Memorandum by Sedgemoor District Council
(AH 29)
The Potential Benefits of and Scope to Promote
Greater Homeownership
Benefits—if there are products on the
market that increase the number of persons who are currently tenants
of Social Landlords who could be attracted to move into the private
sector, this would increase the number of relets available to
persons on the Housing Register. The resultant increase in relets
could be made available to those on the housing register who may
not be able to access the open market.
The other advantage of extending the availability
of homeownership products could potentially reduce the size on
Council's Housing Register, by making home ownership more attainable
for persons at or below average incomes.
SDC's Housing Needs Survey of 2003 showed that
the average access price for the district was three times an income
of just below £30,000. In the same period 25% of Open Market
Sales were below £88,950. Therefore 703 households with incomes
of not more than £30,000 had access to the open market.
However, in 2004 there were 410 properties sold
at under £100,000, this means there was a reduction in the
number of affordable properties available of 293. Therefore in
only one year only there has been a reduction in the supply of
open market housing affordable to local people and as result 293
households have been excluded from the housing market.
In 2003 the average income for the district
was only £20,000, even allowing for the more generous mortgage
multiplier of 3.75 times a persons annual incomes, this would
still not give someone access to homeownership, without a deposit
of in the region of £25,000.
However, recent research in to the increase
in Council Housing Registers between 2003-04 has shown that the
greatest increase in demand has been for one and two bedroom accommodation.
It is likely that persons seeking this type of accommodation will
be on low or below average incomes and therefore their ability
to access to owner occupation may be limited.
Sedgemoor has suffered from a loss of family
accommodation through the Right to Buy, in particular three bedroomed
family houses, to such an extent that the supply of this type
of accommodation through relets is almost non existent. This has
been made worse by a high level of under occupation created by
elderly households remaining in family accommodation. Therefore,
the drive to increase homeownership is unlikely to encourage this
group of households to move and therefore create additional relets
for families on the housing register.
Economic and Social Impact of Current House Prices
Within Sedgemoor the draft Somerset Wide Needs
Assessment, produced by ARK Consultancy, shows the affordability
gap is growing. The level of income required to purchase a second
hand one bed flat is now £24,000 (for a single income household)
and is £27,690 for a couple with joint income. Therefore,
the price of the smallest second hand property, without a substantial
deposit requires an income of £4,000 above average local
incomes.
The average price for a two-bed house in the
district of £120,000 requires a joint income of £32,000.
It is only by the provision of increased numbers
of shared ownership or discounted market housing that the increased
numbers of local wage earners will be able to access the housing
market.
Without this the social impact will be to marginalise
local people on average incomes who be denied the opportunity
to property market. This combined with the decline in the numbers
of social relets will lead to every increasing shortfall of affordable
housing, which the predicted level of housing provided for within
the Regional Spatial Strategy will not address.
The local economy within Sedgemoor, which has
seen growth only in the low paid low skilled sector, may as a
result find it increasingly hard to recruit new workers, without
an influx of migrant workers, since there will be a lack of affordable
housing in the district.
The Scale of building required to influence
House Prices and to ensure an adequate supply of affordable housing
with in Somerset, based on the assumptions of the Regional Spatial
Strategy, is identified in the draft Somerset Wide Housing Needs
Assessment.
This predicts that the total supply required
to meet housing need would be 3,490 and take 20 years to catch
up with the backlog of need. This is an 350 additional units per
annum than is allowed for in the Regional Spatial Strategy. However,
this calculation is based solely on meeting housing need that
is registered and takes no account of those people who do not
register on Council's waiting lists.
The Draft Somerset Local Needs Assessment calculates
that when these people are taken in to account and allowing for
those who circumstances may change and therefore allow them to
access the market, there will be a requirement for a total of
2,635 new affordable houses per annum. Again this figure is excess
of the total number of dwellings likely to be provided for within
the Regional Spatial Strategy.
Based on this evidence and the increasing affordability
gap identified within Somerset and Sedgemoor, it is difficult
to see how merely increasing the supply of private open market
housing, without increasing the supply of subsidised housing,
will result in reducing the housing need identified in the report.
The only benefit may be to increase supply and therefore, free
up smaller units for first time buyers who may be currently housed
in either social or private rented housing. This would effectively
increase the supply of affordable rented housing.
However, in rural areas of which in Sedgemoor
a high proportion of the population live in, there are the combined
issues of the lack of supply and affordability of properties on
the market. The issue facing rural areas is not just one of the
shortage of social rented housing, but also intermediate housing.
The intermediate housing market is typically regarded as for those
employed in schools, health and or other public services and may
also be newly forming households. These would tend to look to
the open market to meet their housing needs. If no intermediate
housing is available and these people are effectively forced to
leave the area to find suitable housing, then this could result
in rural communities becoming less sustainable.
| 
