THE AFFORDABILITY CRISIS (Part 1)
We make no apologies for banging on about housing affordability, it is to many people the real ‘housing crisis’, together with an acute shortage of social rented accommodation for those on reduced or restricted means.
There is no easy answer to fixing the high house prices that prevent (young) first time buyers getting into the housing market. It’s a major problem and the author of this article has 2 children in their 20s that are struggling to buy a house or flat locally, so can sympathise.
The issue is primarily the affordability gap, that is the difference between the level of borrowing that can be achieved based on income (typically 4 or 5 times through a mortgage) and the market price of a property. Whilst in some situations this can be bridged by a large deposit, many young people don’t have the ability to save the amount required, especially if renting in the meantime. The bank of mum & dad might come into play!
In our area, using council published data, an average entry house price in the borough (significantly higher in Billericay) is around £268,000, whereas average income is about £35,000. That’s a multiple of nearly 8x wages to house price, whereas it’s almost impossible to borrow more that 5x and it’s typically nearer 4x. In this example, for a very modest property, the affordability gap is around £100,000! The council states that 57% of the borough’s residents can’t afford such a property and that an income of £44,000 is needed. We think that it’s nearer £50,000 assuming a 10% deposit.
Even if the Basildon town centre regeneration goes ahead, the cheapest property we are likely to see anywhere (a 1 person studio in a tower block) will be at least £200,000 by the time they get built. The person on the average income of £35,000 can’t afford that either as they would only be able to borrow around £150,000. It would require a deposit of around £50,000 to bridge the gap, or an income of of over £40,000 and a 10% deposit.
The two obvious solutions clearly being (1) earn more money which is easier said than done considering that it would require a minimum increase of 20% per annum in the examples above, or (2) reduce the market price of property.
Being able to earn more money is not assured so is seeing lower priced housing on the market a reality?
The hard answer is NO!
A lot of people won’t want to hear that, but there is absolutely no clear evidence that house prices will reduce by the 25% or more needed to plug the affordability gap in our area. We might see some small reduction in house prices as a result of the current financial situation of high interests rates (another problem for house buyers as it limits borrowing further) and cost of living pressures due to inflation. The 25% required is an exceptional and unprecedented reduction. Even during the global crash of 2008 the fall in house prices was not around 20% and prices recovered very quickly.
Many will no doubt scream “what about the basic laws of supply and demand”. Surely if we build a lot more they will get cheaper. That’s what we were taught in economics at school! This is fundamentally what the Government, developers and those with a vested interest in building (and making money) continually try to push.
Unfortunately it is now well proven and accepted that supply has very little impact on house prices. The Bank of England supports this view. Other financial reports state that even if we built the Government’s manifesto promise of 300,000 houses a year, it would take the best part of a generation for it to have any noticeable effect on prices and even then just 1 or 2%. To put that figure into context, house prices have increased by 15% in the last 3 years alone.
Another factor is that the housing market tends to build to demand. There is absolutely no way that development companies will speculatively mass build houses (flood the market) if there is an empty order book. Building a house is expensive when you consider the cost of land and the ever increasing cost of construction. Companies will stop building if there are no buyers which is exactly what we are seeing in the industry now. Some are laying off workers too. And of course, any reduction in house prices eats into the builders profits as the cost of land and construction are fixed or rising.
In fact, in certain circumstances, even if the land was free and the developer made no profit, the cost of construction alone would be more than a person on average income could afford!
There is also one other very important reason why we are very unlikely to see any significant fall in house prices and that is for every 1 person wanting to see lower prices, there are thousands more that want prices to stay high or carry on increasing. The developers obviously, but it applies to every existing householder as that increased price is also in effect increased profit and that might be a key part of their financial planning, such as a providing a future pension. Private and institutional investors in private rented property also want to see continued high prices to protect or increase their assets.
The fact is that property now is much a financial asset or instrument as it is a home, possibly more so. If the cost of new build property reduces, whether naturally or artificially in some way, it will have a direct impact on the value of existing property in the same area.
