Letter from GPRLA to States Deputies
Who would wish to be a residential Landlord today, and more importantly, in 5 years time?
Beware of what you wish for. No part of our World is perfect, but Guernsey and its Deputies should be proud of the Island’s track record of domestic and quality of life issues compared to most other jurisdictions.
This email is purposely kept as short as possible, and simply wishes to draw your attention as to why any attractions to being a private landlord are fast disappearing for many reasons, but particularly by the lack of understanding by those who wish this Island be tied up in oppressive, expensive to run legislation.
GPRLA was set up some 15 years ago, sponsored by the then Housing Department (Dave Jones) to avoid future legislation and to improve the standard of local letting accommodation. Membership now owns/represents more than 2,000 Island rented homes. The Association produced a ‘Code of Best Practice and Lettings’ guide and has provided services enabling good relationships to both LandlordsTenants alike. Please see our website www.guernseylandlords.
gg. The Association further produced its widely used standard ‘Plain Language Lease’ (accessible from the ‘Members Area’ of our website) .
We firstly wish it be known that Guernsey property owners do not set market trends, but are carried forward or backwards by natural market forces of supply against demand and the cost of borrowing. This same rule applies to any commodity. The current high prices and rents are aggravated by a serious and much publicised shortage of the housing stock – only you as Government can address such shortage, and once a balance is restored, stabilisation of values will start to take place.
Guernsey’s private landlords are mostly made up by an age band of 60+ years who have chosen to invest in or inherited local property to make homes available to those who are unable to or not wishing to own their home.
In spring 2019 Environment and Infrastructure announced its intention to introduce a new ‘General Housing Law’ and undertook a consultation process. GPRLA coordinated its members’ responses/comments in 2 replies to E&I, the thrust being that this law was an administrative sledgehammer to crack a very small nut. Meetings also took place between E&I and GPRLA Council representatives. It appeared the Agenda was already set as our comments (representing more than 2,000 let homes) were disregarded in the biased and selected ‘Summary of Consultation Findings’ attached to the proposals.
Environment and Infrastructure’s Policy Document P.2020/30 was debated on 17th June 2020 by the previous States, and you (The States) have just approved the ‘Enabling Legislation’ without real challenge or due thought. As a result, we suspect the Law Officers will be producing rafts of expensive, resource using and unnecessary new legislation that, in our opinion and experience, will be imposed on an ‘industry’ that not only self regulates by a demand for quality, and is constantly considered some sort of ‘cow’ to be milked and restricted more and more.
According to the 2021 Guernsey Residential Property Stock Bulletin, some 6,812 rented units (homes) are privately rented (156 less than 2 years previously), plus 2,380 social units. The Policy states that 22% of our population (in 2017) lived in rented accommodation. Is this privately owned facility/service not essential to our Island population? Is the Tax collected from private landlords, amounting to approximately £23-30 million per annum (no official figures available) not considered a major contribution to our finances?
Further, private landlords provide a vital buffer of accommodation for those who come to work in Guernsey for a few years and choose not to incur the significant costs of buying and then selling a property. Such short/mid term employees include key Civil Servants, Teachers, Medical Staff, Accountants/Bankers, etc who are vital to the running of Guernsey. Sadly, many States Departments, and others, are currently suffering appointment withdrawals due to the lack of suitable family accommodation – a dwelling with current value of between £500,000 and £950,000.
GPRLA fully supports legislation that will streamline the many Laws and States Departments currently responsible for our housing needs/protection into one cohesive unit. However, Section 4 of the Policy Letter appears to authorise yet another ‘empire’ to be created within the office of Environmental Health and to appoint ‘authorised enforcement officers’ (what qualifications?) to hit Guernsey’s landlords and expect annual fees in return.
