Monday, 12 October 2015

Cameron's approach to "affordable housing" will be a disaster

It is less than one month since I wrote about affordable housing. You may recall that I was extremely critical of how, over the last five years, central government has hiked up the price of new “affordable” properties for rent.

Since then, the Prime Minister has declared that he intends to change planning rules, again, so that property developers no longer have to build affordable homes for rent.

What David Cameron actually said at the Conservative Party Conference was: “For years, politicians have been talking about building what they call ‘affordable homes’ – but the phrase was deceptive. It basically meant homes that were only available to rent. What people want are homes they can actually own.”

I was horrified at his speech, which was even factually inaccurate.

Here in Cornwall, we have been providing “discounted homes for sale” for many years. Found on numerous developments, both large and small, these properties were controlled via a legal agreement known as a “Section 106.”

The “106” restricts the value of the property, in perpetuity, as a percentage of OMV (open market value). Put in simple terms, when the property is resold, it must be on the same terms that it was initially purchased; ensuring that the affordable home benefits future generations.

Cornwall Council recently updated this element of its affordable housing policy. It set out, for example, that the percentage discount for a two-bed house should achieve a figure of £87,000 while for a three-bed house it should equate to £104,500.

It is an approach that has worked well, but it has been undermined by central government and the banking sector. Most banks and building societies are now refusing to grant mortgages for such properties, making it very difficult for local developers to identify purchasers.

Cameron’s new alternative approach is to build what he calls “starter homes,” which would be sold at a 20% discount. But according to government documents, outside London, the discounted price for these properties “should be no more than £250,000.”

It really does beggar belief that some MPs think a £250,000 property is affordable.

The Government has also made it clear that these “starter homes” would not be “affordable” in perpetuity. The Government states that the discount would be a “one-off,” benefiting just a single family, and after five years the property could be sold at its open market value.

Is it any wonder that the housing charity Shelter branded Cameron’s so-called starter homes as “unaffordable,” while the homeless charity Crisis condemned the plan as “disastrous.”

[This article will appear in this weeks Cornish Guardian].

1 comment:

craig weatherhill said...

Cornwall Council's approach does not help. Not long ago, I designed an affordable house, and obtained planning permission for it. It was tight going to keep it affordable. It then came to a Section 106 agreement. Does Cornwall Council have a set template for these that it can just run off for both sides to sign? Done and dusted in 24 hours? No. CC strung the whole thing out for a year, during which the cost of building materials was rising. And that wasn't all. They charged an extra hourly, exorbitant rate for the time and work of the Council's own in-house solicitor, but...hang on! Doesn't that person already receive a handsome salary for the work that he/she is employed by us to do? What is it that we were paying for? And why? For me, the question was, is this fraudulent practice? By the time that lot was paid, the house was on the verge of being unaffordable and it very nearly didn't get built at all! This Council's whole approach to affordable housing consists of lip service at a profit to itself.