Why is all of this important?
Basildon council is currently running a consultation on housing provision in the borough, and later this year they will launch a consultation for the next Local Plan. Both focus on affordability and what the council is going to do about it. Or what they would like to do.
It is therefore necessary for residents to fully understand the matter of affordability and what affordable housing really means. We are not convinced that this is properly explained by the council in its current or future consultations, and in part they are wrongly promoting cheaper housing. This could very easily give residents the wrong impression which in turn could lead to them unknowingly supporting mass building but with no tangible affordability benefit to most local people trying to buy a home as a result.
We will cover this further in Part 2 in a few days.
We make no apologies for banging on about housing affordability, it is to many people the real ‘housing crisis’, together with an acute shortage of social rented accommodation for those on reduced or restricted means.
There is no easy answer to fixing the high house prices that prevent (young) first time buyers getting into the housing market. It’s a major problem and the author of this article has 2 children in their 20s that are struggling to buy a house or flat locally, so can sympathise.
The issue is primarily the affordability gap, that is the difference between the level of borrowing that can be achieved based on income (typically 4 or 5 times through a mortgage) and the market price of a property. Whilst in some situations this can be bridged by a large deposit, many young people don’t have the ability to save the amount required, especially if renting in the meantime. The bank of mum & dad might come into play!
In our area, using council published data, an average entry house price in the borough (significantly higher in Billericay) is around £268,000, whereas average income is about £35,000. That’s a multiple of nearly 8x wages to house price, whereas it’s almost impossible to borrow more that 5x and it’s typically nearer 4x. In this example, for a very modest property, the affordability gap is around £100,000! The council states that 57% of the borough’s residents can’t afford such a property and that an income of £44,000 is needed. We think that it’s nearer £50,000 assuming a 10% deposit.
Even if the Basildon town centre regeneration goes ahead, the cheapest property we are likely to see anywhere (a 1 person studio in a tower block) will be at least £200,000 by the time they get built. The person on the average income of £35,000 can’t afford that either as they would only be able to borrow around £150,000. It would require a deposit of around £50,000 to bridge the gap, or an income of of over £40,000 and a 10% deposit.
The two obvious solutions clearly being (1) earn more money which is easier said than done considering that it would require a minimum increase of 20% per annum in the examples above, or (2) reduce the market price of property.
Being able to earn more money is not assured so is seeing lower priced housing on the market a reality?
The hard answer is NO!
A lot of people won’t want to hear that, but there is absolutely no clear evidence that house prices will reduce by the 25% or more needed to plug the affordability gap in our area. We might see some small reduction in house prices as a result of the current financial situation of high interests rates (another problem for house buyers as it limits borrowing further) and cost of living pressures due to inflation. The 25% required is an exceptional and unprecedented reduction. Even during the global crash of 2008 the fall in house prices was not around 20% and prices recovered very quickly.
Many will no doubt scream “what about the basic laws of supply and demand”. Surely if we build a lot more they will get cheaper. That’s what we were taught in economics at school! This is fundamentally what the Government, developers and those with a vested interest in building (and making money) continually try to push.
Unfortunately it is now well proven and accepted that supply has very little impact on house prices. The Bank of England supports this view. Other financial reports state that even if we built the Government’s manifesto promise of 300,000 houses a year, it would take the best part of a generation for it to have any noticeable effect on prices and even then just 1 or 2%. To put that figure into context, house prices have increased by 15% in the last 3 years alone.
Another factor is that the housing market tends to build to demand. There is absolutely no way that development companies will speculatively mass build houses (flood the market) if there is an empty order book. Building a house is expensive when you consider the cost of land and the ever increasing cost of construction. Companies will stop building if there are no buyers which is exactly what we are seeing in the industry now. Some are laying off workers too. And of course, any reduction in house prices eats into the builders profits as the cost of land and construction are fixed or rising.
In fact, in certain circumstances, even if the land was free and the developer made no profit, the cost of construction alone would be more than a person on average income could afford!
