© 2018 Buckland Newton Parish Council Website last updated 3rd October 2020 13:40
There seems to be confusion over the term ‘affordable
housing’, many people assuming it means only ‘social
housing’ but this is not the case.
There are a number of different types of houses which
come under the Government’s definition of ‘affordable
housing'. These are:
Social rented, affordable rented and intermediate
housing, provided to eligible households whose needs
are not met by the market. Eligibility is determined with
regard to local incomes and local house prices.
Affordable housing should include provisions to remain
at an
affordable price for future eligible households or for the
subsidy to be recycled for alternative affordable housing
provision.
Social rented housing
Social rented housing is owned and let by local
authorities and housing associations such as Magna,
Sutton Hastoe and Yarlington. These homes are offered
at the lowest rents which are set by Government
(sometimes called target rents) and are determined
through the national rent regime. Even more importantly
the development of this form of affordable housing is
very costly and is no longer supported through
government funding.
Affordable rented housing
This was introduced in 2011. This form of affordable
housing is provided by local authorities and Registered
Providers (Housing Associations). There are rent
controls restricting rent, including services charges to be
below 80% of the local market rents. Government grant
funding is currently available for this form of affordable
housing.
Because more rent is charged, the housing providers
can generate income to help build more homes. Such
rents are often charged on new build homes. Housing
benefit can still be claimed to assist with paying the rent.
Intermediate housing
Intermediate housing is a general term used for
affordable homes, both to rent and buy, which are aimed
at those households who can’t afford to meet their
needs in the open market but can afford more than very
low social rents.
Examples are:
Shared ownership
Shared ownership is designed for people who cannot
afford to buy a house on the open market but still want
to get on the property ladder. An initial share is bought
(usually 25% to 75%) and then rent is paid on the
remaining part. There are two monthly payments, one
for the mortgage and one for the rent. However, these
are still less than the mortgage would be on an open
market property. The other share in the home is owned
by a housing association or a developer. It may be
possible for you to increase or decrease the share later.
Low cost housing for sale
These properties are built and sold at below market
value by private developers. The initial sales price is
typically anywhere between 40% and 75% of the
open market value.
The property is bought at a discounted price and the
buyer owns the freehold of the entire property.
Unlike shared ownership, no additional rent is paid.
The discount remains in place in perpetuity,
generally through restrictive covenants placed on the
title with the Land Registry.
When coming to sell the property, the owner has to
sell the property at the same percentage of open
market value as it was bought for so that the
property remains affordable. For example, if the
owner paid £140,000 for an affordable property
worth £200,000 and it rises in value to £220,000 by
the time of sale, the 30% discount would be passed
on and it could be sold for £154,000.
Intermediate rented housing
These are homes developed, owned and managed
by private sector companies or individuals. Through
a legal agreement signed as part of their planning
permission, they must rent homes at 80% of open
market value, including any service charges. These
are typically on a standard assured shorthold
tenancy. The Council can nominate applicants from
the housing needs register.
Low cost market housing for sale
This is where it all gets even more confusing. Low
cost market housing for sale is not considered to be
affordable housing; this is where a
developer sells the property at a discounted value,
but there is no mechanism for it to stay at that
discounted value when sold.
Who is eligible for affordable housing?
Those people with a local connection who cannot
afford open market housing. Local connection has
been defined by West Dorset District Council
(WDDC) for previous schemes elsewhere as:
•
Resident in the area for 6 months, or 3 years
out of the last 5
•
Having permanent employment for 6 of the last
12 months
•
Close relatives in the area
•
Other special circumstances agreed formally by
WDDC (West Dorset District Council)
In our case ‘the area’ would be Buckland Newton
Civil Parish. However if there is an affordable house
vacant at any time and no local people to fill it, there
could also be a ‘cascade’ provision where the area
cab be extended first to neighbouring parishes, and
then to the whole district.
In our Neighbourhood Plan, we may be able to vary
these requirements if we wish. In the Buckland
Newton Neighbourhood Plan, ‘Affordable Housing’
will most likely mean the provision of ‘Low cost
housing for sale’ and ‘Intermediate rented
housing’
What are affordable homes?