Gib’s housing dilemma

By Daniel Herbert

GBC’s Viewpoint recently focused on housing. It is heartbreaking to see people living in such dire conditions in Gibraltar in 2024. It is also extremely sad to hear that individuals who were shown living in squalid conditions on GBC’s viewpoint programme in 2020, continue to live in such abhorrent conditions today.

Unfortunately, the debate on viewpoint did not address (for various reasons) a number of points relating to housing, nor did it address in detail any proposed measures to attempt to fix the housing problem being faced in Gibraltar.

Whilst an elected Government is only in power for four years at a time, and there is only so much you can do in that four-year period, it is still possible to plan ahead and put the wheels in motion for those policies to be implemented and accepted gradually. The full extent of a policy may not see its true fruition for a number of years, and a good policy may take time to plan execute.

Housing has been an issue in Gibraltar for hundreds of years. Demand has always outweighed supply. We are and always have been a prosperous nation. We evolved from a goods and shipping hub to a financial services and gaming hub. Prosperity inevitably attracts people, but unfortunately, we are finite in land. We can only reclaim so much. GBC aired a great programme on the history of housing in Gibraltar called “The Housing Endemic” which touches on these points and which I would recommend that everyone should tune into.

HELP TO BUY SCHEME

Over the years there have been some successful 50/50 co-ownership development schemes (such as Harbour Views, Montagu Gardens, Waterport Terraces, Mons Calpe etc). These properties were all purchased “off-plan” and the purchaser paid instalments towards their purchase whilst the properties were being built. The time is fast approaching where we are going to run out of land to build these 50/50 developments. However, there will be lots of people looking to buy their first house each year. The current lowest listing price for a two bed in an original co-ownership development is £260,000.00 in Gib V. Putting down a deposit of at least 10% on a property is difficult for most people, especially if their circumstances don’t allow them to live at home with family and are having to rent privately.

In England there was a help to buy scheme which only required a purchaser to put down a 5% deposit. This scheme could potentially be replicated and tailored to Gibraltar’s needs. The remainder of the deposit required, usually being another 5%, could be loaned by the Government to the purchaser to assist them with the purchase. There would need to be various conditions attached to the scheme which I won’t delve into detail on now, but you can get the gist of it by looking at how the help to buy scheme worked in the UK.

This scheme could be beneficial for first time buyers, people looking to move up the property ladder and potentially to the Government, depending on the conditions of the loans they would be providing. There is potential for the scheme to be beneficial for all the people involved, and I hope it is explored at some point.

50/50 RESTRICTIONS

Co-ownership estates were built with the financial assistance of Government and generally the terms of the lease prevent renting on the private market and restrict who the property can be sold to. This is known colloquially as the “three-year residency” market. These houses were built with the intention of housing Gibraltarians and long-term residents with more affordable housing than what was available privately. It was and still is a route for some to enter the housing market.

In April 2023, the Government announced that if certain criteria were met (the estate being over 30 years old and the owner having owned the house for at least 10 years), houses in these co-ownership estates could be sold to any person. That is to say, that, a person could come from abroad and buy a house in Montagu Gardens or Harbour Views without living here for three years beforehand, as long as the previous owner met the criteria above-mentioned. This goes against the very basis of the original policy for building the houses and against the terms of the lease that was granted. It invariably increases the price of the property, as it is available to be bought by more people, and potentially takes a property away from a Gibraltarian, or a long-term resident looking to get on the property ladder, or locals looking to upgrade from their current house.

As the population ages and the people living in these estates pass away, the houses will need to be sold if the deceased’s children already have their own house. These houses should continue to be utilised by Gibraltarians and long-term residents as they were always intended to. The ‘Help To Buy Scheme’ could help people to afford these properties, and not have to instead wait years for their house to be built. This is a win-win scenario for the seller, the purchaser, and for the community.

The recent policy needs to be revisited and revoked before too much damage is done.

NEW APPROACH TO GOVT HOUSING

As I was told recently, historically it was difficult for a local to purchase a property in Gibraltar. Only the “elite” families owned properties. It was common for multiple families to occupy one flat, and for several flats to share a communal toilet or bathing facilities. These people would put themselves on the housing list and would have to wait until the Government were able to house them in an estate.