There is also one other very important reason why we are very unlikely to see any significant fall in house prices and that is for every 1 person wanting to see lower prices, there are thousands more that want prices to stay high or carry on increasing. The developers obviously, but it applies to every existing householder as that increased price is also in effect increased profit and that might be a key part of their financial planning, such as a providing a future pension. Private and institutional investors in private rented property also want to see continued high prices to protect or increase their assets.
The fact is that property now is much a financial asset or instrument as it is a home, possibly more so. If the cost of new build property reduces, whether naturally or artificially in some way, it will have a direct impact on the value of existing property in the same area.
Why is all of this important?
Basildon council is currently running a consultation on housing provision in the borough, and later this year they will launch a consultation for the next Local Plan. Both focus on affordability and what the council is going to do about it. Or what they would like to do.
It is therefore necessary for residents to fully understand the matter of affordability and what affordable housing really means. We are not convinced that this is properly explained by the council in its current or future consultations, and in part they are wrongly promoting cheaper housing. This could very easily give residents the wrong impression which in turn could lead to them unknowingly supporting mass building but with no tangible affordability benefit to most local people trying to buy a home as a result.
We will cover this further in Part 2 in a few days.
THE AFFORDABILITY CRISIS (Part 2)
Two definitions from the Cambridge dictionary….
Affordable - “not expensive, cheap, reasonable”.
Affordable Housing - “a provision of housing to make home ownership accessible to buy for those who would otherwise not be able to”.
Those are not the same by a long way. It’s important to understand why.
In part 1 of this article we highlighted that, other than a global financial crash greater than 2008, house prices are not going to reduce enough (25%+) to make them more affordable to most people in work on average earnings, regardless of how many are built.
So what is this so called ‘affordable housing’?
Most importantly, it’s not what most people think. It is not lower priced housing on the open market i.e. cheaper.
It is actually a very prescribed type of housing as defined within the planning system. When Government, developers, planners, councillors etc. talk about affordable housing, or just affordable, they are very specifically talking housing under 3 possible tenures.
In the withdrawn Local Plan, and expected to be carried forward to the next version, Basildon council set a policy that 31% of all developments (of over 10 units) should be affordable housing. National planning policy dictates that they need to make provision for such housing. Each local authority sets is own percentage, it is not a national figure. 31% is actually on the low side compared to neighbouring boroughs.
Historically this is broken down into 70% at reduced market rent (typically a 20% reduction) and 30% as intermediate housing, otherwise known as shared or part ownership. The Government recently introduced a third category under the First Homes scheme which it expects to form around 25% of the affordable home provision. It’s not clear but we assume it will replace some of the shared ownership properties. First Homes are sold at a discount. We will expand on these 3 tenures below.
As an example, on a development of 200 houses, 62 should be affordable housing of which 32 will be at reduced rent, 14 for shared ownership and 16 as First Homes.
The provision of all affordable homes is via a Section 106 agreement negotiated between the council and the developer. The key word here is negotiated. It is inevitable that the developer will try to reduce the number of affordable homes they have to supply as they are less profitable despite costing the same to build. Note - affordable homes must be built to the same standard as houses for sale at market prices within the same site. This ensures that they are of good or equal quality and no corner cutting is taking place.
Nationally, the actual delivery of affordable homes is below 20% of all developments. On some sites there are no affordable homes at all if the developer can show that the development is not financially viable to deliver them. This is increasingly so for developments on brownfield land such, as the 4,000 units approved in Basildon town centre and on other sites around the town. In some situations a developer can simply make a payment to the council for affordable homes to be provided elsewhere. This is a murky area with no clear evidence of where, or even if, it get is spent appropriately by the council.
The reason for this attempt to avoid affordable housing provision is that the developer has to sell them at a discount to a housing association or to an agent. This hits profits.
There is no question that affordable housing helps some people and as a group we fully support the council’s aims in this regard. But do they address the needs of local people, very specifically the young first time buyers, wanting to own a home of their own?
