Out of the tenure trap

St Mary's Village is an affordable housing scheme on the former Trowbridge estate in Hackney, east London, that aims to disprove the notion that owner-occupiers won't buy homes next door to tenants.

Visitors to the scheme's sales and marketing suite are faced with a choice of tenure as well as size and type of home. The 220 homes ranging from one, two, three and four-bed apartments and houses to live/work units will be offered for shared ownership, low-cost ownership or market sale.

Residents choose the home they want to live in and then decide how to pay for it. All the pepperpotted homes have identical specifications and size standards to avoid pre-determined tenure zones, and it is made clear to potential buyers that their next-door neighbours are as likely to be tenants as owner-occupiers.

Lovell is the private partner and contractor, and is offering 89 homes on the open market. It also operates the Lovell Resale Covenant low-cost ownership scheme where buyers pay 70% of the cost of the home. The rest of the equity of these 60 homes is held by Hackney Council, which benefits from any increase in value of its 30% of the home. Metropolitan and Notting Hill Housing Associations are the RSL partners offering 67 shared ownership units and they will be managing all three types of property after completion.

A legal framework has been drawn up between the partners to allow residents to change the nature of their tenures if their financial position changes. "The idea is that people won't have to move out of their homes if they lose their jobs or fall ill, and if their position improves they can staircase back up again," says Lovell's London region regeneration manager Jamie Hunter. In other words residents can buy or sell equity in their home whatever the tenure of their homes. The only proviso is that Lovell Resale Covenant tenants buy the remaining 30% equity in one go.

The first phase of apartments and terraced housing at Trowbridge is actually owner occupied. Hunter says Hackney Council understood Lovell's need to raise cash early in the build process to pay for the rest of the housing and the community projects on site. When the scheme is completed in summer 2002 the development will feature a community centre, sports area, shop, doctors surgery and village green. Hackney also has overage agreements with Lovell so that it benefits from any increase in house prices during the build process.

Though Lovell is willing to experiment with pepperpotting it accepts that the market is prepared to pay more for wholly private housing. It priced homes 10% higher on the first phase than pepperpotted equivalents in the second, although rising land values eliminated the difference by the time second phase units were released onto the market.

On the pepperpotted phases released to date the three types of tenure are evenly mixed throughout apartment blocks and housing terraces and sales went well enough for Lovell to bid, unsuccesfully, for another project with its RSL partners. The scheme would have gone one step further and included social renters as well as shared equity tenants.

Last month St Mary's was given Housing Forum Approved Project status because of its approach to maximising customer choice and its use of benchmarking.

According to Hunter a lot of developers and housing associations want to go down the pepperpotting route but are waiting to see how it works at Trowbridge. "At the moment developers aren't sure whether you can sell next door to a housing association unit but in London people don't know the circumstances of their neighbours. Why should it be different for new build."