Greenwich Council’s independent housing delivery arm has announced a plan to contribute up to £10,000 to tenants to go towards a mortgage deposit.
Meridian Home Start, set up by the Royal Borough of Greenwich, is one of many local authority companies now in existence, but is fully independent from the council. It is set to build more than 200 homes across three sites, with rent levels set at or below 65% of local market rates. Further sites are expected to push the number of homes up to around 750.
Council leader Denise Hyland has also announced a new saving scheme, similar to the government’s Help to Buy ISA. However, the subsidy is far more generous.
With reference to a site on Rochester Way, SE9, where the construction of 29 affordable-rent homes is under way, Hyland said: “Families who rent and save will get £1 from Meridian Home Start for every £1 they save, to a maximum of £10,000, to use as a deposit when they move on to buy their own home.”
But the scheme has its critics. Local blog From The Murky Depths said: “Like Help to Buy, this will only push up prices, reducing affordability for many. Help to Buy already exists, so why spend money locally on this? To attach a local boost to damaging national factors?”
Last week Greenwich Council’s cabinet also agreed to spend £65m buying homes off the open market up to 2020 – despite its own findings showing, From The Murky Depths reported, that this was the most expensive way to provide additional affordable housing.
The £65m is expected to pay for around 173 units at an average cost of £375,000, with a mix of funding from £45.5m in council reserves and £19.5m from Right to Buy receipts. After the cost of borrowing, each home will cost around £14,500 pa, with this figure dropping to £2,850 after rents have been collected.
The homes bought from the open market will provide replacement temporary accommodation (to help tackle the council’s homelessness budget) and meet new general needs for affordable housing (to help tackle wider housing need).
The current cost to the borough for temporary accommodation is £4,733 per unit, so the scheme could deliver a saving of 40%.
Comment: Paul Wellman, Estates Gazette
With the political debate over affordable housing continuing – and the task of supplying it becoming more difficult – has Greenwich Council ducked the issue and taken the easy way out?
By buying homes off the open market, to replace those lost through Right to Buy, the council has not come up with any net additional housing stock. The proposed 750 homes to be built by Meridian Home Start is commendable, but could it go further?
Even Greenwich’s own calculations reveal more affordable homes could be built if its funding were aimed at registered providers, with an average cost of £106,000 per unit – around a 72% discount on the figure for buying off the open market, as it is proposing.
Greenwich – and every other council, for that matter – has been hamstrung by the continued forced sales under Right to Buy, and the resulting permanent loss of low-cost housing. Figures released this week by the Chartered Institute of Housing show 230,000 social homes in England will have been lost under the Conservatives by 2020.
Local authority arms-length housing companies have been created out of desperation to try to circumnavigate both the cap on borrowing set by government and the loss of homes through Right to Buy. All these organisations seem to be doing things in slightly different ways – and to be frank they are essentially sticking-plaster operations.
In the case of Greenwich, many will look at the strain that homelessness and the cost of temporary accommodation places on the borough’s finances and ask whether providing a lump sum of £10,000 to aspiring home-owners is the best use of limited funding?
Arguably not. What no one can dispute, though, is that Greenwich and others are in a catch-22 situation: through no fault of their own, they don’t have the skills and resources needed to take on the housing crisis.
In response, a Royal Borough of Greenwich spokesperson said:
“Retained Right to Buy receipts provide time-limited funding to the council which, if unspent within the three-year deadline, are required to be returned to the Ministry of Housing, Communities and Local Government (MHCLG), with the potential for interest charges to be added.
“The use of this funding to provide new high-quality affordable homes provides significant benefit to the borough’s residents and the council’s service users, while also assisting the council to manage its homelessness budget pressures in a way that is more cost-effective than paying for temporary accommodation externally.
“RBG regularly engages with and encourages registered providers to take up receipts, subject to a funding agreement with us.
“The council has recently taken a decision to work with Meridian Home Start (MHS) on a first phase of sites to develop affordable housing in the borough, which will be able to use RTB receipts. The council is continuing discussions with MHS on potential future sites, with any future decisions subject to the council’s governance processes.”
To send feedback e-mail paul.wellman@egi.co.uk or tweet @paulwellman eg or @estatesgazette
