Open Letter to Deputy David Warr

For the Attention of:
Residential Tenancy Law Consultation Strategic Housing and Regeneration Team

Email to: housingmatters@gov.je

Dear Minister, Deputy Warr

CONSULTATION IMPROVING RESIDENTIAL TENANCIES IN JERSEY – RESIDENTIAL TENANCY LAW REFORM PROPOSALS PUBLISHED ON 14 APRIL 2023 (“CONSULTATION”)

This letter is sent on behalf of the Jersey Homelessness Board (JHSB) in response to the Consultation.

Introduction

Most Islanders recognise that Jersey’s housing system is not working and has been this way for a long time. All too often, housing is referred to and focused in terms of the rise and fall of prices, under-supply and excess-demand or how hard it is to get on the “housing ladder”. This misses the fundamental point of why our homes matter, which is that they have a huge impact on our lives.

Jersey’s housing system is in urgent need of re-designing through policy and practice change to give everyone access to decent and affordable homes. Our homes are fundamental to our health and wellbeing. Decent, affordable homes support our mental and physical health. When our wellbeing is supported, we’re able to thrive in our work and, as a result, contribute more to our society and economy.

Everyone needs a home

Context for Responses

The JHSB is an unincorporated affiliation of organisations who support people in Jersey who are homeless or at risk of being homeless. It works with those organisations from the private sector, government and third sector, working together to eradicate homelessness in Jersey. The JHSB encourages cooperation between more than 30 organisations (see https://homelessness.je/cluster for details) and supports the forum for discussion via the Homelessness Cluster, exchanging ideas on matters in which the organisations share a mutual interest and opinions on public matters.

During 2019 and 2020, the JHSB oversaw an in-depth review of homelessness in Jersey and published the Island’s first Homelessness Strategy (see http://homlessness.je). On 9 March 2021, the Minister for Housing and Communities presented to the States his formal response to the strategy, accepting most of the recommendations. JHSB continues to monitor the Government of Jersey as it works through the strategy recommendations.

In the meantime, disappointingly, there has been a marked reduction in the availability of decent affordable homes available to all Islanders and this has adversely impacted many families and, in particular, low income families and the most vulnerable.

Overall Response to the Consultation

We recognise that the availability of decent and affordable homes, particularly for low income families and the most vulnerable, is precarious with a high proportion of the population reliant on renting from private landlords. Making changes to how renting homes in Jersey is regulated and controlled is long overdue, but such changes need to be made very carefully to ensure the risk of adverse unintended consequences is reduced to a minimum.

We are wholly supportive of initiatives that ensure Jersey has a modern residential tenancy law and welcome the Consultation, however, we are of the opinion that the Consultation lacks sufficient detail and supporting data. Having carefully reviewed the Consultation, we are concerned about the apparent lack of clarity over specific and important factors, a lack of supporting empirical evidence and a lack of scrutiny and analysis as to the likely effect of the proposed changes. Similarly, whilst there are occasional references to anti-avoidance measures the lack of detail is worrying.

Our comments and observations set out in this letter are anchored to this concern and we believe that without a more scientific and disciplined approach we risk witnessing a material reduction in the number of available homes to rent with an inevitable upward pressure on open market rental values. In turn this will increase the risks of homelessness.

About the Consultation

We are aware that in respect of the proposed changes to the residential tenancy law the Government of Jersey has taken the additional following actions:-

  • 24 April 2023: States Members briefing
  • 25 April 2023: Environment, Housing and Infrastructure Scrutiny Panel briefing
  • 2/3 May 2023: 4 hour In-Committee States Assembly debate
  • May 2023: Series of on meetings held by the Minister with tenant-facing specialistorganisations, and by Officers with social housing providers (at which the social housingproviders offered to publicise the Consultation with their tenants).
  • Other public events held by the Minister and Officers to publicise the Consultation

We are also aware that the Minister has, alongside the Consultation invited responses from Islanders to “four simple open-ended questions” considered to be of most relevance to tenants and landlords, as follows:-

  • What is your opinion about limiting the amount and frequency by which rents can be increased by a landlord?
  • Do you think it’s better for tenancies to have a fixed end-date, or no specified end-date, and why?
  • Do you think a landlord should be able to give notice to end a tenancy without giving a reason?
  • Is there anything else about renting properties in Jersey that you think should be addressed as apriority?