The affordable housing made available for either reduced rent or shared ownership are managed through the housing association. These associations have their own qualification criteria and usually work in partnership with the council. We understand that priority is given to those on the council’s housing waiting list, although they have to show that they have the financial means to pay the reduced rent or the mortgage for shared ownership.
We believe that there are over 2,000 households already on the waiting list. The chances of a young Billericay resident in employment getting on the list, qualifying and getting access to an affordable home is therefore very low.
Another important point to note is that most affordable homes are flats. Very few are true houses.
But clearly the vast proportion of affordable housing is for rent. It does nothing to fulfil the dream of home ownership. It might be at 80% of the prevailing market rate, but with private rents already being very high in our area, even at that level of discount they will still be high.
Those available for shared ownership might look more attractive to those looking to own, but such property needs very carefully consideration. Shared ownership is a hybrid of a mortgage, a deposit, rental and service charges and all this adds up.
Let’s say a property has a local market price of £300,000 and the buyers takes a 25% share of £75,000. Clearly the mortgage on such a sum is going to be relatively easier to secure and with lower repayments compared to buying the whole property. The buyer then pays rent on the remaining 75% and there are service charges on top as such properties tend to be leasehold apartments within a communal block.
The two questions buyers of a shared ownership property need to consider are whether they can afford to increase their mortgage to buy a greater share in the property and how easy is it to sell to move on if you still only have a part share. Anecdotally we hear that very few people achieve full ownership and selling can be tricky. Such properties might therefore need to be considered for the long term and is it really home ownership if you only ever own a part?
The third category of First Homes might be the best of the bunch if home ownership is the aim, but we have yet to see any such properties even mentioned, let alone delivered, in our borough. The approved developments at Maitland Lodge and Kennel Lane have none, although they do have the two other types of affordable housing tenure - reduced rent and shared ownership.
A First Homes property is a new build sold at a discount on the market price. The discounted purchase price cannot exceed £250,000 (£400,000 in London). The properties are for first time buyers only, whether an individual or people buying together. None can have previous owned or was in the process of buying a property.
The income of the buyer, or buyers combined, cannot exceed £80,000 and they must be able to secure a mortgage on at least 50% of the discounted price, with funds for any difference between the mortgage and the discounted price.
The discount on the property is fixed to the property by deed. The first buyer cannot profit from the discount. Any subsequent buyer(s) of such property must also meet the qualification criteria of being a first time buyer with no more than £80,000 sole or joint income.
The Government has set a minimum level of discount of 30%. This can be increased by the local authority to 40% or 50% if they can demonstrate a good reason for deeper discounts. All discounts are via a negotiated S106 agreement between the authority and the developer.
Assuming a 30% discount and taking the maximum discounted price of £250,000 into consideration, the maximum market price of a property under this scheme is just over £357,000. Such a property would require a minimum mortgage of £125,000 (50% of the discounted price of £250,000) plus a further £125,000 to make up the full discounted price. More realistic is a mortgage of around 90% of the discount price (£225,000) plus a further £25,000. In effect a 10% deposit.
This is where this starts to show that this is not necessarily as good as it seems due to high market prices in our area. A mortgage of £225,000 would require an income of close to £50,000, significantly above average local income of around £35,0000. However it is achievable for two people with a joint income of around £50,000.
The clear issue with First Homes is when it comes to selling and moving to the next property. The question is whether enough extra borrowing can be secured from 70% on one house to probably 90% on the next house which is likely to be more expensive. That second property can’t be a First Home as the buyer is no longer a first time buyer.
First Homes remain a somewhat unknown quantity but do look like a viable option, assuming some get built and made available.
Sorry that this has been long and at times technical, but it was important to show what affordable housing really means.
In the final part of this article we will summarise and set out the way ahead. Look out for part 3 in a few days.
Two definitions from the Cambridge dictionary….
Affordable - “not expensive, cheap, reasonable”.
Affordable Housing - “a provision of housing to make home ownership accessible to buy for those who would otherwise not be able to”.
Those are not the same by a long way. It’s important to understand why.
