Brick by Brick’s shared ownership flats are far from affordable

CROYDON COMMENTARY: The council has been accused of hiding behind statements that promise “affordable” housing. NIX GLOVER has done some digging to see just how unaffordable such housing can really be

Flats which can be bought under ‘shared ownership’ are often only ‘affordable’ if you are earning a significant salary

Croydon Council say they are building affordable homes, they are required by planning law to ensure that all projects over a certain size contain affordable housing, so whether the council via their company Brick by Brick are building them or an independent developer does it, there should be housing for every budget.

So is there?

According to figures provided by Croydon Council in a Freedom of Information response last November, the total number of units Brick by Brick is proposing to build is 756.

Of those, 488 – 64 per cent – are to be sold on the open market, at market rates, including most, if not all, of the wheelchair-adapted units.

According to the council’s own figures, only 60 of these 756 units – less than 8 per cent – will be for affordable rent.

The totals, and proportions, have shifted a little since the council answered the FoI. In the company’s business plan, approved by the council cabinet earlier this month, there was no breakdown provided of the number of units for affordable rent.

But much of what Brick by Brick is proposing as “affordable” housing depends on homes that will be sold and rented as “shared ownership”. But at what price?

I took a look at some typical “shared ownership” properties in Croydon to get a feel for how these arrangements might be structured. It may not be exactly the same as any of the schemes which Brick by Brick say they are building, but it provides an illustration of how much a share ownership flat might cost.

A property of only 76m² is currently on offer in Coulsdon. It has two bedrooms (one with en-suite shower room), a bathroom, an open plan kitchen-living room, balcony and parking space. It’s current market value is £340,000.

This property is available as shared ownership, so you can own 45per cent of it for £153,000.

But you then also have to pay rent of £408.52 per month.

So if you get a mortgage with payments of £800 per month, it will cost you £1,208 per month.

Who can afford that?

The average wage in Croydon is £33,000, or £2,143 per month after tax.

If you subtract the cost of your home, that would leave you with £935 per month for Council Tax, utilities and other costs. Not forgetting that you still have to pay the annual service charge of £141.25 and any maintenance charges on your newly, part-acquired shared ownership home.

If you are a couple, and both working, then you can probably afford it, and maybe even own a car to put in the parking space. But if you decide to have children, with the costs that come with them, you may struggle.

But what if, say, you are a single parent earning the minimum wage, and are unable to work? Or if you are disabled and are on benefits?

A monthly mortgage-rent payment of £1,200 is nearly impossible. No benefit pays enough for a mortgage of £150,000. The Greater London benefit cap for a couple, with or without children, is £23,000. And while some benefits are not counted for the cap, even the maximum PIP payments are only £7,337 per year.

The local housing allowance for two bedrooms is only £939.86, but they won’t give you housing benefit with the mortgage.

So how could you ever afford one of these “affordable” homes?

Nix Glover, who has worked at Nestlé and in Purley, is a member of the Brick by Brick Action Group which organised the Town Hall protest at Monday’s council meeting

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3 Responses to Brick by Brick’s shared ownership flats are far from affordable

  1. Charles Calvin says:

    These findings are worrying because it demonstrates there is a company being run in our names by people who fundamentally cannot deliver on what they’re promising. I see myself as a shareholder of Brick x Brick as they are building on my land and are loaning themselves my money. All Croydon residents who pay Council Tax are de facto shareholders in this company.

    They say they are providing a mix of housing tenures but as this piece of reporting demonstrates, they are not.

    Brick x Brick ignore what residents say and the Council likes to think they’re at ‘arms length’. So who are they actually accountable to?

    These local authority pseudo-development companies are not over-looked by Whitehall and Westminster. There’s no back-stop. There’s no accountability. When, in five years, it’s realised they were not run in a the way needed to operate in this sector, nor staffed by people who are suitably qualified or motivated, it’ll be too late.

    Council owned land is a non-returnable asset, once it’s gone, absorbed into the private sector, we’ll not see it for a generation.

    On the current trend, up to half of all councils in England may have these companies by 2020, most building on council land. Is this going to be the housing disaster of the 21c – the equivalent of Thatcher’s right-to-buy. Or just a land-grab version of it with the same outcomes?

    Depressing that Croydon can’t buck the trend but are being subsumed into it.

  2. I currently live in a shared ownership house in Thornton Heath. 9 months in and my rent is going up by £23 per month, and have been told this will happen every year, meaning by 2022, it’ll be aprox £100 more per month from the original figure. The term in the lease indicates the rent COULD go up, but I was under the impression it was discretionary, not mandatory. This is not affordable.

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