We further note the Government of Jersey has advised the following:-

  • The four questions, and simplified versions of the online feedback survey, have been translated into Portuguese, Polish, Romanian, and have been made available to organisations working with the minority communities to ensure they can contribute their views.
  • The questions have been printed on postcards that have been distributed within the community (with a freepost address for responses), including translations from English into Portuguese, Polish and Romanian, aimed also to assist Islanders who do not have access to the Internet.
  • Anyone who wishes to access a printed copy of the survey, in English or any of the three aforementioned languages spoken by the minority communities, have had the option to do so by approaching the information points at Charing Cross as well as during the in-person events in St Helier Town Hall.
  • The Housing Advice Service, based at Customer & Local Services in La Motte Street, has also been available for Islanders to pop in during working hours to speak to a housing adviser.
  • Engagement has been sought via social media and the local press.

We welcome and support the initiatives described above, however, we are of the opinion that inadequate hard copies of the actual Consultation have been made available and the lack of multilingual copies (especially in Portuguese, Polish and Romanian) discriminates against those who do not have the ability to use equipment to download the Consultation online and those who do not speak English as a first language. It may also come across as patronising that only “simplified versions” are available to those who do not speak English.

We also remain concerned about the relatively short period of time for the public to engage in the subject and have time to respond to the Consultation. We note that the Consultation period was extended from 8 to ten weeks, but remain of the opinion that ten weeks is insufficient to ensure proper and reasoned consultation with the public.

Purpose of the Consultation

We note that the stated purpose of the Consultation is to engage interested parties during the policy development process to help the delivery of new legislation that the Consultation indicates will comprehensively modernise the legal frameworks surrounding residential tenancies in Jersey without delay.

We further note that the focus is on the management of tenancies incorporating the following:-

  • Letting a property
  • Rents
  • Security of tenure
  • Rights and responsibilities of landlords and tenants

The Consultation states it does not cover the standards for rented accommodation, which, whilst the Minister considers is important, is the responsibility of the Minister for the Environment, who is due to bring forward proposals to introduce a rented dwellings licensing scheme.

Scope of Tenancies Covered by the Residential Tenancy Law

We support the proposal to broaden the scope of the law to protect residential occupiers provided the Minister is satisfied (based on clear empirical evidence) that doing so will not result in a reduction of homes available for rent. We would like to see the Minister’s analysis of this and request he publishes this as soon as possible.

We welcome the proposal to include residential units within lodging houses.

Definition and Interpretation

We support the “in principle” proposal to expand, improve and make consistent with other laws and regulations, including establishing parity of roles and obligations between landlords and tenants. However, we are of the opinion that the Consultation falls short in providing sufficient detail of the proposals we would expect to see. We are of the opinion that further consultation is needed in this area and to ensure adverse unintended consequences do not arise.

It is unclear how the Minister proposes to deal with definitions that go to the heart of whether or not an agreement between two parties amounts to a residential tenancy or some other legal arrangement. We would have expected this to have been included within the Consultation.

For example, under English Law, the difference between a tenancy and a mere agreement or licence to occupy is clearly defined (where the test includes the tenant’s right to exclusive possession). We would like the Minister to consult on proposals to introduce a definition appropriate for Jersey and, in doing so, to share his analysis of the likely impact on the supply of homes available to rent. This should include letting of accommodation within “two-generation” homes and similar arrangements where exclusive possession is necessarily not given (and possibly even expressly excluded).

Tenancy Agreements and Documentation

We support the improvement of minimum requirements for tenancy agreements and documentation to be provided to tenants.

However, we are of the opinion that the proposal in the Consultation to change the law to require a tenancy agreement to contain a clarification of the role and responsibilities of “an agent” should not be made. It is the case that a tenancy agreement records the granting of possession by a landlord to a tenant, so any clarification of roles and responsibilities should be between those two contracting parties. An agent appointed by either party is a person acting with the authority of and on behalf of that party (usually on behalf of a landlord, but potentially on behalf of a tenant), so an agent would be subject to the role and responsibility of the party who has appointed them.

