What is affordable housing in Cambridgeshire?
Increasing rents down to shortage of housing
With Land Registry figures released in June showing an increase in house prices in Cambridgeshire of 1.6 per cent a month and the worrying statistic that house prices are 9.9 times the average salary, the need for affordable housing in Cambridgeshire is greater than ever. But what is “affordable”?
The government definition of affordable provides that this is no more than 80 per cent of the average local market rent, although it is relatively ambiguous in nature. Furthermore, the Office for National Statistics quotes an average of £1,277 a month for a two-bed flat, indicating that those in “affordable housing” could still be paying nearly £1,000 per month, hence it is a rather broad interpretation.
Increasing rents in Cambridge can be attributed to an overall shortage of housing. The market has adapted to accommodate the growing number of those commuting to the capital, and whilst some may benefit from a London salary, this is not reflective of the financial position of those that are employed in Cambridge. As landlords are able to increase prices based on the demand, developers of affordable housing are unable to match the demand for those left behind.
In December 2016, Rentplus announced a new partnership with King Street Housing Society to build the first rent-to-buy houses in Cambridgeshire, aiming to deliver 1,000 properties by 2020. The concept is that the homes will be let at 80 per cent market rate and at intervals of five, 10, 15 and 20 years the tenants are given the chance to buy their home with a 10 per cent “gifted deposit” from Rentplus. This provides an example of a local awareness of the shortage of affordable housing, suggesting that the city is starting to move in the right direction.
There is additional hope further afield as the government has recognised the need for change, reflected in the “Fixing Our Broken Housing Market” report dated February 2017. Alternatively, rather than a sole focus on further housing developments, the National Infrastructure Commission has provided an interim report suggesting how improvements to transport in the corridor between Cambridge and Oxford may link viable homes to potential employment opportunities.
Another, more practical way in which this shortage needs to be addressed is for the transport infrastructure in the region to be improved so as to provide between links between the urban centres and the areas with more affordable housing. Such improvements are beginning to gain traction; for example, the opening of Cambridge North railway station, talk of there being a station at Addenbrooke’s, the transport link between Cambridge and Haverhill, the transport corridor between Oxford and Cambridge and, by no means least, the long-awaited improvements to the A14. A combination of approaches and a commitment to deliver these is clearly needed.
Sarah Coates is a partner in the real estate division of Penningtons Manches at Clarendon House, Clarendon Road, Cambridge CB2 8FH. She joined the firm in 2015, having spent the majority of her time since qualifying in 2006 practising in the Cambridge area. She has expertise in the acquisition and set-up of commercial and residential development sites, development finance, pension fund sales and purchases, and secured lending and refinance work. Call 01223 465428, email firstname.lastname@example.org or visit penningtons.co.uk