STATES OF JERSEY

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SOCIAL HOUSING PROPERTY PLAN 2007–2016

Lodged au Greffe on 16th January 2007
by the Minister for Housing

STATES GREFFE

PROPOSITION

THE STATES are asked to decide whether they are of opinion -

to refer to their Act dated 27th June 2006 in which they adopted the Strategic Plan 2006 to 2011 and, in particular, Section 3.8 of that Plan and ‑

to agree that the States social housing stock should be brought up to an acceptable condition and maintained at that standard through an adequately funded maintenance programme and –

(i) to agree that a number of non-core, prime location properties, as detailed in Appendix C of the Social Housing Property Plan 2007 – 2016, should be sold on the open market;

(ii) to agree that the Housing Department should make arrangements to enable States rental tenants to apply to buy one of the properties listed in Appendix D of the Plan, according to the 10-year timetable specified, on a shared equity basis or at full value, and with first-time-buyer conditions attached, as set out in Section 3.7.1 of the Plan;

(iii) to request the Minister for Treasury and Resources to agree –

(a) that, in accordance with Article 15(3) of the Public Finances (Jersey) Law 2005, the receipts from sales effected under paragraphs (i) and (ii) should, in the first instance, be put towards the planned programme of property refurbishment and regeneration of key high-rise developments detailed in Appendix B of the Plan,

(b) that the receipts generated from sales effected under (i) and (ii) that are not required to complete the planned programme of property refurbishment and regeneration detailed in Appendix B should be held in an interest-bearing fund and that the interest generated be credited to the Housing Department’s revenue account;

(iv) to agree that the Housing Department should plan for the creation of additional sheltered housing, through conversion of existing stock and acquisition where appropriate;

(v) to agree that there should be no further transfer of stock to Housing Trusts unless explicitly agreed by the States Assembly.

MINISTER FOR HOUSING

REPORT

SECTION 1: The need for a Property Plan

1.1 Introduction

1.1.1 Strategic targets

The States Strategic Plan 2006-2011, adopted by the States Assembly on 27th June 2006, set a number of targets for the Housing Department. Among the most important of these was the production of two major pieces of work. The first (and the subject of the present report) is the Property Plan, the essential purpose of which is to identify the estate management, maintenance, and refurbishment issues currently confronting the Housing Department, considered together with the States commitment to expand home ownership, and to make recommendations accordingly.

Among the priority issues to be covered here are –

• Dealing with the immediate problem of refurbishment requirements

• Ensuring that States rental accommodation is fit for purpose, with particular reference to the demographic bulge

• Putting the Departmental budget on a sound footing, with particular reference to the ongoing revenue cost of maintenance

• Increasing the level of home ownership in Jersey, particularly in respect of States Tenants by devising innovative means for them to purchase existing states rental accommodation.

1.1.2 The need to act now

As indicated in the following section, the Housing Department will, during 2007, be commissioning a fundamental review of the organisation and structure of social housing provision in Jersey – but any temptation to defer making a decision until after that report has been produced, should be strongly resisted. An organisational review will tell us nothing new about the most urgent issue facing us: the condition, and fitness for purpose, of the stock.

It is that stock condition which is the subject of the present report. Already, 18% of States rental housing stock would fail at least one aspect of the U.K. Decent Homes Standard. This figure is set to rise rapidly over the next few years. Real people live in this accommodation. They cannot afford to wait for another report or another review to confirm what we and they already know only too well.

1.1.3 Fundamental review of social housing

The second piece of work committed to in Section 3.8 of the Strategic Plan, was the production of a fundamental review of social housing in the Island. This report will be produced during the second half of 2007, and will focus on all of the issues, including but not exclusively –

• The purpose of social housing

• Affordability

• Allocations criteria

• The nature and extent of any currently unmet social housing need

• How it should be regulated and by whom

• The long-term future for Housing Trusts and States rental accommodation

• Links to other corporate policy areas, such as the eradication of poverty and the assurance of housing supply to meet the needs of key workers or returnees

• Medium and long-term costs of options

• Potential for greater inter-agency co-operation and/or organisational change.

