The community pays the price

Affordable housing for key workers in London is a hot issue. After all, doesn't it follow that public sector services must suffer as teachers and nurses are priced out of the market?
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The market may be slowing but this isn't necessarily good news for those trying to get a foothold on London's property ladder. As the government explores ways of ensuring affordability, developers warn that a market downturn could result in fewer available homes.

The market may be slowing but this isn't necessarily good news for those trying to get a foothold on London's property ladder. As the government explores ways of ensuring affordability, developers warn that a market downturn could result in fewer available homes.

Housing is now a hot issue with reports that many workers in the public sector can not afford property prices in the south east. A recent survey published by the Labour Research Centre, on behalf of the GMB union, revealed that many Londoners, with average earnings of £30,483, faced a typical £31,000 gap between the price of a property and their borrowing potential.

If the situation is poor for many Londoners, how much worse is it for key workers? An average teaching salary is £26,387, with nurses trailing behind on £22,409 prompting fears that the capital faces an inevitable deterioration in public services. John Edmonds, general secretary of the GMB is angry: "It is scandalous that such huge gaps in affordable housing exist. The workers affected are the backbone of this capital. They deserve the chance to buy a home close to where they work."

Plans are afoot to redress the deficit. Housing Minister Nick Raynsford recently promised 56,000 new affordable homes for London and the south east and the government also hopes that their Starter Homes Initiative - aimed specifically at key workers - will ease the situation. A possible option is interest free loans, or employer contributions towards housing costs. Further details will be given in the autumn.

Some housing associations work in partnership with schools and hospitals via local authorities, but key workers are competing with burgeoning waiting lists of people deemed to be in greater housing need. To gain planning consent developers must currently allocate 25 per cent of their properties to low cost housing either on site or elsewhere in the borough, a ratio which the government could decide to increase. Alisdair Chant, MD of Berkeley Partnership would like government clarification: "I'm trying to get a clear idea of what constitutes a key worker. When we consider affordable housing we have to try and look at priority, but it is complex."

Mr Chant sees underlying political motives: "Housing is not high on the political agenda, whereas health and education are. The lack of affordable housing for key workers is often bandied about as a reason why they can't attract people into the health service or education."

He believes that investment is key and warns that if the market dips the lowly paid won't benefit.

"When the market is healthy we are able to develop Brownfield sites.but should we be paid less for each unit, sites which were working simply aren't going to."

Steve Coleman, director of home ownership at housing association Notting Hill Housing Trust, agrees that a further squeeze upon developers will not work.

"We mustn't be greedy. If we push for more there is a danger that the sites simply won't get developed."

The Trust successfully manages many properties on developments where the bulk of units are private sales.

Are there tensions between private owners and social housing tenants? "The key lies in good management, but here people are used to it. It works, just look at any London street," says Mr Coleman pointing to multiple examples in Notting Hill, where million pound houses border the many properties owned by the Trust.

Mr Coleman welcomes the Starter Homes Initiative: "It's an excellent idea. An amalgamation of the current schemes with discounted market rents and flexibility of tenure is the future."

The Trust hasn't always welcomed government initiatives. In 1998 I reported on the government's threatened abolition of the Do It Yourself Shared Ownership scheme a part buy part rent system which lets buyers pay between 25-75 per cent of the purchase price with housing associations buying the remaining share.

The government wanted to replace the scheme with Homebuy, where buyers pay 75 per cent of the purchase price, no rent and get an interest free loan for the remaining 25 per cent. Many associations, including the Trust, argued that Homebuy would operate at the expense of the lower paid and, following The Independent's report, the government back tracked and allowed both schemes to run.

Moat Home Ownership is one of the largest shared ownership landlords in the country running DIYSO and Homebuy schemes to help those people on lower incomes to buy their own properties.

Director Chris Cheeseman is aware that Homebuy does not suit everybody: "We know many key workers have to struggle to afford even 75 per cent of the market price."

Moat Homes are now launching a specific scheme specifically targeting key workers with a pilot scheme from September. Mr Cheeseman says: "Key workers are the lifeblood of any community. It's ridiculous that some of the most important workers can't afford to buy a reasonable home in the south east."

Last year Moat helped fire-fighter Michael Barton realise his housing dreams through DIYSO.

Michael works at Southwark Fire Station in Tooley Street, SE1 and was living in a two-bedroom council flat with his partner Caroline and their son Matthew. After deciding to buy, they found themselves priced out of the market by the housing boom. They contacted the association after they heard about the scheme.

The couple were accepted and last October paid £46,000 for a 50 per cent share of a three- bedroom house with garden in Aylesford, Kent with a purchase price of £92,000. Michael and Caroline say: "We love the place. It's a much bigger and better home than we could have afforded on our own." Michael and Caroline's story has a happy ending and if Ken Livingstone gets his way there will be many more. Launching his promised commission of enquiry into London's accommodation needs, he urged that the development of Battersea power station should be used as an opportunity to create affordable homes.

The commission is headed by Chris Holmes, director of Shelter, who published their own report in partnership with Peabody Trust, arguing that 24,000 homes a year are needed to staunch the capital's deepening crisis. Richard McCarthy, Chief Executive of Peabody Trust, said: "Urgent solutions and investment are needed."

Moat Home Ownership: 01732 457616. Berkeley Partnership: 0207 224 2671. Notting Hill Housing Trust: 0208 357 5000 Shelter: 0207 505 2000