The States have binned an idea to sell-off around 1,600 homes and social rental properties to the Guernsey Housing Association, as the total valuation of the properties was much lower than expected.
The government will continue to own and maintain these properties after investigations into the condition and value of 1,649 housing units managed by the GHA showed there would be little benefit from a transfer, with the States losing out on £12m in annual rent from tenants.
A Scrutiny hearing with the Policy & Resources Committee yesterday unearthed the decision. The senior committee and the committee responsible for States housing, Employment & Social Security, agreed in principle to a transfer in 2021, pending further investigation.
But both committees ultimately agreed that reducing States income at this time would not be sensible. The aggregate value of the 1,649 properties was valued at £155m, assuming they would continue to be used in the same sector going forward.
The GHA would’ve purchased the stock through a States-guaranteed loan.
Studies also revealed that more investment will be needed in the properties, especially regarding energy, heating, and thermal efficiencies.
Pictured: Scrutiny grilled P&R on its wide mandate yesterday.
Scrutiny President, Deputy Yvonne Burford queried the senior committee on the progress of the transfer. Almost immediately, Deputy Peter Ferbrache, President of P&R, said the sell-off would not proceed.
“It was professionally valued by a quantity valuer, and the figure that was given didn't make any sense for a return, amongst other things, as well as the social aspects because we'd have to have lose some significant income for not a very great capital return,” he said.
P&R member Deputy Bob Murray agreed: “In terms of trying to make a business case for it,it really didn't stack up at this point in time. Primarily because the valuation was a little less than perhaps we'd have expected."
Deputy Peter Roffey, President of ESS, speaking after the hearing said while no homes will be transferred to the GHA, useful insight did emerge out of the investigations around the condition of the States’ housing stock.
“We are writing to all tenants so they will be receiving a letter from us in the near future explaining in more detail the decision not to go ahead with the transfer and reassuring them that we are committed to keeping the stock in good condition,” he added.
Pictured: Deputy Peter Roffey said the States will continue to keep States housing in a good condition, with proposals being drawn up to rejuvinate Les Genats Estate.
Deputy Ferbrache had previously expressed strong support for the sell-off, saying it would help to add hope to islanders’ housing aspirations.
In May, Deputy Ferbrache told Express that the sell-off was one “big idea” to get more people onto the property ladder, by using the sale proceeds to assist individuals to purchase private or partial ownership homes.
He suggested that the sum, floated as £200m, would be ringfenced for the States to use to purchase land at “reasonable prices”.
In June, Deputy Ferbrache reiterated to BBC Radio 4’s Any Questions? programme that receiving a “big chunk of money” from social stock sales could be invested in land to rectify the States’ “disgraceful” record on housebuilding.
Pictured: A sell-off did not make commercial sense to the States.
Reacting to the news on Twitter, former Director of Housing Jim Roberts said: “At one time, rental income from States-owned social housing was essentially ring-fenced for reinvestment in stock upkeep and development. If that were still the case - which it should be in my opinion, a mass stock transfer would make sense.
“The valuation identified the need for costly upgrades, mostly to make old properties more energy efficient. It’s going to be hard to argue that tenants should wait for such upgrades because their rents are being spent elsewhere.
“I don’t know how the GHA would have repaid the loan required to give the States £100m+ for its stock, but I imagine it would have meant charging all social housing tenants more rent. The rent increases would, in the main, have been paid by the States via increased income support.”
If rental income was still reinvested into the housing sector, increases to rent to repay large loans wouldn’t be necessary. Otherwise, the real value of the sales would've been reduced, and more pressure piled on tenants, he added.
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