1.1.4 Background work

Both the present report, and the fundamental review to be produced in 2007, should be viewed in the context of a number of other pieces of work which are either under development or recently published, and which each contribute towards an overall picture of Island housing supply and demand. The most significant of these other documents are –

• Planning for Homes 2006 – the latest in an annual series of statistical reports produced jointly by the Planning and Housing Departments;

• Housing Needs Survey – undertaken in late 2004 to estimate, by analysing respondents’ aspirations, the potential housing requirements of households in Jersey for the forthcoming 5-year period 2005-2009 – it is intended to revise this Survey during 2007;

• Review of the Island Plan (preparatory work for this is being carried out by the Planning Department);

• Migration – Monitoring and Regulation (P.25/2005) – the Report and Proposition from the Policy and Resources Committee, outlining a new system for controlling entitlement to employment and accommodation;

• The Parr Report – the Law and Economics Consulting Group produced a report in November 2000 on the Economics of the Housing Market in Jersey (known as the Parr Report). It emphasised a pressing need to address both how the demand for housing is managed, through subsidy and policy, and how supply of housing might be increased, with the new Island Plan being seen as the main mechanism to deliver change;

• ‘Aiming for a Fairer Society’ – the 2001 report for the Social Policy Strategy Group, from Professor Robert Walker of the University of Nottingham, which led to –

• Social Policy review (P.47/2002) produced by the Social Security Department;

• Income Support System (R.C.48/2004) which led to –

• Draft Income Support Law (P.102/2006).

1.1.5 Principal issues

A number of separate but linked issues have led to the tabling of this Report and Proposition, in particular –

• an urgent need to re-invest in the social housing stock, through planned maintenance and refurbishment;

• inadequate revenue budget and capital funds to achieve this re-investment, and a corresponding duty placed on the Housing Department, under the States Strategic Plan 2006 to 2011, to produce detailed proposals for the procurement of funding to sustain a programme of refurbishment works for States rental accommodation;

• a duty placed on the Housing Department, under the States Strategic Plan 2006 to 2011, to use social housing stock to progress a shared equity scheme in order to encourage an increase in levels of home ownership in the Island;

• a duty placed on the Housing Department, under the States Strategic Plan 2006 to 2011, to achieve the Decent Homes Standard by 2016;

• a duty placed on the Housing Department, under the States Strategic Plan 2006 to 2011, to review, develop and implement strategies for the provision of social housing in the Island, including the long-term management of States rental accommodation – this being the first of a series of reports which will be produced towards that target;

• a recognition that the States rental housing stock is both larger than necessary, and of the wrong composition to meet predicted patterns of future need.

In seeking to meet these challenges, the Housing Department has adopted a holistic, sustainable and practical approach which will, it is hoped, meet with the approval of the Assembly.

1.2 The problem

The Housing Department is well aware of the financial pressures confronting the States. This report, therefore, should not be seen as a traditional plea for more resources: Rather, it is a carefully structured, self-funding plan to meet the urgent needs of social housing tenants, by making strategic use of the housing portfolio.

The provision of long-term, sustainable and affordable housing to meet the needs of those members of the community who are least able to secure suitable accommodation, is the main function of the Housing Department, reflected in its responsibilities as landlord to one out of every seven people in the Island – 13,000 people living in 4,600 States rental dwellings.

An essential part of those responsibilities as landlord is to ensure that the public sector social housing stock is kept in good condition, so that it can be efficiently used by those in need. With such a large portfolio of properties, this task naturally demands significant, regular investment.

However, unlike other social rental landlords, the Housing Department currently also has a responsibility to administer and fund rent subsidy schemes for both the private and public sector. These schemes ensure affordability for a considerable number of tenants, but place significant demands on the annual Housing budget, to the point where reasonable provision for repairs and maintenance to the States rental stock has been, and continues to be, compromised.

