Desperate to improve conditions, Salford council has spent two years searching for a means to unlock possibilities for home owners trapped in their clapped-out houses.
Now it has found a key in the shape of Homeswap. The idea came from residents themselves and has been refined to incorporate features that both aid individuals and help to stabilise the area.
With government consent granted on the legal technicalities, the first takers are about to exchange contracts.
Salford is the first council to pioneer the idea, but dozens are following hard on its heels. Homeswap is increasingly seen as a crucial element in tackling areas that are in decline but still hold the possibility of being turned round.
Living environment coordinator Mark Glynn explains: “Seedley and Langworthy worked as a starter homes area for more than 100 years. It is only in the last five that it has failed. So getting it to work again is not an idea dreamed up out of nowhere.”
Around 1,100 homes need to be cleared from the area in the next three years – about a third of the stock. The council has already bought 520 and some blocks are half empty. But it could not get its plans off the ground without helping the remaining owner occupiers.
It had to declare a clearance area to compulsorily purchase housing, but that would have been another blow to residents already reeling because the value of their homes has plummeted in a few years from £25,000 to £7,000, and in some cases to as little as £1,500.
As the council’s large-scale map shows, every block it wants to clear contains at least one marooned owner. In some cases, the resident’s own mortgage lender has refused to let them sell because of negative equity.
Homeswap provides a solution to these problems, and the major lenders like it. All owners in clearance areas shown on a masterplan are eligible, and the scheme is not means tested. Private landlords do not qualify, as they are not residents.
The process works by the council buying empty but better homes nearby. Homeswappers then choose from the council’s portfolio and the old and new houses are both valued.
Agreed renovation works to the new house, including central heating, insulation, burglar alarms, kitchens and bathrooms, are completed and then a new valuation is agreed.
The owner takes with them their existing mortgage, if they have one. They may still have negative equity but the new home is invariably worth more.
The council takes a second charge on the difference in values between the properties. But with special government consent the council will reduce the charge by 6 per cent a year over five years. That will encourage owners to stay for a reasonable time in the area and help keep the community together.
For example, if someone sells the council their old house worth £10,000, and moves into one worth £14,000, they would owe nothing after five years. The period after which nothing is owed would vary in each case with the house values concerned.
The gamble lies in Salford’s wider plan. Empties in the better areas are worrying but not out of hand. Buying them and moving in Homeswap clients should take up any excess from the market, and clearing the other areas will remove blight.
In some sections, alternate streets will be taken out, creating space for gardens. On larger sites, the council hopes to attract developers of good quality homes that will not collapse the starter home market.
The result should be a rise in values, so homeswappers will climb out of negative equity and will owe the council relatively little.
But this goal has brought concern from the Council of Mortgage Lenders. Deputy director general Peter Williams admits he is still cautious, although the CML and the Local Government Association have been closely involved in the planning.
“I am very keen it should work,” he says. “The long run hope is that the areas the swappers move to will not suffer the same fate. But the scheme does raise serious questions for everyone on that point, which is my ultimate concern. Once the lenders are taking part in the swaps, we must take it back to the industry as a whole and see if it is appropriate for elsewhere.”
The council is, of course, talking up confidence in the area, but it has a fallback position if values do not rise.
The scheme is effectively underwritten through a council power to waive the charge if owners would lose out. Glynn explains: “We want to stabilise the community without letting in carpetbaggers. We hope the cost floor is just a comfort to owners and will not happen, but at the same time people must not have to suffer for our strategic goal.”
The council says it cannot turn regional and national economics on its head, but sees its role as promoting change. “Our masterplan has to be visionary enough without trampling on the rights of individuals,” Glynn says. “We have to take moral responsibility, and that means we have no option but to keep our promises.”
Source
Housing Today
No comments yet