Select Committee on Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Written Evidence

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.

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