Increasing the supply of affordable housing in the market has long been - and will continue to be - an important issue. Here, Building speaks to Patrick McIntosh about a solution which could have far-reaching consequences
What’s the story?
Patrick McIntosh: The village of Smallfield in Surrey is in many ways typical of a relatively small community in England when it comes to affordable housing: overpriced and undersupplied. As a member of the community, I see first-hand the trouble that people are having in finding good-quality, reasonably-priced housing. And while the UK government continues to promote measures to address the national housing crisis, such as the reforms announced by Theresa May at the National Planning Conference last month, this situation is unlikely to change overnight. Instead of waiting for the local authorities to provide the affordable homes we need here, I’ve taken matters into my own hands and hope to encourage others to do the same.
Taking matters into your own hands - so what did you do?
PM: Working alongside a local housing developer, we’ve put forward a piece of land for 88 new homes – 75 of which will be affordable – for local people, with restrictions in place to make sure these houses and apartments go to people in the area with the greatest need. Unlike most private developments, our mission is philanthropic; the small number of private-sale homes are included only to make the scheme financially viable to meet costs.
Our plans for the scheme, known as Dowlands Park, includes a range of homes, from one-bedroom apartments to four-bedroom houses. The exceptionally high number of affordable homes - over 85% - greatly exceeds the government guidelines (which usually only require up to 35% and indeed, the Prime Minister’s latest objective suggests that just 10% of homes on major sites should be available for affordable home ownership). We hope that the scheme will provide homes for low-income families and key workers in the area based on the following restrictions:
- Residents will be required to prove they work or live within a reasonable radius of Smallfield, or that they have existing family connections
- Buyers cannot purchase a second home at Dowlands Park
- Buyers cannot purchase ‘buy to let’ property at Dowlands Park
These homes are for those who are ‘just about managing’, who might work in education, healthcare and the emergency services as well as other jobs that keep our community running. Without these people, our villages, towns and cities won’t function economically or socially. I believe it is vital that we stop relying on local councils to provide the homes we need.
You say it’s important for communities to help support itself. Can this be done successfully by other like-minded developers? And if so, how?
One financial model worth considering is a shared freehold. This would see a 20% reduction applied to the affordable homes, where buyers purchase an 80% share of the freehold in their new home and the developers retain the remaining 20%. The buyer’s share will remain at 80% of market value, to ensure homes remain affordable. On top of this, schemes such as Help to Buy can be applied to further aid affordability. In addition, a management company - ran by residents - can ensure the development remains attractive and well looked after. Or, it might be that affordable homes are sold to housing associations to market and manage, with outline planning permission already granted.
So what are the next steps for Dowlands Park?
A planning application for Dowlands Park was submitted in December 2017 and we are awaiting a decision. Whether planning permission is granted or not, we want to motivate more people to help their own communities instead of waiting for others to deliver what they need. We hope that Dowlands Park will be a pioneer for a new approach to high-quality, truly affordable housing.
Patrick McIntosh is director and chartered financial planner at KMG