We have no comments on the minimum requirement for tenancy agreements set out in Part 2.

Tenancy Types

It is inferred from the Consultation, that the policy intent is to permit landlords and tenants to enter into only two types of tenancies, as follows:-

  1. “short term tenancy” of a contractual term of up to one year.
  2. “open ended tenancy”, a periodic tenancy which continues until either the landlord or tenant gives a valid notice to terminate (and in the case of the landlord, notice would only be valid if there is a good or justifiable reason, which we comment on below).

In the case of a short term tenancy, the Consultation is unclear as to whether it is proposed to control the type of tenant that the landlord can let to. There is reference in the Consultation to “temporary worker accommodation agreements and similar”, but this raises further questions, including:-

  • Will such tenancies only be available to people temporarily living and working in Jersey for, say, up to one year or will it be open to other Jersey residents who are also in temporary work?
  • Will such tenancies be restricted to employers (as landlords) and employees (as tenants)? If so, how will the law regulate the position when the employee’s employment terminates, for example to prevent an employee and any spouse, children or other dependents from becoming homeless? How will the law recognise employees occupying a property not as tenant but some other form of legal occupation (eg. as licensee)?
  • There are instances where “temporary workers” come to Jersey for longer periods (eg. three years), so would such tenants have to move out after twelve months, and be open to eviction by the landlord if they refused to vacate voluntarily, or would their tenancy automatically convert into an open ended tenancy?
  • How would the law regulate the situation where the tenant remains in possession after the fixed term and the tenancy turns into a periodic tenancy? Will it automatically become an open ended tenancy, or will the landlord be free to obtain possession as is the case currently? This will be of great importance to everyone renting homes (whether they be landlords or tenants).
  • Can a short term tenancy convert into an open ended tenancy?
  • What will the impact be on the supply and the market value of rents payable for such homes?

In the case of an open ended tenancy, the extent of their use will be subject to the extent of the controls overseeing short term tenancies. We submit that if short term tenancies can be freely used by landlords and tenants in any situation then they will become the typical or default choice of tenancy and open ended tenancies will be few in number. This is likely to be similar to the ratio of Assured Tenancies and Assured Shorthold Tenancies in the UK where the majority of rented homes use the latter by default.

It is important to recognise the effect on rental values by introducing open ended tenancies which are subject to index linked rents in the scenario where rents in the open market rise at a faster rate. By reducing a landlord’s ability to let at the current open market levels and only subject to open ended tenancies it is likely to result in:-

  • The landlord’s return being suppressed, thus increasing the risk to the landlord of costs not being adequately covered. This will be exacerbated further by the upward movement of mortgage interest rates for those landlords who have borrowed funds to fund their purchase.
  • Reduce options for landlords thereby increasing additional letting risks (eg. tenant risk, illiquidity).All other things being equal, an increase in such risks is likely to have the effect of reducing the attractiveness to a landlord of renting a home, which may result in some landlords:-
  • Seeking a higher return (ie. demanding higher rents for vacant properties).
  • Withdrawing from the rental market altogether (eg. by not choosing to rent or choosing to sell to owner-occupiers), thereby reducing the supply of rental homes.

Either way, this would apply upward pressure on rental values to a higher level than they would otherwise be the case. We do not believe this consequence is the policy intent of the proposed change in law.

The Consultation suggests that such factors are offset by the “benefit” a landlord derives from a tenant having to give longer notice to terminate. We are of the opinion that this benefit is immaterial and will not amount to sufficient compensation for the additional risks involved for landlords. We believe, all other things being equal, the proposals will result in an upward pressure on open market rental values for such tenancies which will impact the most vulnerable in the Island.

We note in the case of open ended tenancies, it is proposed to introduce a probationary period of six months to one year at the start of the tenancy allowing the parties to end the agreement at the end of the probationary period. It is unclear from the Consultation whether the ending of an open ended tenancy during the probationary period will be at the discretion of each party or whether some test or hurdle will have to be met. The Consultation states that anti-abuse provisions will be included but these are not described, and we are concerned that such anti-abuse provisions will not be enforceable.