The Policy Letter 4.37-52 recommends a ‘Deposit Protection Scheme’ to mirror the scheme adopted in Jersey. In our view, this came about as a knee-jerk reaction of the recent demise of a local estate agency where it was reported deposits had been lost. In reality, NO DEPOSITS WERE LOST as they were correctly banked in a secure ‘Clients Account’. The Liquidators confirm no deposits were misappropriated and were repaid in full once the account was unfrozen. We believe all estate agencies handling clients’ deposits do so in an entirely correct manner and are unaware of any landlords/agents ‘walking away’ with lettings deposits over the past 10 years. Please advise if you know of any such occurrences.
The ‘My Deposit Jersey’ scheme is in name only. The reality is, the entire operation is UK based where all ‘local’ deposits are held in a ‘regulated bank’ and administered from an arm’s length location. Is Guernsey ready to dispatch £12+ million of deposits across the water? Deposits are not repaid until landlord and tenant have agreed settlement and confirmed to My Deposit Jersey. Unresolvable disputes will be decided by the deposit holder once all documents/photos have been considered. No visit to the Island will be made to settle such dispute. GPRLA has operated a very successful ‘Mediation’ service for many years and, as a result, very few disputes reach our local Courts. A useful link on this matter is https://www.careyolsen.com/
Other undesirable and administration producing proposals include requirements for all HMO’s to be licensed (Section 4), and Section 5 onwards includes a housing standards rating system with no consideration given as to how ‘required’ improvements will be funded. Further, all privately rented units (homes) are to be registered with E&I and subject to new fees payable to E&I. T&R (Income Tax) already has such declared data. No such registration process of rental properties in the UK is required by Law.
Many landlords, believe it or not, struggle for a number of reasons. Some illustrations are below:-
A 300% increase in TRP in the past ten years – States Approved (generally payable by landlords)
Statuary Repairs Allowance halved 12 years ago – States Approved
Massive recent inflation of building repair costs.
Major increases in buildings insurance premiums.
Guernsey’s Arbitration Law – not fit for purpose and unusable for residential disputes.
Guernsey’s Eviction Laws – not fit for purpose and anything but helpful to landlords
Guernsey Sheriff – toothless debt recovery process e.g. for unpaid rents
Zero States assistance on eco matters such as insulation.
Who will provide quality, family rental accommodation to newly arrived mid to senior band Civil Servants? Not the States.
Society tends to assume that unpaid rents will not cause the landlord a problem. It most certainly can as mortgages have to be paid and many pensioner landlords depend on such regular income.
Letting is not an easy ride for the landlord and can cause hassle and stress, particularly at change of tenancy. Not for the faint-hearted.
It should be noted that many long term tenancies are annually ‘rent reviewed’ using Guernsey’s RPI. An example of annual RPI published in December 2020 was just 1%. That meant that a tenant paying say £1,000pm in 2020 will now be paying just £10pm more in 2021. Can you think of any other essential commodity that has increased by only that percentage? Are landlords not, by default, providing a ’social service’? Alternatively, a landlord could give their tenant notice and re-let for a market value, but the majority live in Guernsey with a ‘social conscience’.
The Coronavirus lockdowns of 2020/21 were indeed hard for all. However, there appears no or little acknowledgement of those many landlords that assisted tenants by providing total/partial rent relief during those periods. Again, no recognition for landlords ‘social conscience’.
During 2020 and 2021, many landlords have sold up, some as a result of legislation requiring them to register and pay an annual fee to ODPA for no benefit whatever. The wedge is firmly in and is now set to go deeper!
Obviously, a number of landlords are selling up at the enhanced market values as rental returns no longer compete with simply sitting back and re-investing into a huge choice of income producing, capital growth investments. Good for satisfying some home buyers, but bad news to the already pressured rental market.
Please reflect on your election manifesto promises to curb financial wastage and question ‘fantasy’ projects. The Enabling Legislation requires a complete rethink as, in our view, it will generate someone’s ‘fantasy’ to create an ‘empire’ to unnecessarily reduce an already fragile, much needed service to our community. These proposals are indeed a classic example of the ’sledgehammer to crack an already very fragile nut’!
We would welcome any responses to email@example.com
Guernsey Private Residential Landlords Association (GPRLA)