Rents ‘robbing young people of housing deposits’

Tuesday 25 February 2020

Young people are being “robbed” of deposits to put on their first home by rising rents in Jersey – and a controversial new licensing scheme may make their situation worse, a senior property lawyer has warned.

The comments came from Robin Troy, a Property Solicitor of nearly three decades, after new statistics showed that local rental costs had risen 7% at the end of last year, ahead of a States vote on new legislation landlords warn could lead prices to shoot even higher.

Put forward by the Environment Minister and due for debate today, the proposed law would see a new licensing scheme for rented housing implemented.

If approved by States Members in a vote today, individual landlords will require a licence, costing up to £200, and be subject to inspections in a bid to improve the quality of properties across the island.

Pictured: A controversial new landlord licensing scheme is being debated by politicians today.

However, the idea has received a mixed response, with the Chairman of the Jersey Landlords Association, Peter Lucas, blasting the legislation as “costly and intrusive bureaucracy".

He explained that, while members support the “promotion of good standards”, they felt the legislation would only “make matters worse for tenants by limiting the supply of rental units”.

A Scrutiny Panel tasked with reviewing the proposed law echoed these concerns in a report, noting that the cost of the new scheme might be passed into tenants, and questioning why the Minister doesn't use the powers already available to him to control the standards of properties under two laws set in 1934 and 1999.

Now Property lawyer Robin Troy has added to the calls for a rethink, particularly in the wake of the latest House Price Index, showing that property prices had risen again, while rents had gone up by 7%.

Pictured: The Jersey Landlords Association described the licensing scheme proposals as "costly and intrusive bureaucracy".

He explained that, after the economic crash, the property marked “turned a corner” in 2016 and has since “gone mad, especially, in my view, in the lower part of the market” for a number of reasons, including increasing demand due to the island’s rising population, more people investing in property, and the low-cost rental market being disrupted by the conversion of lodging houses into higher quality residential units.

While he said he commended the States Assembly “for recently taking a positive stance to rid the Island of poorly maintained and repaired rental property” by introducing minimum standards legislation aimed at improving conditions for tenants and “provoke greater investment by landlords into the rental sector”, the solicitor noted: “…Investment is expensive and this may well be reflected with higher rents.

“My logic is simple, if you invest and have a nicely presented property (house or flat) free from most defects, you can command a higher rent.”

And if today’s rental legislation passes, he warned rents could rocket even higher.

Pictured: Rising rents could leave young people with less money to save to buy their first property.

Mr Troy explained: “The States have introduced a scheme, the Landlords Accreditation Scheme (Rent Safe), currently a non-mandatory scheme for the registration of landlords and their rental units, who are graded as to both the state of the property and the conduct of the landlord. The Rent Safe scheme provides for a register which sets out the grade at which they are assessed in good practice and property standards.

“The proposition is now to make membership of a Rent Safe scheme mandatory and to set the subscription level at £250 per rental unit. This seems to me to be a cynical attempt to raise indirect taxes under the smoke screen of improving housing stock, which improvement is going to occur anyway by the recent introduction of the laws relating to minimum standards. Indeed the proposition for the law states: ‘The fees have been set at a level enabling Environmental Health to recover the full cost of the activities which require regulation.’

“In other words, the proposition is for landlords to directly pay for the activities of a States department.”

He continued: “Landlords are not stupid and probably are not going to be able to soak up these additional costs and will simply pass on those costs in higher rents.” 

And this is something that could have knock-on effects for young people trying to save to make their way up the property ladder, Mr Troy said.

Politicians are due to debate and vote on the new legislation this afternoon, as well as an amendment to it.

The suggested change reflects the comments of the Scrutiny Panel, who suggested that inspections should happen every five years instead of annually.

Watch the debate live by clicking here.