The key to affordable housing for essential workers? A £50,000 salary
This article which is equally applicable to some parts of rural England, albeit the “first steps” scheme doesn’t exist there demonstrates how the property term “affordable” should be translated into common parlance as “unaffordable”. It tells us
Key workers are finding themselves locked out of “affordable” home ownership schemes designed to help them on to the property ladder, because of minimum income requirement of as much as £50,000 a year.
Joanne Pearson, 36, works as a nurse in Southwark, south London, and earns around £26,500. She had hoped to buy a 25% share in a one-bed flat through First Steps, the mayor of London’s scheme, which held its spring home show yesterday. It claims to enable those on modest incomes to buy a share of a property and pay rent on the difference.
However, Pearson’s hopes were dashed on seeing details of the available properties. “Many of the one-bedroom flats advertised on the website require an income of above £50,000 a year, while for others you must earn above £33,000,” she says. “I wonder how many nurses, teachers or other workers on low or modest incomes actually earn £50,000?”
More frustrating is that Pearson can afford the £831 it would cost her in monthly mortgage repayments and rent for a 25%, or £75,000, share of a one-bed flat in Bermondsey. “This is well within my budget as I’m currently renting a flat for over £1,000,” she says. “As a person who provides an essential public service, I feel disheartened and let down that I’m locked out of this scheme.”
A report by Darren Johnson, Green party member of the London Assembly, found that the average minimum income required where this was stated by housing associations through First Steps amounted to £38,452.
Some so-called “affordable” properties listed are priced over £700,000, as the value of those for resale has rocketed in line with the market. A one-bedroom apartment listed in Blandford Street, Marylebone, is for sale at £712,000. Estimates place the monthly cost in excess of £3,000 for mortgage, rent and service charge, with a deposit of £21,360 for a minimum 60% share. Based on the typical rule that housing costs shouldn’t exceed 35% of take-home pay, a couple would need a combined income of £128,000 for this property to be affordable, says Johnson.
Yet the First Steps website trumpets itself as the “gateway to low-cost home ownership”, potentially giving false hope to Londoners fearful of being priced out of a share in a property.