Rising costs and lower salaries are making it difficult for people who work in the countryside to live in the countryside. What’s the solution?
There’s a problem for many who work in rural areas, and it’s that much of Britain’s countryside is becoming too expensive for them to live in. Over the last five years rural salaries have risen 17 per cent more slowly than those in urban areas. Then there’s rising house prices and a distinct lack of affordable housing in the countryside. With this scenario, it’s no great surprise that the number of people aged between 30 and 44 has dropped by nearly 9 per cent in England’s villages over the last decade. Some say it’s reaching crisis point.
Local councils have less housing stock due to the Right-to-Buy policy that was introduced under Margaret Thatcher while austerity measures have seen the disappearance of organisations such as the Agricultural Dwelling House Advisory Committees in England which used to advise local councils on requests to re-house agricultural tenants.
While historically the rural estate or farm would provide affordable housing for its employees, for a number of reasons that’s more difficult for estate owners today. Firstly, the regulations around the provision of affordable housing have become increasingly more complex, while at the same time the financial incentive (or accommodation offset fee) has fallen and stands now at just £34.37 a week.
"It’s not just about finding the land, but designing and delivering affordable housing that can enhance and contribute to the character of existing settlements and buildings"
So what about building new affordable housing from scratch? “Key to the provision of rural affordable housing is identifying where there is a genuine need and that’s where neighbourhood planning is invaluable,” says Neil Sinden, director of Policy and Campaigns at the Campaign for the Protection of Rural England (CPRE). “It’s not just about finding the land, but designing and delivering affordable housing that can enhance and contribute to the character of existing settlements and buildings. Essentially, it’s about bottom-up, grass rootsled initiatives, rather than top-down policy. It’s also very important to ensure that affordable housing is genuinely affordable.”
In 2010, Hugh Coghill, then head of Savills Rural, suggested that landowners should be allowed to set themselves up as a Registered Provider of social housing. “We are already working with two estates to establish them as For Profit Registered Providers (FPRP) and we are aware of others that are considering it,” explains Savills consultant Gary Seabourne, who has been involved in establishing many Registered Providers over the last decade. “This allows them to set up small developments on land they already own and keep the social housing, rather than selling it on to a traditional housing association. This means that they retain some control of the whole site, including site management.”
Combining open market, shared ownership, affordable and social housing would allow the landowner to retain the land and still meet Section 106 policy requirements (see panel, far right). And schemes can be as large or as small as the need dictates: from half a dozen homes to several hundred.
“A really good example could be a case where an estate has entered into a contract on one piece of land for a private development for sale, while using another piece of land to meet the Section 106 commitment,” adds Gary. “They could then be registered as an FPRP and would retain ownership and management of the rented properties. The rental income would cover the loan costs, as well as the management and maintenance, and if they wanted it to, it could provide additional asset cover for future borrowing and investment, years down the line.”
Social housing is not a straightforward investment. There are plenty of regulatory requirements and certain behavioural expectations, but for those ready to take it on – and particularly those who already manage privately rented housing stock – it can offer an attractive investment, albeit a long term one. Key to landowners’ success is a clear idea of what they want to achieve, a feasible business plan and appropriate levels of funding to cover design and build costs, as well as future maintenance obligations.
"Key to a landowner’s success is a clear idea of what they want to achieve, a feasable business plan and appropriate levels of funding"
Identifying appropriate pieces of land is not always straightforward, either. Social housing providers need to design properties that meet high environmental standards and efficiencies, while contributing to the creation of balanced, rural communities.
To date, rural exception sites (see panel) have been beneficial in helping to successfully build in areas which would otherwise not have been open for development.
“As a means of lessening dramatic discrepancies between land value for agricultural use and a site with planning permission, the rural exceptions policy has certainly been helpful,” says Neil. “It can keep build prices down and has allowed smaller housing associations to access land at relatively good value.”
But he points out there have been cases where “exceptions housing” has not counted towards some local authorities’ annual housing provision. So the CPRE believes it needs to become part of a more mainstream planning land allocation process.
The organisation is also concerned that there could be a gradual erosion of the policy by allowing a crosssubsidy between market housing and affordable housing on rural exception sites.
“There are so many complexities that we’re now questioning whether it will be as useful in the future,” Neil adds. “It’s absolutely critical that housing is being produced and justified according to specific need in rural areas, and that this type of housing remains available to people in real housing need forever. In certain areas, some local authorities have been able to establish rightto- buy restrictions and clauses, which we support. We believe that allowing affordable housing to leak back out into the private housing sector can have the most damaging effect of all.”
So, the right way to provide affordable rural housing, it seems, is still unclear. In the past, Hugh Coghill has called for landowners to be incentivised via taxation. Specifically, he has suggested that the provision of affordable housing, designated for 60 years, could be given the advantages of Business Property Relief for Inheritance Tax and Capital Gains Tax.
If you do decide to become a rural social housing provider, don’t expect any surpluses to appear until much later. What you can enjoy now is the satisfaction of knowing you are helping to keep your rural community alive.
Savills Margaret Street
+44 (0) 20 7016 3818
+44 (0) 20 7016 3818
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