In part 1 of this article we highlighted that, other than a global financial crash greater than 2008, house prices are not going to reduce enough (25%+) to make them more affordable to most people in work on average earnings, regardless of how many are built.
So what is this so called ‘affordable housing’?
Most importantly, it’s not what most people think. It is not lower priced housing on the open market i.e. cheaper.
It is actually a very prescribed type of housing as defined within the planning system. When Government, developers, planners, councillors etc. talk about affordable housing, or just affordable, they are very specifically talking housing under 3 possible tenures.
In the withdrawn Local Plan, and expected to be carried forward to the next version, Basildon council set a policy that 31% of all developments (of over 10 units) should be affordable housing. National planning policy dictates that they need to make provision for such housing. Each local authority sets is own percentage, it is not a national figure. 31% is actually on the low side compared to neighbouring boroughs.
Historically this is broken down into 70% at reduced market rent (typically a 20% reduction) and 30% as intermediate housing, otherwise known as shared or part ownership. The Government recently introduced a third category under the First Homes scheme which it expects to form around 25% of the affordable home provision. It’s not clear but we assume it will replace some of the shared ownership properties. First Homes are sold at a discount. We will expand on these 3 tenures below.
As an example, on a development of 200 houses, 62 should be affordable housing of which 32 will be at reduced rent, 14 for shared ownership and 16 as First Homes.
The provision of all affordable homes is via a Section 106 agreement negotiated between the council and the developer. The key word here is negotiated. It is inevitable that the developer will try to reduce the number of affordable homes they have to supply as they are less profitable despite costing the same to build. Note - affordable homes must be built to the same standard as houses for sale at market prices within the same site. This ensures that they are of good or equal quality and no corner cutting is taking place.
Nationally, the actual delivery of affordable homes is below 20% of all developments. On some sites there are no affordable homes at all if the developer can show that the development is not financially viable to deliver them. This is increasingly so for developments on brownfield land such, as the 4,000 units approved in Basildon town centre and on other sites around the town. In some situations a developer can simply make a payment to the council for affordable homes to be provided elsewhere. This is a murky area with no clear evidence of where, or even if, it get is spent appropriately by the council.
The reason for this attempt to avoid affordable housing provision is that the developer has to sell them at a discount to a housing association or to an agent. This hits profits.
There is no question that affordable housing helps some people and as a group we fully support the council’s aims in this regard. But do they address the needs of local people, very specifically the young first time buyers, wanting to own a home of their own?
The affordable housing made available for either reduced rent or shared ownership are managed through the housing association. These associations have their own qualification criteria and usually work in partnership with the council. We understand that priority is given to those on the council’s housing waiting list, although they have to show that they have the financial means to pay the reduced rent or the mortgage for shared ownership.
We believe that there are over 2,000 households already on the waiting list. The chances of a young Billericay resident in employment getting on the list, qualifying and getting access to an affordable home is therefore very low.
Another important point to note is that most affordable homes are flats. Very few are true houses.
But clearly the vast proportion of affordable housing is for rent. It does nothing to fulfil the dream of home ownership. It might be at 80% of the prevailing market rate, but with private rents already being very high in our area, even at that level of discount they will still be high.
Those available for shared ownership might look more attractive to those looking to own, but such property needs very carefully consideration. Shared ownership is a hybrid of a mortgage, a deposit, rental and service charges and all this adds up.
Let’s say a property has a local market price of £300,000 and the buyers takes a 25% share of £75,000. Clearly the mortgage on such a sum is going to be relatively easier to secure and with lower repayments compared to buying the whole property. The buyer then pays rent on the remaining 75% and there are service charges on top as such properties tend to be leasehold apartments within a communal block.
The two questions buyers of a shared ownership property need to consider are whether they can afford to increase their mortgage to buy a greater share in the property and how easy is it to sell to move on if you still only have a part share. Anecdotally we hear that very few people achieve full ownership and selling can be tricky. Such properties might therefore need to be considered for the long term and is it really home ownership if you only ever own a part?