The Consultation lacks details as to how it is proposed to deal with the situation of a tenant of an open ended tenancy whose housing qualification changes during the term of the tenancy.

Tenancy Succession

The Consultation does not state whether it is proposed for residential tenancies to allow for succession. For example, if an open ended tenancy is granted to one named person, is it proposed to allow family members who also live in the property to have the right to be recognised as the tenant in any circumstances (eg. where the original tenant dies or permanently leaves their home)? If so, which family members and how will the situation be dealt with? Similarly, what is the effect if the successor family member concerned has different housing qualifications to the original tenant?

Notice Periods and Security of Tenure

We support the principle that all occupiers should feel safe and secure in their home, and not live in fear of being asked to leave with very little notice. “All occupiers” is highlighted here because we believe that this principle should extend to people (1) who are tenants and also (2) who occupy a home and are deemed not to be tenants.

The need for greater security of tenure or, at least, protection from eviction for any residential occupier (whether a tenant or otherwise) was included within Recommendation 8 of our 2021 Homelessness Strategy.

We request that the Minister includes within the new law minimum security of tenure provisions for all occupiers of residential property and the procedures required for a landlord to obtain possession (including adequate notice provisions).

We request that the law be changed so that, in all cases, a property owner should give an occupier at least 3 months’ notice to vacate and the occupier should give the owner at least two months’ notice, whatever type of tenancy or occupancy exists, and the owner must obtain a court order before being able to evict an occupier.

Termination

The Consultation proposes that a landlord will be able to obtain possession in certain circumstances, such as when the property is being sold. It is unclear from the Consultation how the law will deal with other changes in ownership . Examples include where a mortgagee or other secured party or creditor takes possession of the property (including dégrèvement), or following the death of the owner.

Whilst we do not have statistics available to us, we suspect that a significant number of homes available to rent in Jersey are owned by landlords subject to mortgages or other secured borrowings. Such debt will typically be granted subject to conditions about the type of lettings the owner (as a landlord) can enter into. Typically, such lenders will be interested to ensure that they can easily sell the property in the event of the owner defaulting (eg. where the owner fails to meet the mortgage repayment requirements). If the law is changed without making provision for vacant possession being easily obtained by a secured party (following an act of default by the owner), then it is likely to result in a material number of lenders not being willing to lend against such properties. Please can the Minister publish his assessment as to the likely impact on the availability of homes for rent as a result of the proposed changes to the law.

We note that the Consultation only refers to a small number of proposed circumstances whereby a landlord would have good or justifiable cause to obtain possession of a property. We would like the Minister to consult on all proposed circumstances as the extent of these could have a material effect on the availability of homes to rent from private landlords and on open market rental values.

Evictions to be dealt with by a Housing Tribunal instead of the Court

We believe that the proposed use of a Housing Tribunal would be beneficial (for reasons we set out in more detail below), however we submit that, in the case of evictions, the remit of the Tribunal should be to consider the termination of a tenancy or right to occupy and not actual eviction.

Where an owner wishes to obtain vacant possession of an occupier’s home we believe the law should provide a two stage process as follows:-

  1. An application be made to the Tribunal to determine whether or not the owner’s reason is justifiable and in accordance with the law and if so the Tribunal confirms the date that the occupier is to give up possession.
  2. Following the Tribunal’s decision that the reason is justifiable, if the occupier fails to provide vacant possession by the date stated by the Tribunal the owner is at liberty to apply to the court for an order requiring possession, following which the right to eviction is given.

Property Maintenance

We agree that all residential occupiers should not be living in homes which are deemed uninhabitable. We note that existing legislation gives powers to the Minister for the Environment to enforce improvements to property where applicable. We do not think there is a need to layer additional legislation which could lead to unnecessary complications and duplication of effort. Rather, we believe the Government of Jersey should ensure that the officers acting for the Minister of the Environment be adequately resourced to ensure they can confirm that homes are fit for human habitation and can take timely enforcement action when this falls below standard.

