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The key to affordable housing for essential workers? A £50,000 deposit The key to affordable housing for essential workers? A £50,000 salary
(about 1 hour later)
Key workers are finding themselves locked out of "affordable" home ownership schemes designed to help them on to the property ladder, because of minimum income requirement of as much as £50,000 a year.Key workers are finding themselves locked out of "affordable" home ownership schemes designed to help them on to the property ladder, because of minimum income requirement of as much as £50,000 a year.
Joanne Pearson, 36, works as a nurse in Southwark, south London, and earns around £26,500. She had hoped to buy a 25% share in a one-bed flat through First Steps, the mayor of London's scheme, which held its spring home show yesterday. It claims to enable those on modest incomes to buy a share of a property and pay rent on the difference.Joanne Pearson, 36, works as a nurse in Southwark, south London, and earns around £26,500. She had hoped to buy a 25% share in a one-bed flat through First Steps, the mayor of London's scheme, which held its spring home show yesterday. It claims to enable those on modest incomes to buy a share of a property and pay rent on the difference.
However, Pearson's hopes were dashed on seeing details of the available properties. "Many of the one-bedroom flats advertised on the website require an income of above £50,000 a year, while for others you must earn above £33,000," she says. "I wonder how many nurses, teachers or other workers on low or modest incomes actually earn £50,000?"However, Pearson's hopes were dashed on seeing details of the available properties. "Many of the one-bedroom flats advertised on the website require an income of above £50,000 a year, while for others you must earn above £33,000," she says. "I wonder how many nurses, teachers or other workers on low or modest incomes actually earn £50,000?"
More frustrating is that Pearson can afford the £831 it would cost her in monthly mortgage repayments and rent for a 25%, or £75,000, share of a one-bed flat in Bermondsey. "This is well within my budget as I'm currently renting a flat for over £1,000," she says. "As a person who provides an essential public service, I feel disheartened and let down that I'm locked out of this scheme."More frustrating is that Pearson can afford the £831 it would cost her in monthly mortgage repayments and rent for a 25%, or £75,000, share of a one-bed flat in Bermondsey. "This is well within my budget as I'm currently renting a flat for over £1,000," she says. "As a person who provides an essential public service, I feel disheartened and let down that I'm locked out of this scheme."
A report by Darren Johnson, Green party member of the London Assembly, found that the average minimum income required where this was stated by housing associations through First Steps amounted to £38,452.A report by Darren Johnson, Green party member of the London Assembly, found that the average minimum income required where this was stated by housing associations through First Steps amounted to £38,452.
Some so-called "affordable" properties listed are priced over £700,000, as the value of those for resale has rocketed in line with the market. A one-bedroom apartment listed in Blandford Street, Marylebone, is for sale at £712,000. Estimates place the monthly cost in excess of £3,000 for mortgage, rent and service charge, with a deposit of £21,360 for a minimum 60% share. Based on the typical rule that housing costs shouldn't exceed 35% of take-home pay, a couple would need a combined income of £128,000 for this property to be affordable, says Johnson.Some so-called "affordable" properties listed are priced over £700,000, as the value of those for resale has rocketed in line with the market. A one-bedroom apartment listed in Blandford Street, Marylebone, is for sale at £712,000. Estimates place the monthly cost in excess of £3,000 for mortgage, rent and service charge, with a deposit of £21,360 for a minimum 60% share. Based on the typical rule that housing costs shouldn't exceed 35% of take-home pay, a couple would need a combined income of £128,000 for this property to be affordable, says Johnson.
Yet the First Steps website trumpets itself as the "gateway to low-cost home ownership", potentially giving false hope to Londoners fearful of being priced out of a share in a property.Yet the First Steps website trumpets itself as the "gateway to low-cost home ownership", potentially giving false hope to Londoners fearful of being priced out of a share in a property.
This comes amid the wider debate raging about the capital's housing crisis, with reports that even the huge re-development of Battersea power station will fail to provide any affordable homes for social rent or shared ownership.This comes amid the wider debate raging about the capital's housing crisis, with reports that even the huge re-development of Battersea power station will fail to provide any affordable homes for social rent or shared ownership.
A spokesperson for the mayor of London says that, of the 50,000 low and middle-income Londoners buying their own home through First Steps, some are on salaries of around £25,000 a year, with the average household income of those accessing the scheme at £33,000.A spokesperson for the mayor of London says that, of the 50,000 low and middle-income Londoners buying their own home through First Steps, some are on salaries of around £25,000 a year, with the average household income of those accessing the scheme at £33,000.
