'When pondering the question of affordable housing, could Jersey take inspiration from California?'

Robert Surcouf

By Robert Surcouf

FATE can sometimes be very helpful and, today, as I was struggling with writer’s block and uncertain about what to write, a phone call out of the blue from a friend to whom I had not spoken for a few years gave me the inspiration to write once again on the topic of affordable housing.

Not again, I hear you say, but please bear with me as we take a slightly different view on what we might do as a society to make a real difference. Many commentators, myself included, have raised the importance of building new affordable homes but, being realistic, they are never going to be truly affordable because of the costs of building in this Island. So, what can be done?

We have heard much talk from the past and present governments about modern building methods, modular construction, prefabricated units, onsite offsite, Cornwall, Poland, above parking spaces and even a tunnel to France.

The real question is: Will any of this happen? Will it materially reduce building costs or even speed up the building process? Sadly, we have been waiting a long time to see any improvement.

If positive change is possible, it is unlikely that it will materially reduce the cost of new homes. Though every effort made towards this is positive, the cost of borrowing has risen to such a level that it has wiped out much of the anticipated reduction in the cost of housing in terms of affordability.

Now, back to the telephone call that got my fingers to dance across the keyboard late at night. My friend has spent a large part of his adult life working in California. He and his family have split their time between the west coast of America and Jersey for several decades.

He was recently catching up on a number of articles in the JEP and wanted to take me to task on a couple of points, which led to the unexpected call. He is a very talented businessman, a fellow petrolhead and a devoted family man. He is also someone whose views I very much respect, so it was a very interesting and informative call, raising many valid points about elections, voting, the lack of positive engagement with young people and, of course, housing.

As we tried to put the world to rights, we eventually both agreed that the cost of housing and its availability was causing so many other problems throughout our society. If left unaddressed, even more young people would leave and it would become more and more difficult to attract much-needed skills to the Island. The future for Jersey would start looking like a very expensive retirement village.

He then shared a very interesting approach to housing affordability that he noted was gaining popularity in California and which he felt might have some mileage here in Jersey, and I tend to agree with him.

In California, the authorities are very much focused on creating new affordable homes, something which we will hopefully see locally. No surprise there then. The really interesting revelation was the development of ‘not-for-profit mortgages’, facilitated through charities. These Californian charities are funded by a mix of donations and long-term interest-free loans from wealthy benefactors who appreciate the importance for so many in the community of having the opportunity to buy a home and want to make a positive difference.

Holding these funds, the charities can then provide long-term mortgages at very low interest rates and often with minimal deposits to assist people to get on the property ladder. The focus is often on working with potential borrowers who perhaps have non-traditional income sources or who may not meet the strict requirements of existing lenders. They will focus on families with a track record of paying rent or of working multiple roles, and who clearly have the ability to service a reasonable level of mortgage.

Many of these families would never be in a position to benefit from a traditional mortgage but, with the varied lending criteria and a focus by the charities on outcomes rather than income, they can deliver on their stated aim of supporting families into home ownership.

The question has to be whether such an approach could perhaps work in Jersey. Would individuals either donate to such a charity or make long-term interest-free loans to an organisation that would provide such favourable loans?

A hybrid might be if some individuals could, through such a charity, invest in a portfolio of shared equity where they would own a proportion of 25% or 50% of a number of homes.

They would not receive any rent, but they would not incur any of the costs of being a landlord. Over time, they would still have a long-term investment in bricks and mortar, which has been a very popular investment over the years. These would need to be set up as long-term opportunities, as the owner occupier would be the only person to have the right to commence the sale process.

An added advantage of higher share equity is that those owner occupiers who perhaps own only 50% of their family home but are incurring 100% of the maintenance and running costs would be more likely to sell the home and right-size when the time is right. A new family could acquire the home and the original owner occupier could own 100% of a smaller property that better suits their needs.

At this stage, this is nothing more than a rough idea that would need more work but if Californians are willing to support such an approach and it is working in practice, then maybe, just maybe, this is worth exploring in Jersey?

  • Robert Surcouf comes from a Jersey farming family, though his mother was Spanish and moved to Jersey in the 1960s. He became an accountant and now specialises in risk and enterprise management. A father of two school-age children, he still helps to organise, and participates in, local motorsport events and was one of the founding members of Better Way 2022 before the last election. The views expressed are his own.

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