A NEW loan-deposit scheme to help first-time buyers get on the property ladder has been proposed as part of a series of measures to help Islanders cope with the cost of living.
A Scrutiny panel has proposed resurrecting a £3 million scheme which helped 51 applicants secure their first home after it was launched in 2013 by providing them with interest-free loans to pay for 75% of their property deposit.
Since then, little government support has been provided for Islanders hoping to buy a home despite house prices soaring. Over the past year, the price of a house has increased by an average of 8%, while average wages have increased at a much slower rate.
Citizens’ Advice chief executive Malcolm Ferey welcomed the plans, saying that many of his clients would like to ‘get on the property ladder, if they were able to afford it’.
The move is one of five amendments to the Government Plan proposed by the Corporate Services Scrutiny Panel. Other amendments include proposals to help Islanders with food costs, increased stamp duty on expensive properties, halving a planned increase in the long-term care charge and a boost in the child tax allowance.
The panel’s chairwoman Senator Kristina Moore explained that the panel had proposed that £5 million be transferred to the Dwelling Houses Loan Fund, rather than the Stabilisation Fund, to help finance a new scheme.
‘If you look at the Government Plan you will see that £10.2 million has been allocated to help with housing but not until 2021 so, I think we need something sooner,’ she said.
‘We have proposed that £5 million is taken from the consolidated, or stabilisation, fund and would like to see a loan deposit scheme introduced, similar to the one in 2013.
‘Fifty-one households benefitted from that scheme under which they received interest-free loans to fund the deposits to buy their homes.’
There is currently just over £5 million already sitting in the Dwelling Houses Loan Fund but the government has no current plans to use the money.
The amendment would request the Children and Housing Minster Sam Mézec to present a new scheme as soon as possible next year.
Mr Ferey said: ‘Anything that helps people to get on the property ladder has to be a good thing and we know that buying property in Jersey can be very difficult, so for aspiring people to get a leg up in this way has to be welcomed.
‘I understand that money would have to be found to do this but ultimately if more people are able to buy homes then that benefits the economy because they end up spending money on things like furniture and redecorating.
‘A lot of our clients do say that they would like to get on the property ladder, if they were able to afford it. So, it is always good to see anything which can help them achieve that dream.’
The panel has also lodged amendments to boost the food-cost bonus, which helps families on low incomes to cope with the cost of GST on food, and to halve the proposed increase of 1% on the long-term care charge.
‘We have spoken to Citizen’s Advice about the foods-cost bonus,’ said Senator Moore.
‘It was introduced in 2014 to mitigate the impact of the introduction of GST on lower-income families. It hasn’t increased since then, so we have proposed increasing it from £225 to £258, which is a 12% increase.’
She added: ‘With the long-term care charge, the actuary report of 2017 suggested that we only need to put it up by 0.5%.
‘But they have decided to put it up by 1% on the basis that they really want to build up the Social Security Fund. We are worried about the potential impact on the economy of this level of increase, especially with all the uncertainty that you have at the moment.’
The panel has also lodged an amendment proposing changes to stamp duty to increase takings on high-end properties to increase income by more than £1 million.
And a further amendment, if approved, would increase the child-tax-allowance thresholds, with the aim of providing additional support for families, at an estimated cost of around £800,000 per year.