We are therefore of the opinion that the proposal to give greater clarity on what constitutes uninhabitable accommodation should be the remit of the Minister for the Environment and not fall under the Residential Tenancy Law. Any complaint as to whether or not a property is fit for human habitation should be a matter for the Minister for the Environment.

As to the proposal that there would be a rent suspension in the event of a property becoming uninhabitable because of an “Accident”, whilst the Consultation does not state it, we assume this would amount to a situation that arises which is neither the fault of the Landlord nor the fault of the Tenant. Such a provision is likely to lead to arguments as to what amounts to an accident. We believe the Minister should further consult on proposals in this respect.

We note that the Consultation makes no reference to the distinction between “improvements” versus “repairs”. We would like to understand the Minister’s proposals as to whether there is proposed to be minimum repair obligations placed on a landlord and/or a tenant and whether the proposed approach for a short term tenancy will be the same or different as an open ended tenancy.

We would also like to understand how the Minister proposes to deal with improvements undertaken to a tenanted property either by the landlord or the tenant and, either, with or without the other party’s consent and/or in breach of the contractual terms of the tenancy agreement. Also, does the Minister propose a different approach depending on the tenancy type?

We would also like to see analysis and forecast of the likely improvements that landlords will or will not be willing to make over time in respect of open ended tenancies. To what degree will landlords be unwilling or unable to make improvements if their return is suppressed (as discussed earlier in this letter)? What is the risk of the quality of rental stock in Jersey reducing over time?

Rents and Charges

We support the need for clarity as to the rent and charges payable by a tenant.

We also support, in principle, limiting rent increases annually to the equivalent increase in Jersey’s Retail Prices Index. However, we are concerned about the unintended consequences of the proposals set out in the Consultation that could lead to fewer homes being available for rent and upward pressure on rents.

For example, if the Minister proposes that a landlord has free choice whether to rent under either a short term tenancy or an open ended tenancy, it is highly likely the former will be preferred (for the reasons described elsewhere in this letter). Short term tenancies will by their nature end regularly which will enable the landlord to relet the property at the then market rental value. These could run ahead of open ended tenancies if market rents rise faster than inflation which could result in a two tier market.

However, if the Minister proposes that all tenancies must be open ended tenancies which are subject to index linked rents (other than a relatively small number of excepted short term tenancies) then, all other things being equal, as the open market rent values rise faster than inflation, over time it will be in a landlord’s interests to find legitimate ways to end the tenancy. For example, it may become economically worthwhile to sell the property and reinvest the proceeds in a new rental property at current market rental levels. Or to terminate the tenancy, arrange for the property to be occupied for their own purposes and relet the property in the future to a new tenant at the then market rent.

The Consultation lacks details in this respect and we ask that the Minister provides more details, analysis and research for further consultation.

Powers of Investigation

We have no particular comments on the powers of investigation by officers.

However, we would like to understand the analysis undertaken by the Minister as to the resources required to undertake investigations fully and the likely cost.

Offences and Penalties

We have no comments on the proposed changes to offences and penalties.

Codes of Practice

We support the introduction of a code of practice for residential tenancies noting that whilst they have no legal status, compliance can aid a defence relating to potential breaches of legislation and may encourage best practice.

Regulations and Orders

We support the use of subordinate legislation which enables flexibility when circumstances change.

Social Housing Providers and Tenancies

We support the introduction of formal definitions for social housing and the requirement for social housing providers to set rents in accordance with a social rents policy and to prioritise allocation to those with specific housing needs.

Establishing a New Housing Tribunal

In principle, we support the introduction of a new housing Tribunal and we set out our general comments against key benefits as follows:-

Efficiency and Timeliness: The Housing Tribunal should aim to provide a more streamlined and efficient process compared to traditional courts, allowing for quicker resolution of cases.

Expertise and Specialisation: The Tribunal should consist of members with specialised knowledge and expertise in residential tenancy laws and related issues, ensuring that decisions are made by individuals well-versed in the subject matter.

Accessibility and Procedural Simplicity: The Tribunal should be designed to be accessible and user- friendly, ensuring that both landlords and tenants can easily navigate the process without requiring extensive legal representation.

