The purpose of this report is to make the case for low cost housing as a necessary and enduring part of a functioning housing system and highlight the range of options being explored to ensure that genuinely low cost homes continue to be part of the development mix.
We feel it is essential to do this now in the wake of radical changes to the funding for the building of social housing for rent including the replacement of the Social Housing Grant with the Affordable Homes Programme (AHP) and the escalating costs in the private sector which are putting market rent and sale beyond the reach of many.
The Affordable Homes Programme was introduced in 2011 for four years and is now being continued for 2015-2018. The central premise of the Affordable Homes Programme has been that rent has to rise to up to 80% of market rent for new tenants.
As benefits are also capped as part of ongoing welfare reform, there is concern that the consequence will be an exodus of low paid people away from urban centres.
Caps on housing benefit and a shortage of property in the private rented sector have contributed to a 129% rise in the number of households who were placed outside London. Between April and June 2013 there were 259 families housed outside London, compared with 113 in the same period in 2012.
Meanwhile, according to the Office for National Statistics, 42% of 106,000 Londoners who moved away in 2012 were aged between 25 and 44, the highest figure since 2007.
If this is representative of a longer term trend, we may well be re-setting the economic and social foundation stones of future communities and of towns and cities where rents and sale prices accelerate faster than income or benefit support.
Moreover, the supply gap is getting bigger. One startling headline from Inside Housing is that only one council house is currently being built for every SEVEN sold off under the Right to Buy initiative. In the private sector, shortage of supply means rent and sale prices show no sign of abating, with London rents predicted and average house prices predicted to rise by 30% by 2020.
A significant group now face exclusion from any new supply. These ‘New Nomads’ range from benefit dependents to young professionals as well as families seeking to stay in locations near work, schools and kin.
Our argument is that, as well as providing housing for sale at, or near, market rent, a balanced and economically sustainable community, village, town or city needs a greater supply of low cost housing.
This is housing that is affordable to those entering, or already in, the housing market, or households who are unable to access current planned or available supply either because of their economic situation or stage in their lives.
We are, of course, conscious of the major regional differences relating to supply and, for the purposes of this study, our focus is on the provision of low cost housing in higher value areas and predominantly London and the South East and on examples of schemes in Manchester and the North East which bring new approaches to the provision of lower cost housing for sale.
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Chair: Mike De’Ath, Partner
HTA
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