There is a desperate need for affordable housing in Lewes. In 2005 Lewes district council did a survey of housing need. This found that the average cost of all dwellings in the district at the time was £221,739. Even to buy a two bedroomed flat in Lewes town you would have needed need an income of up to £46,700. To buy a terraced house in the town you would have needed need £54,000. (based on a multiplier of 3 times annual income) Typical rents for a two bedroomed private rented property were around £9,000 per year. This compares with a council rent of perhaps £4,000 per year. The council is probably breaking even on this because it does not carry a large mortgage and does not seek huge profits.
The survey found that 43% of all households in the district had incomes of less than £20,000 and that 58% had incomes of less than £25,000. This is not enough to fund a home.
The survey found that over 60% of owner occupiers with mortgages paid less than £250 per month. This suggests that even owner occupiers can often only afford to live here because they bought when prices were lower or sold other property elsewhere. So Lewes can be a paradise for people moving from expensive areas like Brighton or London, but harder for local people.
Not surprisingly the survey found that there are a large number of “concealed households” in the district (people who had to stay with family or friends because they could not find anywhere else to live). 75% of these could not afford private renting and 84% could not afford to buy anywhere. Only 9% of concealed households had incomes above the national average income of £27,300 per year. These concealed households are often our sons and daughters.
Perhaps a third of Lewes’s council housing has been lost to the right to buy and there is very little new letting by housing associations. Although people do give up their tenancies, making homes available for people waiting, the only source of new affordable housing is through agreements with developers.
Councils can make it a condition of granting planning permission that developers of sites of any size (I think more than 30 dwellings) allocate a percentage for affordable housing. In Lewes the council has decided on 40%, which is lower than in Brighton.. A developer can challenge this by using the planning appeal process if they can show that this would make the development financially unviable. Where this is not possible developers may try to make a payment instead of having affordable housing or may try to provide the affordable housing on a different site or an isolated part of the site. This is because they think the price they can get for the dwellings they sell will be affected if buyers think there will be “undesireables” on the site.
The affordable housing need not be rented. It can be shared ownership. Developers prefer shared ownership because only more affluent people can afford it. Either way the affordable housing will normally be given to a housing association to manage.
Under a shared ownership scheme someone buys a share of the property (anything from 25% upwards) and rents the rest. Buying 50% is common. They are responsible for all repairs and insurance of the property and must also pay all the costs associated with buying a home, although these will be based on the share that they own. This means that buying a very small share can be poor value. Indeed, because of the costs involved shared ownership would be a very poor deal if it were not for galloping house price inflation.
Properties at the Forge development in Ringmer (one of the most recent significant shared ownership developments) show how the sums might work at the very cheapest end of the market. Here 50% of a 2 bedroomed flat was being offered in December 2006 at £82, 750. Annual repayments at 5.5% on this would be £6096 according to “Your Mortgage” magazine. On top of this you would pay rent and service charges of £3324, making a total cost of £9420.
In each case you would need to add something for repairs and other costs, but these should be fairly small initially, since the properties are new. At the Forge the service charge covered some repairs.
So while shared ownership offers a better deal than a private rent it is still way out of reach of the very people we want to keep in Lewes- local people on modest incomes.
A number of articles have highlighted issues with shared ownership.