Environment & Infrastructure was concerned a lack of clear guidance could “open the floodgates” for more Open Market properties and damage the property market – so it paused application decisions pending new policies coming into effect.
This was revealed following written questions to the Committee, where Deputy Mark Helyar accused it of suspending the application process and removing related forms from public websites, which he suggested was unlawful.
E&I President Deputy Lindsay de Sausmarez denied this, saying new applications “would not be considered until the new inscriptions policy had been agreed” when it made the decision in April 2023 after receiving advice from Law Officers.
E&I is confident it’s acting reasonably and that any arguments based on the length of time taken to process applications can be justified by active policy development in the background.
It published a notification to that effect on States’ websites and the relevant application form, with it noted that there were no outstanding applications at that time.
“Any applicant from then onward would have applied in the full knowledge and expectation that their application would not be considered,” she said.
“The Committee is acting reasonably to protect the stability of the housing market while the new inscriptions policy is being developed.”
Pictured: Deputy Mark Helyar was Policy & Resources’ treasury-lead until December 2023.
E&I said multiple sources had alleged to it in March 2023 of “a coordinated effort underway by a group of people to exploit what they perceived to be a ‘loophole’” based on a decision to approve a previous application.
That application, made in 2021, was deferred by E&I in October 2022 but following legal advice it was pushed to decide, approving it two months later: “The legal advice highlighted the risk of Judicial Review or other legal challenge should a decision not be made, with a consequent risk of the potential associated cost to the States of such a process.”
In March 2023, E&I claimed to have been informed of fears among potential applicants that new fees would be brought in under the revised policy, such as increasing the application cost based on the expected uplift in value of the property should it become Open Market.
It had previously become wary of the lack of guidance over which properties should be added to the register, and how many are required, as this could give rise to appeals or legal challenges should an application be denied.
“The legal provision to newly inscribe properties onto Part A of the Open Market Register combined with the absence of a sufficiently detailed policy against which to objectively assess applications therefore left the Open Market vulnerable to a potentially uncontrollable number of new inscriptions,” Deputy de Sausmarez said.
She added it was recognised this could cause a crash in the value of existing Open Market properties, destabilsing the wider property market.
The current £500 application cost, coupled with the “very significant uplift in property value” and “potential or perceived risk of uncontrollable numbers of new inscriptions flooding the market” led E&I to stop considering applications until a new policy is agreed.
Pictured: E&I provided the application form and highlighted the date it was updated after Deputy Helyar claimed it had “disappeared” from States websites.
Deputy Helyar questioned whether this position had resulted in any legal challenges, and if E&I had estimated what the financial loss to the States could be if any claims for compensation were successful because of not considering applications.
Deputy de Sausmarez said two letters seeking clarification on the legalities had been received in October 2023, but these were dealt with at officer level and hadn’t resulted in additional contact.
But it also doubted legal action was likely as it could be viewed as unscrupulous behaviour by the public.
“The Committee considered it unlikely that any developer would want to risk the reputational damage associated with taking legal action over what the Committee considered would be widely seen as an unethical move, given that it would probably be viewed as an attempt to ‘play the system’ to avoid paying a fair contribution of the significant uplift in value,” Deputy de Sausmarez said.
E&I reiterated that it has acted in line with legal advice, and the only cost to the States would be the loss of additional revenue by not applying an increased fee for inscriptions.
Since the notification that decisions had been paused, 11 applications have been submitted.
E&I did accept that its decision may have put some potential applications off the process.
It expects to publish its new policy and fees this month, which will require a States debate later this year, where a controlled increase of hundreds of Open Market properties will be also be proposed.
You can read the questions and responses in full HERE.
