Housing in Rural Surrey: Affordable or Otherwise

by Roger Abbott on 7 March, 2017

The term “affordable housing” has always been a nonsense. I suspect it was invented by Alistair Campbell (or one of Blair’s other spin doctors) to cover over the fact that local councils had been forced to sell off all their housing stock for a pittance. Since then the term has been abused by just about everyone.

There is an official definition (sort of). Firstly, “Affordable Housing” is available only to people who qualify. That is, they have registered with the local council, which has then deemed that they are both in housing need (i.e. effectively homeless) and cannot afford to rent or buy privately anywhere within the area. In practice, many local councils are tending to include a mortgage repayment or rent of more than 35% of net household income as a primary indicator of the latter. Then there are various categories of Affordable Housing:

  • Social Rent: typically those long term tenants who are still under their original council agreement which has the rent controlled through the National Rent Regime (usually around 50% of average private rent in the same area and now very rare).
  • Affordable Rent: the large scale replacement for “council housing”, typically owned by a Housing Association (or a registered private company or charity) these are made available at a rent that cannot exceed 80% of that charged for a similar property in the same area.
  • Shared Ownership: housing association property where the tenant can purchase a share of the property and pay rent on the balance, with the aim that the tenant eventually buys the property outright.
  • Intermediate Rent: available for rent at less than “market value”, but not defined as Affordable Rent.
  • Low Cost Market: for purchase at less than “market value”.

The Government recently widened the definition of affordable housing to include ‘starter homes’ costing up to £450,000 in Greater London and £250,000 elsewhere.

But what is affordable here in rural Surrey? Assuming they are on the average wage, what can a couple with young children afford? And what about all those people who earn less that the average wage?

So, as I said, in terms of what most people understand, “affordable housing” is an almost meaningless expression. Personally, I look at “affordable” from what the tenant or mortgagee can afford. As a rule of thumb I would say the cost of a mortgage or rent should be no more than 30% of income for those on average earnings, a lower percentage for those on lower income and perhaps higher for those in upper income brackets.

 

Housing Need

The first thing we must understand here is the difference between “need” and “desire”.
Example: “I need to buy petrol before we drive to…” Petrol is the essential fuel and without it the car doesn’t work and so there is a defined need. “I need a curry after work.” You may be hungry and maybe you need food, but curry is a preference or desire; certainly not a need.
So, when a developer identifies a need for, say, some large 6-bedroomed houses in rural Surrey, he is really saying that he can sell the houses he proposes to build. There will be people who can afford these houses and they may have a desire to buy and live in them, but in an area like rural Surrey there are plenty of such houses for sale and so there is no “need” as such. On the other hand there is a considerable number of people who cannot afford to buy or rent in this area and they need somewhere to live.

Therefore, what we must do is provide housing that meets local need and ensure that we maintain a balance across the whole housing stock. In this area we have a disproportional number of large expensive houses and a shortage of smaller properties. Thus, when we build, it must be smaller and lower priced houses (i.e. 2 & 3 bedroom). Only by exception should larger properties be allowed. But the biggest need at this time is housing at low rent.

 

Houses for Rent

To save our very special our rural communities, I believe we must ensure that nobody is forced out of the area where they were born or where they have lived for a long time just because they can no longer afford the housing costs there. Priority for official “Affordable Housing” in the rural areas must be given to those people from the rural areas.

There is a problem with the “affordable” rents that many people have noticed. Currently these are set at around 75% to 80% of what might be expected as a commercial rent on the same property. Leaving aside how the “commercial” rent is calculated, the tradition when district councils were in charge of social housing was that the rent was typically around 50% of the local commercial rents. In other words, there has been a massive increase in rents for people who are on the lowest incomes.

It seems to me there is a parallel here. Back in 2004, the Labour government set up the NHS trusts to create an artificial market for healthcare, with the intention that competition would drive down costs. Of course that has not worked and recent reports show that the administration costs of running the NHS are £20bn a year higher in real terms than they were 20 years ago. That’s not medical costs, and nothing to do with living longer or types of treatment etc.
So we are now seeing the government doing exactly the same with social housing. The housing associations are merging into conglomerates and losing both their local identity and their local sympathies. Now, for people who most require help with social housing, we see their rents are rising way beyond inflation while, at the same time, any problems they have are handled by a corporate entity that has no understanding of local issues. The element of having different housing associations, charities and private businesses competing and keeping rents down has not worked and all we see is that costs have increased, and so have rents.

We need to bring social housing back under local control. Whether that is a return to the previous council housing system, or to something else I am not sure. But we must link social housing with the local communities and allow those communities to set their own policies. That includes determining whether any new building is for rent or for sale. Also, it should be entirely for the community and not be for the developer, or the housing association, or a charity, or even a property company to decide what type of “affordable housing” is to be built.

 

New Houses for Sale

As I have already said, there is an imbalance in the housing stock, not only in the proportion between “affordable” and privately owned, but also in house size and style. Thus, when we build new “market houses” as they are sometimes called, they must be smaller in size and within the lower price ranges.

