In 2013, politicians agreed to set up Andium Homes, transferring the Housing Department stock and allowing the new company to increase rents to 90 per cent of the market value.
These rents are pushing up income support costs for most tenants, who can’t afford to pay at these inflated levels, and create a tax on the minority of tenants who do not need income support.
Increases have been rationalised on the grounds that a significant investment was needed to refurbish social housing which had been neglected for many years. Andium was asked to get all its properties up to a decent standard by 2024. However, in its recently published annual report, the company is now aiming to reach this target four years early.
While this is good news for individual tenants, the extra activity is adding to the demand in the construction sector, increasing prices and fuelling immigration. Andium is also pushing up land prices by bidding for new development sites in addition to the States sites earmarked for social housing. Although it has a £250 million loan from the States, it is now looking for private finance for some of these deals.
Andium has received all its 4,500 properties from the taxpayer at no cost, yet it will keep the full sale price when a house is sold.
This is on top of the higher rentals, which are forecast to increase from £46 million in 2016 to £59 million by 2020. The overall impact of this extravagant funding model is that by the early 2040s Andium is projecting a cash surplus of well over £100 million.
Lower rentals would remove the requirement for Social Security to pay rental subsidies and make it easier for tenants to be more financially independent. Returning the value of property sales to the States would reduce Andium’s cash surplus to the betterment of the States as a whole.