Mediation and Alternative Dispute Resolution: The Tribunal should encourage mediation and alternative dispute resolution mechanisms to facilitate negotiation and settlement between the parties, promoting a more collaborative approach.

Procedural Fairness and Due Process: The Tribunal should adhere to principles of procedural fairness and due process, ensuring that both landlords and tenants have a fair opportunity to present their case and challenge evidence.

Legal Aid and Support: Adequate provision of legal aid services and support should be available to tenants who cannot afford representation, ensuring equal access to justice and preventing power imbalances.

Expert Determination: The Tribunal should have the authority to make informed and expert determinations on eviction cases based on the relevant laws, regulations, and precedents, instilling confidence in the fairness and accuracy of its decisions.

Education and Public Awareness: Public education and awareness campaigns should be conducted to inform landlords and tenants about their rights and responsibilities, as well as the availability of the Tribunal as an alternative dispute resolution route.

Data Collection and Analysis: The Tribunal should maintain a comprehensive database of eviction cases and outcomes, enabling the collection of statistical information to identify trends, issues, and potential systemic problems.

Review and Accountability: The Tribunal’s decisions and processes should be subject to appropriate mechanisms of review and accountability, ensuring that errors can be corrected, and that the Tribunal operates within the bounds of its terms of reference.

However, we are concerned that, depending on how measures are introduced, there may be a risk to tenants referring their case to the Tribunal. We submit that appropriate measures are required to mitigate the risk of a tenant facing discriminatory practices by current and future landlords who are aware that the tenant has referred a case to the Tribunal. The law should therefore incorporate appropriate sanctions against a landlord who breaches such measures.

Homelessness

Homelessness impacts different people in different ways, from rough sleeping, through inadequate accommodation, to being threatened with eviction. Its causes are many, often complex, and may be caused by a combination of compounding factors.

Homelessness needs tackling to prevent its potentially devastating impact on individuals, their children and other family members. Doing so also means Government will spend less on the wider impact of homelessness and positive wider economic benefits result as those individuals affected are more able and likely to become more productive members of society.

We support measures that help people out of homelessness or at imminent risk of being homeless. Given many people in this situation are most likely to rent and not own their own home, the proposed changes to the residential tenancy law are in principle supported by us. However, as stated earlier in this letter, it is essential that changes are made after careful review of evidence, analysis, and specialist advice on the true impact of the changes. The most vulnerable in the Island will be impacted the most by unintended consequences and we request the Minister prioritise these first by researching the likely impact before taking the action proposed.

We are concerned that whilst the Minister has published a definition of homelessness in October 2022, we still do not have a clear picture of the true scale of homelessness in Jersey. This is something the Homelessness Cluster have been requesting since their first meeting in 2018 and is the first recommendation in our Homelessness Strategy. At this time, we find it difficult to see how the Minister can propose changes to the law without such data and analysis of the likely impact of the changes.

Rental Deposit Scheme

We do not have any specific comments in respect of the content of the Consultation on this subject.

Separately, we note that, pursuant to the Residential Tenancy (Jersey) Law 2011, the States may by Regulation make provision in respect of deposits, which includes restricting or limiting deposits. We note that there is nothing in the Consultation that proposes an introduction of such provisions. For lower income families, tenants with a poor credit history or having a poor rental history restricting the level of deposits may seem very attractive, but we would not support such intervention and believe other measures would be preferable. The reason we would not support such intervention is because the increased likelihood of tenants who are perceived by landlords to be a higher risk of default (eg. those with lower household income, with poor credit history or having a poor tenant history) finding it harder to secure a home to rent. Such tenants may find it harder as some landlords may not be willing to let to them if the restricted deposit did not cover the perceived increased risk. Instead, we would support other measures, such as a government backed tenant guarantor scheme.

Closing Remarks and Offer to Meet

Our comments set out above are intended to be a constructive response to the Consultation and to reflect the views of the organisations within the Homelessness Cluster.

Please let us know if you have any questions in respect of the above. We would be pleased to meet in person to discuss any of the matters raised.

Thank you for the opportunity to respond to this important Consultation.

Yours sincerely,

Simon Burgess
Independent Chair