When we build the smaller properties, we need to make sure they stay small thus maintaining the same relative price point for future purchasers. That means we need to impose some legal means of preventing any extensions, conversions, “granny flats” or any other building or expansion that increases the market value. I know this sounds harsh, but the buyer will know all about the limitations at the time of purchase. Probably the house will be even cheaper as a consequence. We are currently suffering from “extension blight”. The government has actively been encouraging home owners to build extensions, carry out loft conversions, etc. but all this has done is increase the size (and value) of some of our smaller houses. Thus the problem is deliberately being made worse!
Don’t get me wrong. I’m not suggesting that we prevent everybody making changes to our existing houses: that would be unfair. The restriction on extensions would be limited to new builds only.

I would also reverse some of the more bizarre decrees of former environment minister Eric Pickles. In a desperate attempt to boost the economy, he removed the need for planning permission for all sorts of property changes. I want to see a local authorities have much greater powers to control the housing balance in their areas. As I said, in most of rural Surrey we have a surfeit of large houses and we shortage of smaller 2 & 3 bedroomed properties. And so the local councils should reflect that and have the power to refuse permission on the building of high value bigger houses. I have been very concerned to see the Planning Inspectors overrule our local councils when they have attempted to do just as I suggest.

 

Right-to-Buy Schemes

In current circumstances I feel we should suspend all “right-to-buy” schemes for property in the social rent, affordable housing, housing association and council rented schemes. This is because we have sold off far too many of these houses and flats without replacement. Back in 1980, the time of the original policy, I said it was wrong to sell-off council houses at highly subsidised prices and without the opportunity for councils to buy or build replacements. Because of that policy, which has been followed by all subsequent governments to greater or lesser extent, today we are dangerously short of social housing. As and when we manage to correct the balance of housing then the possibility of “right-to-buy” schemes can be revisited – but that is a long, long way into the future. And we must learn from the horrendous mistakes we have made over the last 37 years.

 

How & Where to Build New Housing

In this area, we are told by the developers that there is no alternative to building on the green belt. What tosh!
Mole Valley Council now has considerably more land available for new house building than is required by the even more stringent government planning regulations. There is no need to build on the green belt.

With about half the food we consume being imported, surely we must be crazy to even consider building on good farm land!
With agriculture becoming evermore intensive, the refuges for our natural flora and fauna are even more important. They must be of a size large enough to enable the species to continue to thrive without undue pressure and the corridors used by wildlife that connect the refuges must be maintained.
The other big worry in this area is flooding. Sadly the massive building projects going on elsewhere will put their run-off water into the River Mole. Yes, I know, they all have their little attenuation ponds, but on the scale of the building in those areas and the combined effects of all the developments, downstream flooding problems are inevitable. By no means am I alone in that prediction. We cannot add to this problem by building close to the river or in other areas where there is a history of surface water or where the groundwater systems are not fully understood.

So where to build in the rural areas? Yes we can use redundant agricultural buildings, but only if truly of no further use and not because the landowner is going to put up another building for a similar purpose somewhere nearby. Yes we can infill within our villages, and there are plenty of opportunities to do that. And there are other areas that keep popping up that could be built on without causing any damage. So yes, we do need to build in the rural areas, and there is some space.

What we don’t need however, are the big schemes the major building companies are after. Giving Taylor-Barratt-Bovis-Redrow & Co a field with the instruction “go build 100 houses” is not the answer. It creates all sorts of social and environmental problems that far outweigh any benefit that can possibly accrue from the new houses.

In our rural areas we need small builds: probably no more than half a dozen houses at a time. Within our communities there is a constant turnover of people that reflects the local house sales. The usual rate means that people new to the village have a good opportunity to fit in with, and contribute to, the community. Small scale builds allow that process to continue. So, if we have a site for say 15 houses, why not build 6 this year, 5 in two years time and the balance after that? It takes a bit of fore-thought but a Parish Council working with the local District Planning Dept. can manage that easily.
There are huge advantages to this approach. To start with, the giant companies won’t be interested, so we are giving a great opportunity for local builders, employing local people, to build local houses for local people. In addition we get the opportunity to have new, interesting and innovative designs that match the character of the community. Surely much better than the bog standard, mass produced styles that the big companies have pre-prepared for all their schemes no-matter where the building site may be. And of course we, the community, remain in control without bullying by lawyers employed by the big companies when they turn to the courts to contest any conditions we have placed upon them during the planning process.

So, does that mean we cannot build on the green belt?
If we are doing so with the agreement of the local community and we are not treading on quality farm land and we are not interfering with nature and we are not creating flooding problems (either for us or for our neighbours downstream) and we are building only in small numbers and we are only building housing that we all agree we desperately need, then maybe we can. If we are building houses that are guaranteed to be affordable, not only now, but in perpetuity then that adds to the argument. If we can take another piece of land as a replacement that contributes to the quality of the green belt, then why not?

There are a lot of conditions in there. There will be people who say I am making it impossible to build anywhere in the green belt. I am not. Agreed, it will be extremely difficult for the big building companies with big budgets and big resources to build big new estates: but that is right and it certainly does not prevent small local builds.

As I have said many times, the green belt does not exist for the benefit of the people who live there. Nor is it necessarily pretty and well manicured. The green belt an essential counter-balance to the concentrated urban developments that keeps the overall environment healthy and contributes massively to the well-being of all our people, including those who live in the towns and cities.

And finally… we who live in the green belt know that we can meet our housing needs if we are careful and thoughtful about what we are doing.

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