Gibraltar has moved on from this and there is now a high percentage of home ownership. The 50/50 schemes have been paramount to this. However, not everyone can afford to buy a property, or they may not want to own a property.

There is not enough government rental housing stock to meet the needs of the community. This has been the case in the past, it is the case now, and will be the case in the future if policies and views do not change. Before we commit to building more government rentals, we need to deal with the core issue of the perception of government rental housing. The housing stock should cater for all the different types of families within the community. To name a few: The persons who cannot afford to buy or rent a property on the private market; the persons who are desperately trying to save for a house deposit; the persons who are over 18 who are still living with their parents and sharing a room with their sibling(s); the single parent going through a divorce who needs their own house to have their kids overnight. Although some people may reside in their government rental for their entire life, the ideal purpose of the housing stock is to provide a stepping stone to individuals who are going through a difficult juncture in their life and want to live independently or become homeowners but require assistance for a period of time before they can take that next step. Social housing should help to bridge the gap.

I am sure that the majority of rentals that are allocated are given to people who are in need of them at the time of allocation. This is based on the current points criteria pursuant to the Housing Allocation Scheme. The points system doesn’t currently consider your financial means, but I believe that it should. The financial means testing can be carried out as part of a person’s assessment to get a house, and/or to assess how much rent they pay per month. Every person should contribute a fair share of their wage to their government rental. This is what equality is. A person with strong financial means is entitled to live in Government rentals, but the household should pay their fair share of their monthly income as rent. It is not fair that two tenants each pay £100 in rent a month when one of them takes home £15,000 a year, and the other takes home £50,000 a year. This needs to change.

Whilst it would be ideal to implement financial means testing to all current government tenants, it is not something that would be well received by those tenants and any government would struggle to get elected with such a policy. However, it may be possible for the policy to be implemented for all new tenancies granted after a certain future date. This is a staged approach to social housing in which we may not see any benefits for several years but will start the process to eventually lead to a fully means tested government housing stock, which, will ultimately benefit those in the community who need it the most. Over time the attitude towards Government rentals should change, and we may have estates where tenants are all paying different amounts of rent, but the rent they pay should reflect a fair contribution of the amount they earn. A Government will need to bite the bullet and change the system at some point. For the benefit of the community at large, I hope they bite the bullet sooner, rather than later.

RENOVATION OF PRE-WAR BUILDINGS

Finally, I wanted to conclude my contribution piece by touching on what I believe is a common and widespread misconception. That is, the misconception that landlords are wealthy, greedy or have a portfolio of properties. The stark reality is that in fact, there are many landlords who have only recently inherited a property or a building, that they choose to rent out in the conditions they acquire them, given that often these landlords do not have the funds or means to repair or keep the property in good condition. They may also rely on the rent as their sole source of income. It is even more difficult when their buildings are pre-war and occupied by tenants with low rents protected by the housing act.

The problem with protected rents is that the properties tend to be in dilapidated condition, but due to the low rents received by the landlord, there is either no funds available or no real incentive for the landlord to refurbish them. These properties require a lot of investment to put them into a good state of repair. Whilst abatement notices can be served on the landlord, looking at the condition of properties in Upper Town, the system does not seem to be working effectively. Unfortunately, this means that people continue to live in inhumane premises for years until they are given a government house, or they pass away. In my view, this results in a lose-lose situation for everyone.

The Government urgently needs to explore options to incentivise landlords and investors to rejuvenate the upper town. There have been some successful transformations by certain developers, but it is not enough. The Upper Town is an untapped area with huge potential and a lot of heritage.

There should be a minimum standard of living for each and every person in Gibraltar in 2024. It is unacceptable for anyone to be living in poverty. The housing situation needs to be addressed and dealt with so that everyone can have a decent standard of living. I have recently joined the committee of Action for Housing to assist people in real need of support with their housing problems. The views portrayed in this opinion piece are my own views and not necessarily those of Action for Housing. I hope we see the change we need to see soon.

Daniel Herbert is a lawyer who specialises in residential and commercial property matters. He is also a committee member of Action for Housing but writes here in a personal capacity.