There are calls for a rethink in the way rents are calculated in Jersey.
It comes after Andium Homes announced above-inflation increases for tenants, as directed by the States.
Jersey Citizens Advice has written to the States' Housing Policy Development Board to say the formula that is used to calculate rents is flawed.
Rents in Jersey are typically in line with the Retail Price Index (RPI), a calculation that measures the rate of inflation. This year RPI was set at a rate of 2.8%.
In Jersey, private rental costs are used to help calculate the RPI rate. Jersey Citizens Advice argue that this is unfair as it means some renters will end up paying more than the market value of houses.
We know of a scenario where a Jersey landlord rented out a one bed apartment to a tenant in 2009. At the time he received advice from an estate agent to set rent at £13,600 and to include a rent review clause linked to RPI in the lease. Accordingly, rents were increased each year in line with RPI until 2018 when the tenancy came to an end and by this time the annual rent payable had £17,971. However, when the property came to be re-let estate agents advised that the maximum annual rent achievable was only £15,000. This illustrates that on this occasion rent was well beyond the market rental figure. We suggest that there may well be other similar cases.
Jersey Citizens Advice are now campaigning for a RPI rate that does not include rental costs in order to provide a 'fairer measure for landlords to measure their rent increases'.