Combined Authority approves multi-million pound fund for affordable housing, including £100,000 homes project
PUBLISHED: 14:53 26 March 2020 | UPDATED: 14:53 26 March 2020
The Cambridgeshire and Peterborough Combined Authority has approved an additional £40 million fund for affordable housing, including its £100k Homes project.
The Combined Authority board agreed the fund by a majority on March 25 (Wednesday), with the caveat that economic disruption caused by the pandemic could see the money repurposed.
Under its founding devolution deal, the Combined Authority was given £170 million to fund affordable housing.
The newly agreed £40 million fund will add to that resource by taking money earmarked for other Combined Authority projects and loaning it to developers “to enable quicker delivery and more affordable housing”.
The plan is then for the money to be repaid to the Combined Authority in time to maintain its cash flow and for the original projects to still go ahead.
But questions were raised during the board meeting, with the leader of Cambridge City Council, Cllr Lewis Herbert, and the leader of South Cambridgeshire District Council, Cllr Bridget Smith, questioning the timing of the decision.
“I just think that the Combined Authority would be wise to start those projects at the other end of the crisis,” Cllr Herbert said.
He also argued the authority needs to know more about how its current loans will be repaid during the pandemic disruption, suggesting there may be other demands for funds if the county’s economy struggles.
Cllr Herbert said he was in favour of the strategy to use the reserves to facilitate more affordable housing and said he had argued for it for over two years.
But even so, he warned the decision was “hasty,” adding “I don’t see that agreeing any spend from the £40million, that there will be much happening for three or possibly six months.”
“My concern there is that we are not sure anyone is going to be building houses for an awful long time,” Cllr Smith said.
“Shouldn’t we be broadening (the fund) out as of now to start investing it in business recovering and business sustainability?”
The leader of Fenland District Council, Cllr Chris Boden, argued that the decision should be made.
“I feel very much that we need to plan for the future,” he said. “We have no idea how deep and how serious and how long this crisis is going to be.
“It may be at the shorter end of some of the expectations. It may be longer. If it is at the shorter end, by approving this now we will be able to move forward with our plans in the appropriate way.
“If it’s longer we can always reverse this decision.”
The mayor expressed agreement with the concerns raised but said “we have to be mindful that the world might not stop over the next three weeks, and that business might well be able to carry on in a strong position.
“I don’t want to commit unnecessarily to new decisions over the course of the next three to six months, but I think we also have to make sure and be mindful of the businesses we are working with and have been working with, also will be part of the recovery post-COVID-19.”
The Combined Authority’s head of finance, Jon Alsop, said agreeing the fund for affordable housing would not restrict it to affordable housing only.
He said it was “to support, for example, additional affordable housing schemes, but also to potentially support other service investments”.
“The original concept was to promote affordable housing,” he said. “But that’s not to say that it can’t be made for other investments in other Combined Authority priorities”.
The purpose of the fund as described by Combined Authority documents outlining the decision was to “approve the creation of a £40 million ‘top up’ fund to extend the availability of recycled funding to bring additional affordable housing to the market”.
Cllr Herbert abstained on the vote, with all other members voting in favour.
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Asked if the money will only be spent on affordable housing and not other projects, with the exception of money repurposed to respond to the pandemic, the mayor said: “It will be spent on affordable housing, most notably the £100k Homes scheme in helping developers finance schemes.
“Then developers will pay us back unless something extraordinary happens that needs something very, very quickly and Government ask us to help out through that fund.”
A spokesperson for the Combined Authority said the “mayor’s general power of competence” was used for urgent decisions, as local authorities have not been granted decision-making powers for virtual meetings.
All non-urgent decisions, and those not qualifying under the mayor’s general powers, were deferred.
What are £100k Homes?
£100K Homes is an initiative by the Cambridgeshire and Peterborough Combined Authority. They are new one-bedroom properties available to buy for £100,000 across Cambridgeshire.
The Combined Authority says it plans to make the first £100k homes available by the end of 2020.
The scheme “is a locally-driven initiative to tackle the local housing crisis. As such, it is only open to those who live or work (or both) in the area”.
The idea is that the first purchaser of a £100k home will buy the property at a discounted price from what it would cost on the open market.
A legal agreement would then stay with the property to maintain the market discount for future buyers, so the owner can still benefit from an increase in the market value or suffer a loss from a market fall.
For example, the first purchaser buys the home for £100,000, despite its market value being much higher, say £200,000, by qualifying for the scheme.
Five years later, the owner now wants to sell, and house prices in their area have increased by 10 per cent.
The home’s market value is now £220,000, so it can be put up for sale for £110,000, and the next buyer has to pay that £110,000 – but the percentage discount compared with market price remains the same.
The Combined Authority says: “Just like purchasing any other home, the buyer will need to provide an upfront deposit and secure a mortgage to purchase the property.
“When the owner is ready to move on, the home can be put up for sale. If they want to stay in the home for the rest of their life, they can.”
Demand is expected to outstrip supply quite significantly. Who will qualify, and how exactly they will be chosen, is yet to be outlined in detail.
Until then, the Combined Authority says: “£100k Homes are aimed at helping people to buy houses close to where they work and in communities where they may have strong connections.
“Applicants for £100k Homes will be scored against criteria relating to these key aims.
“The higher they score, the more chance they will have of buying a £100k home. The Cambridgeshire and Peterborough Combined Authority will manage this process.”
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