Affordable housing

Kirkmain

Have a query about "affordable housing" How exactly does that work. Surely the cost of a house is governed by the free market

Say for example there's a nice house in a nice area. Young professional couple think, this is where they want to raise their children and their family. They have saved, work and can afford a mortgage. They are willing to part with £400,000 of their money and mortgage to buy said house.

BUT, people want housing to be affordable. So do they make this young couple pay £250,000 for a house they are willing to pay £400,000 for? whos subsidising the difference? And if someone is subsidising the difference how do we as a society choose who gets to benefit from the subsidy.

An alternative would be to build the house in a popular area, but deliberately cut corners on materials and workmanship to make it cheaper (and therefore affordable), but then I wouldn't want to raise a family in such a house.

can anyone shed some  light on this concept of "affordable housing"?

kingstreet

Shared ownership comes under the heading of affordable housing. A housing association owns a share and charges rent on it while the purchaser buys a share using a mortgage and deposit.

Discount open market value is another option. A share is usually held by a local authority but this time is rent-free. The purchaser buys a share, say 70% and when they sell they can only sell that 70%. The 30% remains with the LA and allows those with a local connection/key workers to occupy a larger or more expensive property without the outlay.

Kirkmain

kingstreet said:

Shared ownership comes under the heading of affordable housing. A housing association owns a share and charges rent on it while the purchaser buys a share using a mortgage and deposit.

Discount open market value is another option. A share is usually held by a local authority but this time is rent-free. The purchaser buys a share, say 70% and when they sell they can only sell that 70%. The 30% remains with the LA and allows those with a local connection/key workers to occupy a larger or more expensive property without the outlay.

I see. thanks. Discount open market value makes sense. But shared ownership just sounds the worse of both worlds. Risks of ownership and still having to pay into the money black hole of renting.

BarelySentientAI

The other thing "affordable housing" can mean is that they build a couple of 1 & 2 bed terraced houses or apartments squashed into a corner of a development.

sammyjammy

Kirkmain said:

kingstreet said:

Shared ownership comes under the heading of affordable housing. A housing association owns a share and charges rent on it while the purchaser buys a share using a mortgage and deposit.

Discount open market value is another option. A share is usually held by a local authority but this time is rent-free. The purchaser buys a share, say 70% and when they sell they can only sell that 70%. The 30% remains with the LA and allows those with a local connection/key workers to occupy a larger or more expensive property without the outlay.

I see. thanks. Discount open market value makes sense. But shared ownership just sounds the worse of both worlds. Risks of ownership and still having to pay into the money black hole of renting.

It pretty much is worse of both worlds but some people see it as their only chance to get on the "ladder".  Its not until they want to buy a higher % share or sell up that the difficulties become really clear.

Its not something that comes recommended much here.

housebuyer143

sammyjammy said:

Kirkmain said:

kingstreet said:

Shared ownership comes under the heading of affordable housing. A housing association owns a share and charges rent on it while the purchaser buys a share using a mortgage and deposit.

Discount open market value is another option. A share is usually held by a local authority but this time is rent-free. The purchaser buys a share, say 70% and when they sell they can only sell that 70%. The 30% remains with the LA and allows those with a local connection/key workers to occupy a larger or more expensive property without the outlay.

I see. thanks. Discount open market value makes sense. But shared ownership just sounds the worse of both worlds. Risks of ownership and still having to pay into the money black hole of renting.

It pretty much is worse of both worlds but some people see it as their only chance to get on the "ladder".  Its not until they want to buy a higher % share or sell up that the difficulties become really clear.

Its not something that comes recommended much here.

The only plus to it is it's got more security than renting. 

Nebulous2

I'm not in construction, and have a limited knowledge - but. 

I've spoken to people who are building houses, and I've garnered the following. 

Builders will apply for planning permission and will be given permission to build maybe 200 new houses on condition that they provide 48 affordable homes. Often these will be offered to people on the local authority waiting list. These homes wont have as many extras, so will be built without things like built-in wardrobes. Strangely these houses may be offered through a housing association, and will have to meet standards for housing that may be superior to those for private housing - bigger room sizes, for instance. 

So it is quite possible that a house will be offered for £250k, that would cost £400k under different circumstances. They will come with tie-ins however, you will have to stay there for maybe 5 years, and have to sell it back below market value if you sell within a certain period of time. 

The decision about who gets it will be set individually, but may include things like, having a local connection, having a certain amount of points on the waiting list, earning below a certain threshold, being in certain occupations, such as farming. 

BungalowBel

On the estate where our rental flat is, the 'affordable housing' at the back of the estate fronts straight onto the footpath (no front garden) of the road that leads to the council dump.  The front of the estate where our flat is, is much nicer and the nearest road, although busy, is green and leafy.

So yes, the affordable housing is often in the worst part of the estate.

Murphybear

There’s a lot more to it.  Have a look at Fact Sheet 9 on the government website (.gov).  It’s all about affordable housing.  

ThorOdinson

It's largely just a fudge that lets the government say they are doing something about the housing crisis.

Often the developers don't actually build the affordable housing they promised to.