For a number of years, the Housing revenue budget has been starved of funds, while at the same time there has been constant pressure to defer capital spending. As a result, routine maintenance has been trimmed to a dangerously low level, and there is a significant backlog in the programme of major modernisation/improvement schemes funded from capital. The Housing Department has reviewed the condition of the entire portfolio, and has concluded that –

• £7 million p.a., rather than £4.5 million, is currently required to maintain the buildings in a sound and safe condition;

• capital investment of £75 million is needed, over the next ten years, to bring the social housing stock up to an acceptable standard, and to regenerate key areas, particularly within St. Helier;

• the only realistic way in which these two issues can be dealt with, is through the sale of some property in order to raise the funds to be spent on the remainder.

There are a number of factors which make this the ideal time to discuss and decide on this issue –

• The States Assembly has recently approved the Strategic Plan 2006 to 2011, which requires the Housing Department to produce proposals for matters such as refurbishment funding and a shared equity scheme based on the use of States rental stock (see Section 1.3);

• It is impossible to overstate the urgency of the situation. Currently, 18% of States rental stock fails at least one aspect of the best available objective measurement, the Decent Homes Standard (DHS). If action is not taken now, then by 2010 (the year which the U.K. government has set as the target date in a 10-year programme for all British social housing to meet the DHS) 25% of the social housing stock here in Jersey will fail to meet that standard (see Sections 1.4 to 1.7);

• With the imminent transfer of rental subsidy administration to the Social Security Department, there is an opportunity to look at the Housing Department budget afresh (see Sections 1.8 and 1.9);

• The present public sector social housing stock is larger than is necessary overall to meet social housing need, and demographic changes mean that it is the wrong ‘mix’ to meet predicted need (particularly for sheltered housing) in the medium to long-term future (see Sections 1.10 and 1.11); and

• There is increasing recognition – embodied in the Strategic Plan adopted by the States – of the community demand for a greater degree of home-ownership. The Strategic Plan assumes that the Housing Department, and States rental stock, will have a key role to play in meeting that community aspiration (see Sections 1.12 and 1.13).

1.3 The strategic background

Section 3.8 of the States Strategic Plan 2006 to 2011, adopted on 28th June 2006, sets as a target a ‘good standard of affordable accommodation for all’, indicated by –

• Increased levels of home ownership
• Reduction in the number of people waiting to be adequately housed
• A supply of homes that better meets the Island’s housing requirements
• Equity in access to the housing market
• Stable housing market/prices
• Building standards that are equal to those in the U.K.
• Increase in the percentage of homes in public ownership at “Decent Homes Standard”
• Increase in provision of Island-wide sheltered housing.

Specific listed targets are –

3.8.1 From 2007, commence a programme to bring States-owned housing stock up to United Kingdom ‘Decent Homes Standard’ by 2016

3.8.2 Review housing demand/supply through the publication of ‘Planning for Homes’ in 2006

3.8.3 Produce detailed proposals for the procurement of funding to sustain a programme of refurbishment works for States rental accommodation with acceptance of a report and proposition by July 2006

3.8.4 Review, develop and implement strategies for the provision of Social Housing in the Island, including the long-term management of States rental accommodation

3.8.5 Introduce new policies which will ensure more equality in entitlement to accommodation by 2008

3.8.6 Amend building bye-laws to incorporate Lifetime Homes Standards by 2007

3.8.7 Review building bye-law standards for fire safety, energy efficiency and structure following their forthcoming review and adoption in the U.K.

3.8.8 Introduce a shared equity and, if appropriate, potential discount scheme, initially using existing Housing Department stock to increase home ownership

3.8.9 Introduce security of tenure legislation by 2007.

The present report particularly addresses targets 3.8.1, 3.8.3, 3.8.4 and 3.8.8.

