On the threshold of housing crisis

9:19am Monday 23rd October 2006

Major housebuilders claim they are being driven out of York by the council's new policy on affordable housing. MATTHEW WOODCOCK looks at what this could mean.

HOUSE prices rocketing, property building grinding to a halt, fewer affordable homes.

These were the stark warnings made by York's major construction companies which will not have gone down well with the 4,000 people currently on City of York Council's housing waiting list, or potential first-time buyers.

The majority of the city's housebuilders, including Britain's biggest, Persimmon, feel that City of York Council's policy to demand that half of any development over 15 homes must be affordable housing could have disastrous consequences.

Some think it was only just manageable at the previous threshold of 25 per cent.

The usual hive of planning and building activity in York has gone eerily quiet.

Persimmon director Ian Hessay revealed that he was not aware of a single significant application over 15 homes that had been submitted since of the 50 per cent threshold was brought in.

His company - which traditionally builds hundreds of homes in York every year - certainly hasn't made any.

City of York Council leader Steve Galloway accepted that there was currently something of a "hiatus" in the house building market because of the new threshold - but insisted that would be short-lived.

He said: "When the market adjusts to the fact that only 50 per cent of the land will really be profitable, the developers will start moving forward again."

Mr Galloway said increasing the threshold from 25 per cent was designed to meet the huge demand for affordable homes.

Key brownfield sites like Nestl South, Terry's, British Sugar and York Central, would help to satisfy the need, he said.

"The 50 per cent threshold is the best hope for them (residents on the housing list)," he said.

"We really should now get hundreds of new affordable homes every year."

Nigel Ingram, Joseph Rowntree Foundation's director of development and property, warned that setting the threshold at 50 per cent could backfire - to the detriment of families needing homes. He said developers maximise profits.

"The effect of this is that new family homes are not being built in York because developers can't make the profit margins from that type of development."

Mr Ingram said the consequence of introducing the 25 per cent threshold several years ago was that companies built increasing numbers of flats to lessen the blow.

"About 70 per cent of new homes developed in York in the last five or six years have been apartments," he said.

"Developers might adjust to the 50 per cent but might also build smaller flats. What are the families going to do? The most worrying thing is that they will be forced to move out of York."

Mr Ingram said they had hoped the threshold for affordable housing would have been set at between 35 and 40 per cent.

"I think planning permission should only be given if there is a good cross-section of unit types on the development," he added.

"The council has got to stay flexible."

But Derek Gauld, the council's principal development officer, said they would work with developers on a "site-by-site basis".

He said: "It is important to note that the 50 per cent affordable housing level is a target and can be tested through negotiation and evidence work."

Shared ownership worked really well for us'

DAN Adams, 26, and his girlfriend, Michelle McCormack, secured a flat at the Fulford Place complex a few years ago under a shared ownership scheme with Ryedale Housing Association.

Dan, a fitness manager in Leeds, said the apartment cost £135,000 but, under the scheme, they pay £67,500 of the mortgage and the association pays the rest. It means their monthly payments are kept to a manageable £360.

"Without this scheme we would have had no chance of getting our own place," Dan said.

"It has made a really big difference because we were living with my mum in Holgate. We would have had to move out and rent somewhere and that is just dead money."

Dan secured the property after going on the association's waiting list.

They now hope to sell their share back to the association and use the revenue to buy their own home outright.

"We should have generated enough to pay a deposit on a place," he said.

"Our flat will then go to someone else who is in the same boat we were in, which is good.

"It has worked out really well for us and I'd recommend this scheme to all first-time buyers.

"It's an ideal way to get a first step on the housing ladder. We really want to own somewhere that is 100 per cent ours now."