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Reducing affordable housing capital would be an “unmitigated disaster”

Reducing affordable housing capital would be an “unmitigated disaster”

Wednesday 08 March 2023

Reducing affordable housing capital would be an “unmitigated disaster”

Wednesday 08 March 2023


More money will be required to ensure the island’s affordable housing programme can meet the needs of the population and any cuts would risk missing targets, it has been warned.

It comes as the Policy & Resources Committee has put the brakes on major building projects until revisions are agreed by the States Assembly later this year.

Several essential and long-standing projects are on the table, but the man with political responsibility for affordable housing has called for the programme to not bear the brunt of reductions.

Deputy Peter Roffey, President of Employment & Social Security, told Express that recently published housing needs, of around 1,500 new units by 2027, show now is not the time to take the foot off the programme’s pedal. 

“On top of that the States have voted to increase the net migration target to +300 per year. Lastly, the cost of building has skyrocketed. Taken together, all of this indicates a need to greatly increase funding for the affordable housing programme which is the States’ top strategic priority,” he said.

“Certainly any reduction in funding would be an unmitigated disaster.”

He also said that talks are already progressing to revise some housing projects already in the pipeline to simultaneously increase housing stock and provide greater taxpayer bang for buck.

Policy__Resources_Committee_NEW_2022.jpg

Pictured: P&R have paused major building projects pending a summer States' debate.

P&R wrote to senior deputies last week saying that capital spending would be paused until a future States debate, where hundreds of millions of pounds worth of projects would be reviewed. 

The senior committee had been directed to review the scope and scale of capital projects by March 2024 following the stalemate tax debate, but officers have now been ordered to complete the work before the summer.

A policy letter will then be presented to politicians who will decide which projects should be scrapped, stalled, stripped back, or funded via alternative methods such as borrowing.

It’s understood it will include dozens of projects including the Alderney Airport overhaul, the £360m harbour modernisation project, and the affordable housing development programme.

The second phase of hospital modernisation, due to commence in spring next year, is running millions over initial cost estimates, and will top £100m in any event. 

Education is also grappling with further delays and spiralling costs for its transformation of post-16 education. It was given up to £105m to construct the Les Ozouets campus by 2024 but that was delayed to 2025 and it is currently without a builder. 

housing_needs_and_population_increase.jpg

Pictured: High housing demand, limited stock, a growing population and building inflation are presenting a big combined challenge.

Deputy Roffey said while £34m was allocated by the States in 2021 to deliver further affordable housing, this amount was based on the level of housing need identified in the 2017 KPMG report. 

At the time, the big four accountancy firms found that around 800 new homes would be required by 2021, with 200 of those being affordable housing units. 

“Since then times have moved on,” Deputy Roffey said. “This month the States will be debating the Strategic Housing Needs Indicator which shows that far more affordable housing is going to be needed over the next five years than previously predicted.  

“721 units of affordable housing for local people will be needed over the next five years - far more than the now outdated KPMG report. Add in the need for key worker housing - which also comes under the affordable housing programme - and we are talking about circa 1,000 units in five years.

“This is a massive task and to come anywhere close to delivering on this target the whole States will need to be fully committed both to providing the funding and the land required to create this housing.

“This is definitely a time when the affordable housing programme should be stepping up a gear or two, not being scaled back in any way.”

GHA Guernsey Housing association Victoria slade

Pictured: Victoria Slade now heads up the Guernsey Housing Association.

Part of the States allocation has been used by the Guernsey Housing Association, which manages the affordable, specialist and key worker housing stock, to purchase land across the island.

Last year alone the GHA acquired three redundant sites for new builds, and planning applications are in as it seeks to erect hundreds of homes in the coming years.

You can read more about the GHA’s efforts HERE

Hundreds are currently waiting for this type of housing.

Deputy Roffey argued aggressive purchasing of land has been necessary since 2020 as “the GHA literally had almost nowhere to build”. 

But he said construction costs should be viable as most plans will involve borrowing - “with those loans being serviced from the income stream created by the new housing stock.  

“However some of the cost will have to be met by grant funding from the affordable housing fund. It is this grant funding which allows the resulting housing to be affordable.”

There are also active examples of modifications being made to housing projects to improve viability and the States’ strategic objectives.

ESS are in advanced talks with P&R and are currently awaiting approval to more than double the number of key worker accommodation units on a recently purchased site.

“The former CI Tyres site has planning permission for 25 key worker apartments but we - together with the GHA - are hoping to change those plans to create more than 50 units in a much taller building,” Deputy Roffey said.

“This will drive down the States grant required per unit. As I type, ESS is still awaiting confirmation from P&R that they have approved our request for such funding to be released.”

READ MORE…

Around 1,500 additional homes by 2027 to meet needs

Housing market "peaks" but demand remains high

Extra staff needed to deliver required housing

Affordable housing viability under the spotlight

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