How do you build affordable homes? Hold the land in trust
You are probably aware of rising house prices but you might be surprised to find that much of the cost of a house is actually in the land.
Rising land values are affecting an increasing number of people, with even those on good incomes now finding themselves priced out of the housing market and instead paying high rents in the private sector. There are too few affordable homes and even fewer permanently affordable ones. So how can we build more and keep the costs appropriate to those on low and middle incomes?
The community land trust model has an important part to play in creating more genuinely and permanently affordable homes. The basic idea is this: hold the land in trust and remove its cost from the homes, thus making them affordable.
Homes built on land in trust are part-sold or rented at affordable rates and protected from right to buy. This is important because when an affordable home is sold on the open market it ceases to be affordable – as has happened with the 2.5m council homes sold under right to buy since the 1980s. Community land trusts are still exempt from the recent changes, giving right to buy discounts to housing association tenants. Avoiding right to buy is crucial to establishing and protecting genuinely and permanently affordable homes.
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Some rural community land trusts have secured land at no or low cost but this is increasingly unlikely to happen in the south-east where land values are particularly high. Given the difficulty of finding low-cost land, Oxfordshire Community Land Trust has recently joined forces with three other community-led housing groups (Oxford Cohousing, Kindling Coop and Happy House Coop) to form Homes for Oxford and mount a commercially competitive bid for a 17-acre site, formerly a paper mill, owned by Oxford University.
If successful, Homes for Oxford intends to build at least 190 mixed tenure homes with at least half to be permanently affordable. All the homes will be built in small groups – around 40 mixed tenure homes – to promote neighbourliness and mutual support. The site will be largely pedestrianised, with cars kept to a minimum and parked on the edges of the site. There will be some office space and a regular bus service. Once the homes are built the land will be transferred to and managed by a community land trust, which will be run by a combination of residents, local villagers and others with professional expertise.
Homes for Oxford plans to build 50% open market homes (to fund the project), 10% intermediate, 40% social rented – meeting local council policy of ensuring that 50% of homes are affordable.
However, Homes for Oxford is challenged by the fact that many prospective residents cannot afford open market and don’t qualify for social rented. So we would like a higher proportion of shared ownership homes on the site. It’s not easy to do this while offering the best price for the land: prices are discounted by any affordability requirement so commercial bidders and land owners will be aiming to reduce the proportion of affordable homes to get the best price.
We have two options to deliver an increased number of genuinely and permanently affordable homes: either it secures more donations to fund the land cost (for the community land trust), or it gets a reduction in the land cost (unlikely). There is massive local support for this proposal: Homes for Oxford received pledges of donations and investments of more than £500,000 in the five days prior to bidding.
If this proposal gets built, it would be a destination for urban planners, especially those struggling with how to make cities affordable. It would also put Oxford centre stage for delivering housing innovation in a time of crisis.
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