1.4 Housing Stock condition

1.4.1 Factors influencing maintenance needs

As at 1st June 2006, the Department managed 4,602 units of social rented accommodation. Not surprisingly, the stock is made up of properties of varying ages, as follows –

Period of construction	Percentage of stock constructed
1900 – 1949	4.2%
1950 – 1959	12.1%
1960 – 1964	4.2%
1965 – 1969	7.9%
1970 – 1979	37.8%
1980 – 1984	11.4%
1985 – 1989	9.5%
1990 – 1999	12.4%
2000 – 2006	0.6%

The period of construction has a significant impact on the maintenance and improvement needs of the stock, and therefore on the approach adopted in this property plan. This is not only because of the obvious fact that buildings deteriorate with age, but also because there have been particular periods of history, in Jersey and elsewhere, which were characterised by poor building; and because any significant change in building standard regulations has an impact on the maintenance requirements of property constructed prior to that change.

It has been clearly identified that different types of stock have different maintenance needs, and that unit size is also important: Small units such as bedsits or one-bedroom flats cost proportionately more to maintain than larger dwellings, partly because of high turnover rates, but also because the most frequently maintained items – kitchens and bathrooms – are largely the same.

The Chartered Institute of Housing reports that ‘Non-traditional [i.e. non-standard] stock has higher on-going maintenance costs than traditional due to the inherent defects and materials used’. In a District Audit of its stock, Gosport Borough Council concluded that ‘property built between 1945 and 1964 is generally less well constructed and less likely to have had significant improvement works undertaken.’

The same is almost certainly true in Jersey. Indeed, it could be argued that the period during which Island property was less well constructed probably extends further, as far as the mid-1970s, especially when one considers the high-rise developments which were constructed between 1967 and 1975.

Generally, high rise blocks are more expensive to maintain due to higher cyclical maintenance costs, inherent defects, access, and health and safety considerations.

Furthermore, in the mid-1980s, local Building Regulations in respect of such important issues as heating and insulation were significantly changed, in line with latest U.K. standards. Unless they have been subject to major refurbishment in recent years, local buildings constructed before that time generally do not benefit from what are now considered adequate levels of insulation.

Whilst pre-war properties might be considered to be of better build quality, buildings of this type can again be expensive to maintain and improve, mainly due to the types of materials used; this is particularly relevant when buildings have some historical merit which attracts protection in the form of listed status.

It can be concluded from all of this, that as much as 66% but certainly a minimum of 29% of the Department’s social housing stock can be considered as ‘non-traditional’, and therefore generally more expensive than average to maintain, in terms of the Chartered Institute of Housing’s findings.

1.4.2 Maintenance budget savings – false economy

In any property-owning organisation, when savings are sought, it is always the building maintenance budget which is especially vulnerable, simply because other areas of spending are usually mandatory, or at least difficult to defer. For a year or two, the adverse effects of cutting back on maintenance can pass almost unnoticed; even so, they are insidious and cumulative. In the housing sphere, ultimately, units of accommodation become unfit or even unsafe, and have to be closed down. Well before that time, they become unpopular with tenants, and therefore difficult to let.

The Housing Department fully recognises the need for efficiency and value for money. Over a number of years the Department has radically reorganised its maintenance function to ensure that services are provided ‘better, simpler, cheaper’. Making full use of the Department’s buying power as a major construction customer, advantageous schedules of rates have been negotiated for the 3 key areas of routine maintenance, response repairs and void property refurbishment. As a direct result, the Department is recording value-for-money performance measures which would place it among the very top performing social landlords in the U.K.

Value for money is not enough, however, if the overall lack of funding means that the essential maintenance programme falls further and further behind. Detailed surveys of the stock under management have clearly shown that a sum of about £7 million per annum is required to keep the buildings in good and safe condition, while the current budget allocation is around £4.5 million per annum. Efficiency gains alone cannot bridge such a gap. Quite simply, all other things being equal, the Housing revenue expenditure budget would need to be increased by £2.5 million per annum, in order to provide for a fully funded maintenance programme.