The third category of First Homes might be the best of the bunch if home ownership is the aim, but we have yet to see any such properties even mentioned, let alone delivered, in our borough. The approved developments at Maitland Lodge and Kennel Lane have none, although they do have the two other types of affordable housing tenure - reduced rent and shared ownership.
A First Homes property is a new build sold at a discount on the market price. The discounted purchase price cannot exceed £250,000 (£400,000 in London). The properties are for first time buyers only, whether an individual or people buying together. None can have previous owned or was in the process of buying a property.
The income of the buyer, or buyers combined, cannot exceed £80,000 and they must be able to secure a mortgage on at least 50% of the discounted price, with funds for any difference between the mortgage and the discounted price.
The discount on the property is fixed to the property by deed. The first buyer cannot profit from the discount. Any subsequent buyer(s) of such property must also meet the qualification criteria of being a first time buyer with no more than £80,000 sole or joint income.
The Government has set a minimum level of discount of 30%. This can be increased by the local authority to 40% or 50% if they can demonstrate a good reason for deeper discounts. All discounts are via a negotiated S106 agreement between the authority and the developer.
Assuming a 30% discount and taking the maximum discounted price of £250,000 into consideration, the maximum market price of a property under this scheme is just over £357,000. Such a property would require a minimum mortgage of £125,000 (50% of the discounted price of £250,000) plus a further £125,000 to make up the full discounted price. More realistic is a mortgage of around 90% of the discount price (£225,000) plus a further £25,000. In effect a 10% deposit.
This is where this starts to show that this is not necessarily as good as it seems due to high market prices in our area. A mortgage of £225,000 would require an income of close to £50,000, significantly above average local income of around £35,0000. However it is achievable for two people with a joint income of around £50,000.
The clear issue with First Homes is when it comes to selling and moving to the next property. The question is whether enough extra borrowing can be secured from 70% on one house to probably 90% on the next house which is likely to be more expensive. That second property can’t be a First Home as the buyer is no longer a first time buyer.
First Homes remain a somewhat unknown quantity but do look like a viable option, assuming some get built and made available.
Sorry that this has been long and at times technical, but it was important to show what affordable housing really means.
In the final part of this article we will summarise and set out the way ahead. Look out for part 3 in a few days.
THE AFFORDABILITY CRISIS (Part 3)
In the previous two articles we explained that;
- when used in the planning context, affordable homes are a very specific type of property
- they are not cheaper homes to buy on the open market
- building thousands of houses does not make them cheaper
- property is now as much an asset as it is a home and it’s value is largely influenced by financial matters, not supply
- property prices would need to crash by over 25% to make them truly affordable to the average first time buyer in our area
- such a fall in prices would have wide reaching impacts on all existing house owners or buyers, it would be deemed a national disaster
- the Government, landowners, developers, council planners, councillors and anyone with a vested interest in building houses tend to overlook the real meaning of affordable and continually imply that more houses = affordable houses = cheaper houses
- none of the three types of housing under the affordable housing definition fully address the dream of home ownership for the young first time buyer, the bulk are for rent only
- even the affordable housing for shared or discounted ownership come with strings attached and for many they are still unaffordable due to the prevailing very high market prices in our area, and many wouldn’t qualify for them anyway.
We believe that it is very important for local people to fully understand what affordable housing actually means because very soon we will have to opportunity to comment on the early stages of the next Basildon Local Plan.
We have had sight of the consultation document and very disappointingly it doesn’t explain any of what we have set out in our three articles but gives the very clear impression that more = affordable = cheaper. That could be a conveniently nuanced position to take if the agenda is to get residents to support mass (excessive) building in the borough through the Local Plan.
It is also clear that the council will be setting an agenda based on a 15 year ‘demand’ for over 20,000 new houses across the borough. It’s a target spawned from the Government’s 300,000 houses per annum target that those in the industry are desperately trying to hang on to.
