OPEN LETTER: Why GP11 hasn't worked

Wednesday 07 February 2024

Dear States Deputies, We are writing this open letter to you on behalf of the Guernsey Construction Forum and the named prominent island residential developers that have counter-signed at the end of this letter.

This letter and appendix have been written in support of a Requête being brought to the States Assembly to propose the suspension of GP11, to allow a private housebuilding re-start to occur, after eight years of inactivity.

Pictured: Deputy John Dyke is leading political efforts to scrap GP11. Read more on that HERE. 

The reasons stated here itemise why GP11 doesn’t work and have been made repeatedly over the years since GP11 was first proposed to the DPA, P&R, E&I and ESS.

• GP11 is preventing the private sector increasing the supply of new homes. We are confronted with a housing crisis of a scale and magnitude not seen since the liberation of Guernsey in 1945. It is only the private sector which has the resources and capacity to mobilise at speed and to increase the housing supply
• Private housebuilding has been stalled by GP11 and no GP11 contributions have been made since its inception in 2016
• Private housebuilding needs to be re-set quickly to urgently increase the island’s much needed housing supply
• 30% GP11 developable land contributions for large sites do not allow developers to achieve the industry standard level of a 20% margin on sales values
• The GP11 processes are too complicated, too slow, too difficult to administer, inflexible and contains too many fundamental uncertainties
• The absence of GP11 affordable land contributions since 2016 has forced the GHA to buy land in the marketplace and to compete with private developers wanting to buy land, thereby inflating building land values generally When key stakeholders should be trying to work together collaboratively to reduce costs and build affordable homes, we are not because government inertia is driving up costs and restricting supply to the detriment of Islanders
• GP11 is a big negative and a disincentive to private housebuilding and investment in residential schemes in Guernsey because it causes delay and fundamental uncertainty
• Guernsey Construction struggles with 30% higher building costs than the UK, this contributes to lower margins and higher house prices. The minimum investor and funder requirement of a 20% margin on sales values is difficult to achieve
• Developers like to have a three-year investment exit horizon and GP11 creates delays that compromise the objective of achieving a three year exit and thereby causes increased financial costs
• The GP11 Planning Covenants are unwelcome to banks and funders and create an obstacle to bank security arrangements
• Owner occupation has been adversely affected by GP11
• Since GP11’s introduction the policy has never been updated and as a consequence and the existing policy has become outdated and is now unworkable
• The GHA do not want to work with small numbers of units in diverse locations but prefer bigger sites wholly managed by them.,If any GP11 contributions had been achieved these would unhelpfully provided small numbers of homes in diverse locations managed by private housebuilders
• Planning officers have advised that without a Planning Inquiry GP11 law cannot be amended under the existing Law
• GP11 has become a clog on residential development, the only way to quickly restart private housebuilding is therefore to suspend it

In summary, GP11 has introduced many more fundamental uncertainties for developers than previously existed and added delay and complexity to the Planning process. Prior to GP11 the Planning application process already needed to be streamlined and simplified. A vicious circle has developed where developers’ cost of land and cost of building has dramatically increased to a point where they do not allow the industry standard margin of 20% of sales value, which disincentivises investment and stalls much residential building.

By way of further explanation of the facts and opinions that underscore this letter we have appended a further detailed supporting document.

In order to resolve the Island’s housing supply problems, in the fastest way possible, we urge you to support this Requête and in the absence of the ability to amend GP11 without a full Planning Inquiry we ask you to vote to amend the 2005 Planning Law and suspend the GP11 policy with immediate effect. An eight-year suspension of GP11 will allow private housebuilding to re-start and once again build up momentum to generate much needed housing supply for Islanders. Eight years is needed to allow as explained in this letter to be properly investigated and addressed before any amended policy is reintroduced.

Residential developers who have endorsed this letter: