Affordable Housing

Question 1

What is the London Plan policy on Affordable Housing

Answer 1

in London – and has a target for 50 per cent of all new homes to be genuinely affordable. The Plan uses a ‘threshold approach’. Schemes that deliver at least 35% affordable housing go down a ‘fast track’ route.

Question 2

How many new homes does London need to deliver every year?

Answer 2

66,000 new homes, 43,000 of which should be affordable.

Question 3

what is the mayors strategic affordable housing target?

Answer 3

50% of homes to be genuinely affordable

Question 4

What is the affordable housing requirement for building on public sector land?

Answer 4

At least 50% should be delivered as affordable.

Question 5

What sites have to provide affordable housing?

Answer 5

Any sites which have the capacity to provide over 10 units.

Question 6

What is the threshold approach?

Answer 6

The threshold approach encourages developers to deliver minimum of 35% affordable and deliver housing in line with the tenure requirements. If this is the case, they will not be subject to a viability review

Question 7

What is the required affordable housing tenure split for development in London?

Answer 7

30% Low Rent Housing (i.e. London Affordable Rent and Social Rent)
30% Intermediate tenure (i.e. London Living Rent and shared ownership)
40% to be decided by the borough based on objectively assessed need

Question 8

What are First Homes?

Answer 8

First homes are a tenure of affordable housing which will be for first time buyers who live within the local borough. The homes will be discounted at a rate of min. 30% and capped at £250,000 (£420,000 in London)

Question 9

Will first homes always be first homes?

Answer 9

Yes - they will have a restriction in the title.

Question 10

What are the different tenures of affordable housing?

Answer 10

Intermediate - Shared Ownership/ London Living Rent
Low Cost Rented - Affordable Rent/ London Affordable Rent

Question 11

What tenure will first homes be?

Answer 11

Intermediate tenure - Low cost rented tenure is protected so it is likely the first homes model will begin to replace shared ownership.

Question 12

What is shared ownership?

Answer 12

• Purchaser buys a share of between 25% - 75%
• Purchaser pays an annual rent on top of this on the unowned equity around 2.75%
• Overtime can buy remain equity to own 100%
• Maximum income of £90k per household

Question 13

What is London Living Rent?

Answer 13

It is an intermediate tenure - you must have an income of less than 60,000. The concept is that you rent the property at a reduced rent so the saving on rent can be used as a deposit to buy the property within 10 years a.k.a move seamlessly into the shared ownership model.

Question 14

What is Discounted Market Rent

Answer 14

80% of open market value in London (this is not affordable, so intermediate tenure)

Question 15

What is social rent?

Answer 15

Social rent is the most affordable rental product – often around 15-25% of MR

Question 16

What is affordable rent?

Answer 16

Affordable rent is capped at 80% of MR. Minimum tenancy of 2 years and was introduced 2010 to replace Social Rent

Question 17

What is London Affordable Rent

Answer 17

London Affordable Rent is a non-binding target introduced by Mayor Sadiq Khan. They are not legal caps, and only really constitute benchmark targets as 80% of MV in London is still not affordable/

Question 18

What are the rough values of affordable housing

Answer 18

Vary widely dependent on borough but as a rough guide:

Affordable rent - £90 - £400

SO £300 - £700

Question 19

What is a registered provider

Answer 19

Any organisation (for profit or not) registered with the regulator as a provider of social housing - They own and manage their housing stock.

Question 20

How would you value affordable housing?

Answer 20

Cash flow the income (rent) MINUS the costs (management and maintenance) over the number of years = net passing rent

Discount net passing rent back to PV at a set rate to give the investment value

Discount rate is based on risk and includes inflation

Question 21

What is help to buy?

Answer 21

Allows first time buyers to purchase a new build property of up to £600,000 in London and £437,000 in the regions. Purchasers put down a 5% deposit and receive an interest free loan (for 5 yars) of up to 40% of the value in London (20% in regions) and get a mortgage from a lender on the remainder.

Question 22

Has help to buy worked?

Answer 22

Help to buy has supported 31% of all new build sales since its inception.

Question 23

When is Help to Buy ending?

Answer 23

March 2023

Question 24

What will be the effect of the end of help to buy?

Answer 24

Gap in the market for new build properties, increase in the demand for shared ownership and first homes