But at 20,000 houses that’s is no different to the withdrawn Local Plan. They need residents to accept that or the new plan will be challenged as before. But the only positive benefit they can table is this unrealistic belief that it will deliver affordable housing that allows people to buy a home of their own.
It’s a falsehood. A council, day to day or via a long term strategic Local Plan, cannot guarantee any reduction in house prices. They do not have any levers to manipulate a free housing market to that outcome. To say or imply so is totally wrong.
However, they can deliver the type of housing as defined under the affordable housing banner and we should encourage them to do so as they do help some people, especially those on council waiting lists.
The fact is that the real local housing ‘need’ is 50% of the assumed ‘demand’ for 20,000 houses. Evidence based need and projected demand are very different and we need to challenge this before the very high demand figure gets baked into the thinking and the next Local Plan. That’s what happened back in 2014 and we know only too well how that went! The Green Belt is at just as much risk as before with a plan based on 20,000 houses, perhaps more so now.
But above all we cannot let the promise of cheaper houses cloud our thinking and we must respond to the Local Plan consultation accordingly and appropriately, and from a good potion of understanding. We need more houses but they need to be the right number of the right type in the right places and a new Local Plan is where that must be set out.
The consultation is due this summer. It will be with us very soon.
In the previous two articles we explained that;
- when used in the planning context, affordable homes are a very specific type of property
- they are not cheaper homes to buy on the open market
- building thousands of houses does not make them cheaper
- property is now as much an asset as it is a home and it’s value is largely influenced by financial matters, not supply
- property prices would need to crash by over 25% to make them truly affordable to the average first time buyer in our area
- such a fall in prices would have wide reaching impacts on all existing house owners or buyers, it would be deemed a national disaster
- the Government, landowners, developers, council planners, councillors and anyone with a vested interest in building houses tend to overlook the real meaning of affordable and continually imply that more houses = affordable houses = cheaper houses
- none of the three types of housing under the affordable housing definition fully address the dream of home ownership for the young first time buyer, the bulk are for rent only
- even the affordable housing for shared or discounted ownership come with strings attached and for many they are still unaffordable due to the prevailing very high market prices in our area, and many wouldn’t qualify for them anyway.
We believe that it is very important for local people to fully understand what affordable housing actually means because very soon we will have to opportunity to comment on the early stages of the next Basildon Local Plan.
We have had sight of the consultation document and very disappointingly it doesn’t explain any of what we have set out in our three articles but gives the very clear impression that more = affordable = cheaper. That could be a conveniently nuanced position to take if the agenda is to get residents to support mass (excessive) building in the borough through the Local Plan.
It is also clear that the council will be setting an agenda based on a 15 year ‘demand’ for over 20,000 new houses across the borough. It’s a target spawned from the Government’s 300,000 houses per annum target that those in the industry are desperately trying to hang on to.
But at 20,000 houses that’s is no different to the withdrawn Local Plan. They need residents to accept that or the new plan will be challenged as before. But the only positive benefit they can table is this unrealistic belief that it will deliver affordable housing that allows people to buy a home of their own.
It’s a falsehood. A council, day to day or via a long term strategic Local Plan, cannot guarantee any reduction in house prices. They do not have any levers to manipulate a free housing market to that outcome. To say or imply so is totally wrong.
However, they can deliver the type of housing as defined under the affordable housing banner and we should encourage them to do so as they do help some people, especially those on council waiting lists.
The fact is that the real local housing ‘need’ is 50% of the assumed ‘demand’ for 20,000 houses. Evidence based need and projected demand are very different and we need to challenge this before the very high demand figure gets baked into the thinking and the next Local Plan. That’s what happened back in 2014 and we know only too well how that went! The Green Belt is at just as much risk as before with a plan based on 20,000 houses, perhaps more so now.
But above all we cannot let the promise of cheaper houses cloud our thinking and we must respond to the Local Plan consultation accordingly and appropriately, and from a good potion of understanding. We need more houses but they need to be the right number of the right type in the right places and a new Local Plan is where that must be set out.
The consultation is due this summer. It will be with us very soon.
