Affordability

The need for affordable housing is apparent - and is clearly supported locally. But the distinction between "affordable" and "social" housing is not being made clear. SWCLT members have stated that these homes are "for local people, on local wages, to live and work locally". A recent Cambridge News article Cambridge's 'affordable housing' is anything but highlights the issue in Cambridge and the surrounding region that despite being labelled "affordable", these houses are out of reach of many. They also highlight the distinction between "social housing" and "affordable rent" housing:

Social rent is based on a formula that combines local wages and local property values, and typically sees rents set at around 50 per cent of private rents in the same area.
Meanwhile affordable rent is capped at 80 per cent of the full market rate, making it out of the reach of people on low incomes.

The shocking statistic that this article highlights is that in East Cambridgeshire, 100% of new affordable housing was also affordable rent rather than social rent last year. This is in stark constrast to the vision of the National CLT in their Response to the Government's Social Housing Green Paper where they state:

Lots of Community Land Trusts are started by people who see the need for social housing in their community and want to take the lead in providing it. Their local leadership helps overcome the stigma associated with social housing, brings forward additional housing supply, and can improve the quality of the homes and their management. CLTs also do much more than give residents a voice, they give them real control and agency. I'm pleased the Government has recognised the growing role of community led housing in the social housing sector.

Sadly, this distinction between "affordable" housing and "social rent" housing appears to be lost in the ECDC CLT model - that of large scale development and cross-subsidy to provide houses only at an "affordable" level - something which is provided by any open-market housing development (over 10 houses).

In 2014, Charles Roberts spoke to the Parish Council providing information on CLTs - he is quoted as saying:

The Ely by pass and changes to A14 will have a significant effect on the A10, which will have an effect on house prices in Stretham and Wilburton. The ongoing effect will be low paid local community (nurses, policemen, hairdressers etc) and agricultural workers will be displaced by commuters. National Housing Federation suggests that rent or mortgage payments should not be more than 1/3rd of income which is not affordable in this area, especially for younger members of the community.

Since then, Bill Hunt has stated "the big reduction in traffic will happen when the 22 mile £1.5 billion A14 upgrade opens in 2020" - suggesting the Ely bypass will have little impact locally. There is no evidence that the road changes will alter house prices here - the main pressure is from people working in Cambridge looking for somewhere more affordable to live. Charles specifically mentions nurses and policemen - key workers - their pay is sadly very low for the important role they play in the community. Alas, the houses SWCLT provide via "shared ownership" in Stretham are out of reach of these keyworkers at the 1/3rd of income level Charles states (SWCLT have not responded to requests for worked examples - but our calculations show around £900pcm required for a 2-bed house, almost 50% of a nurses salary of £22k). It appears somewhat misleading to mention keyworkers, who clearly cannot afford houses provided via the SWCLT "business model".

As the affordable housing are the key to the SWCLT "campaign" (they never seem to mention the majority open market houses) - the SWCLT have been asked to provide answers to questions on affordability - including costs involved in the share ownerships, and total costs of ownership - as well as their own business model, to back up the bold statement by Charles Roberts to the PC. They have not responded to change the figures - so this is taken as acceptance of the figures presented to them.

We now present some of the questions and the answers we have obtained from SWCLT public consultations, SWCLT documents, National CLT and other CLTs.

Example of Shared Ownership Costs - at a public consultation, a member of public was informed that the houses in Stretham started at £88k - this being for a 40% share. This makes the full price £220k. From their year-end finance report, the SWCLT "sold" 3 homes for £288k - presumably making this 1 at £88k, and 2 at £100k - making the full value of those homes £250k
We believe SWCLT sold 1 and 2 bed homes - so a 2 bed home in Stretham was valued at £250k, with minimum share of £100k - and rent paid on £150k - the rent set initially at 3% - making that £375pcm, plus "service charge" of around £30pcm (£380per annum).
Using the Government Shared Ownership calculator - and a typical mortgage interest rates of 4.5% and deposit of £10k - this requires a wage of around £44k to be in the 1/3rd income to debt level as discussed by Charles Roberts in a Parish Council meeting. Combined with rent and service charges - this makes monthly payments around £900pcm - with maintenance costs on top.
Local wage is around £21k, and according to Totaljobs - the average key worker salary is £19k. SWCLT have not responded to requests for information showing these are affordable on local wage.
On a 40% share of a house - SWCLT were asked what percentage of maintenance has to be paid. No response from SWCLT - but typically 100% of maintenance has to be paid for in shared ownership, regardless of share. That seems unfair, as SWCLT ultimately benefit from this maintenance.
SWCLT were asked if people can staircase both up and down - down for example to release capital if circumstances change. No response. And can people who own an 80% share sell to something who can afford a 40% share, with SWCLT paying the difference - making the sale flexible. Again, no response.
SWCLT were asked to explain the tenancy for shared ownership - as it would appear to be leasehold - meaning the "owner" never owns the property, and this can result in issues if rent arrears occur. No response. Previous court cases have highlighted that the "owner" can lose all their share - assured tenancy and forfeiture for arrears - Richardson v Midland Heart. A flaw in the shared ownership model, not just locally. Leasehold has been described as renting with a large deposit - that deposit can be forfeited.
SWCLT were asked about mortgage protection with lenders - this allows the lenders the right over the whole property if unresolved debt issues arise. No response. Presumably this undermines properties being held in perpetuity. Nationally, 15% of shared ownership household have some sort of financial issue per year, around the same measure as first time buyers. SWCLT were asked about policies for dealing with these issues. No response.
SWCLT were asked why the "Indepedent Review - Viability Report for Stretham" indicates a "deficit of circa £46,000" - this is presumably per property (year end finances would indicate this at around £49,000 per house sold). No response. If this is the cost per house, the debt incurred by SWCLT for a development is likely to be substantial unless many houses are shared rather than rented. SWCLT are asset rich - they can claim their balance sheet is good - but their cash debt may also be large. Paying this debt means a long wait for community benefits to appear.
SWCLT were asked about the Viability Review highlighting the underestimate of £22,271 per annum costs, reducing the surplus for Stretham to £7,500 per annum. This provides very little breathing space if there are major unexpected costs. No response.
SWCLT were asked to confirm the figures in Peterhouse Enterprises Year End Report 2018 - p.15 showing a 40% share in Manor Farm Stretham LLP provided £397,667 profit (2017 - £274,361) - showing around £1.8m profit for the "open market" element in 2 years. No response.

The lack of response is concerning, as the model that is presented is one of affordable homes for local people on local wages. The example costs would suggest this is far from the case, and the offering no more than standard developer led development. Indeed, it would appear that the developer and land owner are still making substantial sums of money, whilst SWCLT are left with high levels of debt - increasing for each house they own to rent.

What is needed is for the SWCLT to be open and honest about their model and the true costs. They seem to have only considered the ECDC "cross-subsidy" model, which appears to still favour the land owner and developer. CLT typically has the land ownership via donations or favourable deals and grant funding to bring forward housing which can then be offered at genuinely affordable levels, including social rent.

Recent documents concerning the local plan show that the Inspector suggested removing all references to community-led development including Policy LP5, and the Kennett CLT. The Inspector has yet to explain why these should be removed, but it does raise a question over the use of CLTs by ECDC. It certainly does not appear to offer what most rural CLTs offer - and what should be supported in Wilburton. Leave standard affordable homes to the developers, use the CLT approach for housing genuinely at local wage levels.

Next: The 2018 Local Plan