Each year that passes with inadequate funding for preventive maintenance has a number of negative effects:

• It inevitably means that, when the work is eventually carried out, its cost will have increased by more than the intervening rate of inflation, because problems will have become more serious over time.

• It places a higher demand on costly, ‘urgent response’, ad hoc repairs which then in turn disrupt planned maintenance programmes.

• It increases the risk of accident and injury to tenants, and therefore the exposure of the States to potentially expensive claims.

• Ultimately it leads to residential accommodation being underused, and eventually closed down as unfit or unsafe.

The Department has a sound knowledge of its stock. It has planned rolling maintenance programmes for the next 20 years (see Appendix A) and has produced a comprehensive refurbishment programme covering a 10-year period (see Appendix B). The Department is therefore well positioned to face future demands, knowing both the scale of the problems and the required solution – but is frustrated by a chronic shortage of funding to make the necessary improvements.

1.5 The Decent Homes Standard

The U.K. Government has defined a ‘Decent Home’ as one which is wind- and weather-tight, warm, and with modern facilities. Specifically, it must –

1. meet the current minimum statutory standard for housing;

2. be in a reasonable state of repair;

3. have reasonably modern facilities and services;

4. provide a reasonable degree of thermal comfort (measured by effective insulation and efficient heating).

These are not just abstract targets. There is strong evidence, for example in the work of the National Family and Parenting Institute, the Annual Report of the U.K.’s Chief Inspector of Social Services, and CAMHS (Child and Adolescent Mental Health Strategies) published by a number of local authorities, of a causal link between poor standards of accommodation, adult depression, and poor health and education outcomes for young people.

In the year 2000, an estimated 2,100,000 homes owned by local authorities and housing associations in the U.K. failed to comply with the Decent Homes Standard. Throughout the U.K., there was an estimated £19 billion backlog of repairs and improvement. In that year, the U.K. government set a tough target for social housing providers, requiring that all social rented housing should meet the Decent Homes Standard by 2010 – that is, within 10 years. Whilst latest estimates suggest that it is unlikely that this target will be met, the number of non-compliant homes is coming down year on year.

Performance across the U.K. is far from consistent, however, as shown in the following table of percentages of non-DHS-compliant properties –

	2003	2004	2005
South West Housing providers with 3,000 to 5,000 properties	30.10%	25.30%	19.00%
National Mean Average	22.90%	19.70%	18.70%
National Top Performers	1.00%	1.20%	0.90%

There will be a natural inclination for Jersey to aspire to be a top performer in this sector. Even if the necessary funding was immediately available, however, achieving the 2010 target would require too great a concentration of refurbishment activity in too short a time. This would place considerable inflationary pressure on local contractors over the next couple of years, and would create a repetition of the problem in 20 or so years’ time. It would also require an unmanageably large degree of estate ‘decanting’ during refurbishment.

It is considered more sensible management to spread the required work in a more sustainable way over a 10-year period, leading (as stated in the States Strategic Plan 2006-2011) to full compliance with the Standard by 2016. This reflects the recent States decision, in adopting the Strategic Plan.

1.6 Capital Expenditure Requirements

As well as the annual maintenance requirement, there is also a significant backlog in the modernisation/improvement programme, due to pressures on capital funding across the States. Analysis of the whole portfolio has indicated that capital funding of some £75 million at 2006 prices will be required, over the next 10 years, in order to meet the States strategic target of achieving Decent Homes Standard, across the board, by 2016. This estimate of an average £7.5 million a year, before allowing for any inflation increases over the 10-year plan period, is based on a list of priced works, and can therefore be considered reasonably accurate. It is a far higher urgent annual capital requirement than the sum which has been agreed in principle as Housing capital funding for the next 5 years.

During the last 10 years a number of estates – Oak Tree Gardens, Cherry Orchard Court and others – have been redeveloped or refurbished to a high standard, and similar works are currently in progress at both Le Squez and Le Marais. Unfortunately there are a significant number of other estates which need attention.

