Service, construction, agriculture, tourism and even hairdressing and the finance industry. Almost all Island businesses have been detrimentally affected by overly stringent constraint on the issue of employment licences.
16. We particularly need more immigrants because we need more tax payers to pay the pensions, health care and housing needs of the elderly who continue to grow older and have, over the last 50 years, quadrupled in numbers as a proportion of our population. As a rough rule of thumb, Jersey needs at least two tax-paying workers for every pensioner and we already have almost 35,000 pensioners, despite the recently announced increases in retirement age. But we do not yet have 70,000 or more full-time working adults, to generate the taxes the Island needs to balance its books.
17. The bottom line is that some of our politicians do not seem to recognise or understand the costly extent and effect on Jersey’s economy of having had a rapidly ageing population for the last 20 years or so.
18. A century or more ago, most people died by the age of 50. 50 years ago, people used to die at 70 on average. But due to wonderful advances in medical science and healthcare, people are now living into their 90s.
19. The simple number of births over deaths is causing the population to increase by about 300 to 400 people per year. This annual increase requires 150 to 200 new units of accommodation per annum and this trend will likely continue and possibly grow, as the average age of death continues to rise; though there is presently a human skeletal age limit of about 120.
20. But the Government has taken approximately 20 years to begin admitting that the Island’s population will reach 125,000 or so within the next 10 to 20 years. Frankly, if medical science continues to progress, our population is more likely to be approaching 140,000. Honest projections of these figures need to re-assessed and published annually so that we can all know just how big our new hospital has to be, how many schools we shall need, how much water has to be in our reservoirs and how much has to be spent on better infrastructure, such as roads and cycle tracks and pavements and the bus service.
21. The proper way of dealing with this problem, politically and economically, is to cater fully for the prospective population increase, including the taxation revenue that will have to be generated to cater for our elderly residents. One real (but in my view highly undesirable) alternative would be to set about destroying our own economy so that people will leave the island in much greater numbers than at present. There are really no in-betweens that might make voters happier and thus give politicians a better chance of re-election at each successive future election.
22. All new immigrant workers (including short-term immigrant workers) will need to be housed, of course, and the Government, on its own, does not have the money to do this, unless it is willing to borrow a further £1 billion to £2 billion to lend-on to Andium Homes for the provision of a great deal more social housing. According to the JEP, Andium has said that any additional costs involved in providing accommodation would drive up rent prices and lead to less investment from landlords. This is a view with which the JLA agrees.
23. In our view, discouraging private landlords from investing in more rented housing in Jersey is an economically stupid and wholly flawed philosophy, as the wholesale abandonment of the rented accommodation industry, by investing landlords, will throw much greater financial responsibility and burden onto government and the tax payer.
24. Those who believe that private landlords will not reinvest their funds elsewhere need to visit the House of Commons Library and read the economic history of England between 1914 and 1984. During that 70-year period, the implementation of rent controls and protected (ie secure, long-term) tenancies decimated the number of private landlords from ownership of 92% of all housing down to 8%. Since the UK government abandoned rent controls and implemented shorthold tenancies in 1984, the 8% has now recovered to about 23%.
25. To summarise some of the issues which have, in the last 7 years, acted as deterrents to housing investment by private landlords:
26. One Jersey Government office with a single full-time civil servant could easily manage and administer a deposit protection scheme and the arbitration of any resulting disputes between landlords and tenants. There are only 20 or 30 such disputes per year. Unlike MyDeposits.Com staff, that officer would be “on the ground” in Jersey and able to visit properties where photos are inadequate (eg it is impossible to photograph an unsavoury smell). He or she could also impose necessary discipline on delinquent landlords and delinquent tenants, including the maintaining of “blacklists” of the relatively few “baddies” on both sides. There’s nothing to beat naming and shaming to ensure relatively inexpensive disciplinary control over the few individuals who spoil it for the rest. Perhaps we should bring back the stocks and the throwing of rotten tomatoes!
27. Jersey seems to have become a community that can be relied upon to employ sledgehammers to crack nuts. Government needs to review its promises to minimise red tape.