I believe that the revised National Planning Policy Framework (NPPF) offers significant opportunities to modify current local planning policies to provide new opportunities for first-time buyers to purchase affordable housing and new development opportunities for local small and medium-sized housebuilders. I have written to the Leaders of Ryedale and Hambleton Councils to propose that 50% of the affordable homes be provided through Discount Market Sale (DMS), which means they are sold at least 20% below market value, with eligibility determined by taking into account local incomes and local house prices.
These types of affordable homes offer a number of advantages over affordable rented homes;
- They encourage home ownership; Residents then have a greater stake in their community and society as a whole;
- Buying is cheaper than renting. For example, the full market value of a 2-bedroomed town house in Malton is around £160,000 for sale and around £600 per month to rent. 80% of market rent would be £480/month. The same property could be provided at 40% below market value through DMS, so £96,000. A 90% mortgage on a 5-year fixed rate costs around £400 per month. Mortgages on DMS are available from Halifax, Nationwide and the Leeds.
- The council could help buyers to save. Buyers would have to find a 10% deposit but the council could work with developers and aspirant buyers to promote the Help to Buy ISA where the Government boosts savings by 25%
- A higher proportion of affordable homes. The developer would receive a higher value for each home sold compared to the transfer price to a housing association so could deliver a higher percentage of affordable homes on each site.
- Local residents always benefit from the discount. The discount is passed on from one owner to the next.
Current policies favour the provision of affordable rented homes, to the exclusion of Discounted Market Sale (DMS). For instance, in one of our local towns, of the 656 homes currently in development or consented, 279 are for affordable rent, with no DMS and only nine 2-bedroomed homes for market sale, severely restricting the opportunities for young people to get onto the housing ladder.
There would be a benefit too for SME housebuilders which are usually owned by local business people employing a higher proportion of local workers, apprentices and tradespeople and are more likely to use local supply chains and support local businesses and good causes. They are deliver homes significantly more quickly than larger housebuilders. SME developers delivered 66% of all homes in the UK in 1988, by 2008 this figure had fallen to 44% and today it is only 26%.
I have regularly argued for planning policies that support SME developers and am delighted that some of these have now been included in the revised NPPF. As far as I am concerned it is a win- win all round and I very much hope that the local authorities will adopt it as a policy.