HATS OFF TO SHELTER

At last an official organisation has exposed the myth that government backed schemes for `affordable housing' are helping those on the lowest incomes to become home owners.

Schemes such as `shared equity', `low cost home ownership', `first time buyer initiative', `home buy' other so-called `intermediate' housing products are increasingly being advertised in Salford and the rest of the country as a means of helping people get affordable access to home ownership. But a damning report by Shelter, titled The Forgotten Households, states that the average income of those accessing shared ownership schemes is more than £28,000 a year, and £32,000 a year for shared equity, while those earning an average income of £16,000 or below "cannot afford even the very cheapest shared ownership homes".

The report estimates that there are 866,000 of these `forgotten households' in the UK - people who are working on low incomes, who get few state benefits and who are renting from private landlords.

Meanwhile, housing associations, developers and `high middle income' earners are benefitting from schemes which cost the country hundreds of millions of pounds every year.

To qualify for the state subsidised `intermediate housing' schemes, household income can be anything up to £60,000 (see Mary Burns Feed The Rich Award here) and Shelter believes that "publicly subsidised new supply (of houses) should be directed at helping those in the greatest housing need first, with social rented homes taking much greater priority."

In Salford, intermediate housing schemes have been encouraged in virtually every new regeneration development – Miller Homes at Unity Quarter, Countryside Properties at New Broughton…and Urban Splash at Chimney Pot Park – where £5million has gone to subsidise 91 houses under First Time Buyer Initiative and 10 units under the LCHO (Low Cost Home Ownership) scheme at a cost of £350,000.

Many of these housing products are directed through Plumlife which promotes itself as a "government backed company set up to help you get onto the property ladder". Plumlife advertised affordable housing products in glossy magazines such as Live Manchester (`Manchester's premier guide to luxury living') which also carried adverts for Mercedes Benz cars and Rolex Watches.

"New supply is called `affordable' without a common understanding of what this really means" states the Shelter report "The result of this is that intermediate housing is being classified automatically as affordable when vast swathes of the local population cannot afford it."

Salford Council certainly classifies these shared equity schemes as `affordable housing'. It's snappily titled `Affordable Housing Development Control Implementation Note' shows how it uses such schemes to push up the numbers and percentages of affordable houses on each new development.  The Note, rather turgidly, but quite clearly states…

"For intermediate housing the discount required to secure the involvement of a social housing provider is typically 35% on open market value. Where social rented units are to be provided the discount normally required is much greater than that required for intermediate units, typically 65-75% per unit. The contribution sought from developers will be a 35% discount on the open market valuation of each of the affordable units. A 35% discount on open market value equates to approximately 7% of the total sales value of a development. The 35% discount on open market value will be sufficient to secure 20% affordable units within a scheme, if all of the units are to be of intermediate tenure."

In other words, real affordable housing, ie social rented houses, require a 65-75% discount from developers, whereas these `intermediate' houses only require a 35% discount. Salford has a policy of requiring 20% affordable houses on large developments. You get more `affordable housing' for less money but who is it helping – low income families or developers and ultimately the Council's statistics?

"All too often" states the Shelter report "the needs of consumers have been left out of the equation and products have been developed as a means to help developers and housing associations to generate revenue.

"Promoting access to home ownership to all groups at all costs must be questioned as the dominant driver of housing policy and spending" it adds "…disproportionate amounts of public money are being spent on the intermediate market without a clear policy goal."

In 2008/9 the Government's Home and Communities Agency spent £620million, or 23% of the social housing grant fund, on intermediate housing. An extra 10,000 social rent homes could have been built with this money.

In May this year, figures obtained by the Salford Star under the Freedom of Information Act showed that the number of people with household incomes of £20,000 or less who have benefitted from all the various `intermediate' housing schemes in Salford up until 2009 stood at a shocking 10 families (click here for more details).

Shelter damns what it sees as a "smokescreen" behind which "meaningful reform" of the housing system has just not happened, and explains that  publicly subsidised new housing "should be directed at helping those in the greatest housing need first, with social rented homes taking much greater priority".

It recommended that "Focus should be shifted away from higher-middle income first-time buyers, who are likely to achieve home ownership later in life without assistance…(the government) should concentrate more subsidy on generating housing supply that helps those in greatest need."