Push to cap maximum Andium rental prices

Monday 25 October 2021

The former Housing Minister is pushing for maximum rents charged by the island’s key social housing provider to be brought down from 90% of the market rate to 80%.

Senator Sam Mézec has put forward his idea as an amendment to the Government Plan, which is due to be debated in December.

According to the Senator, who stepped down as Housing Minister in order to support a vote of no confidence in the Chief Minister last November, the reduction could be achieved by Andium returning less money to the Treasury each year.

This would enable the provider to make the change without causing disruption to its plans to build affordable homes.

As a result, he predicts the Government would lose out on £1.8m in income by the end of 2025 – but this would be balanced by the fact that it would have to pay out less in Income Support to help individuals with their rent.

Pictured: Former Housing Minister Senator Sam Mézec is behind the amendment.

In a report explaining his proposals, Senator Mézec said that the freezing of Andium rents on two occasions during the current Government’s term of office means that the social housing provider currently has “barely any” tenancies charged at 90%.

“Andium Homes have confirmed that 45% of their current tenancies are charged below 80% of the market rate, whilst the remaining 55% are charged between 81% and 90%. The average rent charged is at 76% of the market rate,” he noted.

“There is virtually no political support for maintaining the social housing rents policy as it currently stands, and successive Housing Ministers have pledged to overhaul it but failed because of other political considerations. The greatest concern has been the effect on Andium’s development programme if they were required to shoulder the financial burden of a reduced rental income without their return to Treasury being altered to take this into account.”

While the Senator acknowledged that those who have their full rent paid by Income Support would not notice the change, he said “many” would be “better off”.

He further argued that the proposal, if approved, would be good for the island’s children, saying: “By setting social housing rents at a more affordable level, more children will be living in homes where they have more security and their families are better able to provide for them, because of the alleviation of the burden of their rental costs.” 

While States Members narrowly defeated a similar proposal in June, the Housing Minister had since indicated his support for such a change.

At a recent Scrutiny hearing, Deputy Russell Labey said that recent freezes meant that no Andium tenant should be paying rent at the 90% market rate upper limit, but closer to 85%.

He added that the Government had also “promised to look at scope as best we can, a model to make the social rent policy up to 80% of market rent, not up to 90% as it is currently.”

Responding to a query from Deputy Graham Truscott on what will happen when rent rates have to go back up again, Deputy Labey pointed to the “formula” he’d inherited whereby increases should be inflation + 0.75% - but never more than 4%.

Pictured: Housing Minister Deputy Russell Labey speaking during the Scrutiny hearing.

Head of Policy in the Strategic Policy, Planning and Performance Department, Sue Duhamel, said that the system “might need to be changed" and that there were ongoing "negotiations with Andium and Treasury" on the topic.

Reflecting on the Scrutiny comments in his proposition, Senator Mézec added: “…Actions speak louder than words. To date, we have seen no action to fix the current broken system. This amendment provides a plan for action now. “

Explaining the rationale for putting forward the amendment to the Government Plan, Senator Mézec commented: “During the 2018 election campaign, Reform Jersey promised to change the social housing rents policy, because we believed that setting rents so close the market rate was putting tenants into rental stress and possibly contributing to inflation in the private sector. I am pleased to now be proposing the end of this policy and setting rents at a more affordable level in the future."

In line with the @ReformJersey manifesto, today I have lodged proposals to cut the social housing rent cap from 90% of the market rate to 80%.

This will help ease social housing tenants out of rental stress, without impacting on Andium’s important development programme. pic.twitter.com/sUcxG82V7i

— Senator Sam Mézec (@SamMezecJsy) October 25, 2021

He continued: "When social housing rents are set so close to the market rate, you cannot really claim it is social housing anymore. Reforming the social housing rents system has been recommended by the Housing Policy Development Board, the Homelessness Strategy, and each of the last three Housing Ministers, but has not been achieved due to reluctance within the civil service to facilitate a new system.

"As Housing Minister, I froze Andium rents twice and introduced a cap on rent increases, which has effectively broken the current policy and de facto disconnected current rents from the 90% target. This means we have an excellent opportunity to realign the rents policy now. The effect of capping rents at 80% of the market rate now would mean a prolonged rent freeze for hundreds of social housing tenants, to enable their rent to fall down in value over time. This would leave fewer households in rental stress.

"Despite voting against the proposals I brought to the Assembly earlier this year to declare a ‘housing crisis’, more States Members are now accepting that we do have a crisis and that action needs to be taken. So far, there has been no tangible action from the government apart from forming more talking shops and proposing more consultations. I hope members will back my proposals to make one small step in alleviating the housing crisis.”

Debate on the Government Plan and States Members’ amendments to it is currently scheduled to begin on 14 December.