The best current estimate, based on detailed appraisal of the housing stock, is that 2,300 properties in some 60 locations, ranging from large estates to single dwellings, are in need of modernisation or redevelopment within the next 10 years. Unless the States are prepared to countenance the gradual closure of estates, there is no way to avoid the need to re-invest in the stock. A summary of this programme, with the list of priced works, is attached as Appendix B.

It is acknowledged that the Council of Ministers has made available a total of £6 million a year in capital funding, for each of the 5 years 2007-2011, even though this additional £30 million has to be offset against the withdrawal of existing capital bids totalling £15 million in respect of the Cedars and Ann Court Phase 1. (These 2 bids were withdrawn partly because of pressure to allocate resources to other areas, partly because a package of funding over 5 years was considered far more useful in terms of the ability to plan ahead with some measure of certainty.)

If the States approve the measures proposed in this Property Plan, the capital requirement will be higher over the first 5 years than over the last five (2012-2016), both because of the urgent nature of some initiatives, and because some refurbishment will need to take place before funds can be generated through sales of property. The capital funding already promised will therefore be needed during these early years, in order to ‘kick-start’ the redevelopment programme.

1.7 The need for regeneration in key areas

Included within the general capital need for refurbishment to bring property up to the Decent Homes Standard, there are a number of key areas, particularly within St. Helier, which look shabby and ‘tired’ and which are in urgent need of regeneration. It is difficult for a community to have pride in (and therefore care for) its living environment if it feels like a run down, cheerless, ‘concrete jungle’.

In Jersey, shortage of land zoned for building has at times created pressure to build high, with insufficient thought given to the social consequences. Often, the short-term benefit of creating large numbers of housing units on relatively small parcels of land is outweighed by the long-term social damage caused.

The Housing Department portfolio includes a number of properties which can be considered ‘high-rise’, at least by local standards: La Collette Flats, The Cedars, De Quetteville Court, Convent Court, Caesarea Court, Hue Court and Le Marais tend to provide an awkward mix of family accommodation and accommodation best suited to older people. These 2 client groups have very different needs, and the potential for friction in a densely-populated building is considerable.

It is no coincidence that some of these high-rise buildings are among the least popular accommodation – generating the highest proportion of complaints about issues such as cleaning and anti-social behaviour, and the highest number of transfer requests. Once this kind of situation gets beyond a certain level, the downward spiral can be almost irreversible, destroying all community spirit and pride.

If the States give the Minister and the Department the power to make essential strategic decisions about the housing stock, as outlined elsewhere in this report, it is the intention to put necessary resources into regeneration initiatives in key areas, righting the wrongs of the past. Chief among these target areas would be –

• demolition of the Convent Court and Caesarea Court high-rise buildings, and their replacement with new housing schemes;

• demolition of the De Quetteville Court high-rise building, and redevelopment of the site into a small complex of suitably designed sheltered homes.

In addition, in the final years of the Plan, serious consideration will need to be given to the future of the 4 high-rise blocks at Le Marais. These blocks were originally constructed in 1972, and a good deal of work was done on them between 1999 and 2002. By 2016, they will be nearly 45 years old, and will require either further expensive major work, or demolition and replacement (probably with a scheme of family houses and flats).

In the case of some of the taller blocks – particularly those in relatively good condition, with a small ‘footprint’ which would restrict the potential for redevelopment – it is proposed that remodelling as sheltered housing will be the best way forward. As was mentioned in Section 1.4.1, however, high-rise blocks can often be inherently expensive to maintain, particularly if the original standard of construction was poor. For both social and resource reasons, then, refurbishment is generally less likely to be the favoured option than redevelopment.

1.8 The Housing Department Revenue Budget

Excluding the income and expenditure associated with Housing Control and Building Loans, and recharges to Treasury funds, the Housing Department revenue budget for 2006 is broadly as follows –

Income	£’000
Gross Rents	(32,227)
Other income	(2,095)
Total income