Could we be about to see a rent cap in Jersey?

26 Apr 2019

Rent prices are increasing year on year. The latest figures from Jersey's housing price index show that, in the second quarter of 2018, rent prices increased by 10 per cent compared with the first quarter of the year. In the fourth quarter of 2018 rental prices were 18 per cent higher than in the same quarter in 2017.

Reading the above figures, it is not surprising that there was a petition online to cap rental prices at 30 per cent of the tenant's income. This petition received over 5,200 signatures. Due to the high number of signatures received, politicians had to consider the issue for debate.

The Housing Minister, Senator Sam Mezec, stated that rent caps are one option. However, due to the limited success of rent caps in other jurisdictions he has proposed instead to repurpose empty properties and to restrict foreign investment.

Caution should be exercised in relation to governmental intervention in the private rental market as too much red tape can actually lead to a situation that is to the detriment of tenants. For example, when rent controls were introduced in parts of Scotland, rents increased markedly immediately before the controls were implemented.

The introduction of a limit in rental income might stop investors from entering the private landlord market. If investors are deterred from purchasing properties then there may be a reduction of stock available for tenants - so a cap couldĀ  have a negative impact on the supply of properties available. The quality of properties may also reduce as lower rents might leave landlords with less income to maintain their properties.

One of the main issues in Jersey is a shortage of affordable housing. This is a complex issue but it seems unlikely that it will be fixed completely by putting a cap on the rental market.

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