"Obviously, homes vary in price, size, type and location and this does influence the income-level thresholds that First Steps' providers and mortgage providers require from customers to ensure they can afford their repayments," she adds."Obviously, homes vary in price, size, type and location and this does influence the income-level thresholds that First Steps' providers and mortgage providers require from customers to ensure they can afford their repayments," she adds.
Shared ownership was first touted as a solution for those with a household income from £18,000. However, Alex Hilton, director of private tenants group Generation Rent, says that tales such as Pearson's highlight the shoddy state of this market, with a series of schemes that are failing those they were set up to help.Shared ownership was first touted as a solution for those with a household income from £18,000. However, Alex Hilton, director of private tenants group Generation Rent, says that tales such as Pearson's highlight the shoddy state of this market, with a series of schemes that are failing those they were set up to help.
He criticises shared ownership as a "bureaucratic nightmare", adding: "It is just a sticking plaster on a failed housing market, and another scheme that stimulates demand without creating more supply. The real beneficiaries are the millions of homeowners who get to see their properties rise in value."He criticises shared ownership as a "bureaucratic nightmare", adding: "It is just a sticking plaster on a failed housing market, and another scheme that stimulates demand without creating more supply. The real beneficiaries are the millions of homeowners who get to see their properties rise in value."
The initial investment required is often 25% for shared ownership, with buyers able to invest in further chunks as and when they can and want to. In the longer term, the scheme is meant to empower buyers to own an entire property.The initial investment required is often 25% for shared ownership, with buyers able to invest in further chunks as and when they can and want to. In the longer term, the scheme is meant to empower buyers to own an entire property.
However, this concept, known as "staircasing", is largely inaccessible to those on lower incomes. "The levels of rent in additional to the mortgage makes it impossible for many people to find the surplus income to do this," says Mark Hayward, managing director of the National Association of Estate Agents.However, this concept, known as "staircasing", is largely inaccessible to those on lower incomes. "The levels of rent in additional to the mortgage makes it impossible for many people to find the surplus income to do this," says Mark Hayward, managing director of the National Association of Estate Agents.
He adds that the vast majority of properties through shared ownership are new-builds sold by housing associations. These typically command higher prices than "second-hand" homes. However, this premium can disappear as soon as someone moves into the property.He adds that the vast majority of properties through shared ownership are new-builds sold by housing associations. These typically command higher prices than "second-hand" homes. However, this premium can disappear as soon as someone moves into the property.
Shelter, the homeless charity, recently put shared ownership under the spotlight, saying it is a sector that urgently needs reform. It says the minimum share of ownership should be as low as 12%.Shelter, the homeless charity, recently put shared ownership under the spotlight, saying it is a sector that urgently needs reform. It says the minimum share of ownership should be as low as 12%.
This way, buyers would still benefit from the main attraction of shared ownership – it gives security to the occupiers, as they cannot be evicted at short notice, unlike in the private rented sector.This way, buyers would still benefit from the main attraction of shared ownership – it gives security to the occupiers, as they cannot be evicted at short notice, unlike in the private rented sector.
Roger Harding, director of communications, policy and campaigns at Shelter, says: "The reality is, no matter how hard they work or save, a home of their own is becoming an ever more distant dream for a whole generation of young people.Roger Harding, director of communications, policy and campaigns at Shelter, says: "The reality is, no matter how hard they work or save, a home of their own is becoming an ever more distant dream for a whole generation of young people.
"So far, years of piecemeal policies and an alphabet soup of confusing schemes have meant that shared ownership has failed to reach its potential.""So far, years of piecemeal policies and an alphabet soup of confusing schemes have meant that shared ownership has failed to reach its potential."
He recommends "a new generation of genuinely affordable shared ownership homes" to tackle the housing shortage.He recommends "a new generation of genuinely affordable shared ownership homes" to tackle the housing shortage.
"With the dramatic undersupply of homes making finding a stable place to live increasingly unaffordable, we need to see the government put the brakes on our rollercoaster housing market and commit to building the affordable homes that we desperately need.""With the dramatic undersupply of homes making finding a stable place to live increasingly unaffordable, we need to see the government put the brakes on our rollercoaster housing market and commit to building the affordable homes that we desperately need."