Push for affordability standards

Tower Homes, the L&Q Group’s low cost home ownership company, is campaigning for stronger definitions of affordability in the sector.

Tower, Moat Homes and Metropolitan Home Ownership (MHO) produced a low cost home ownership report and calculator in April 2007. The report calls for a standard approach to be used to assess the affordability of both entire schemes at the planning stage and of homes for individual purchasers at the point of allocation or sale.

Recommendations of the report are that:

- Restricting buyers to borrowing no more than three times their joint income or three and a half times their single income, which most housing associations already do, works well; shared owners shouldn’t be encouraged to take on more debt than they can reasonably afford

- Purchasers should not normally have to spend more than 45% of their net income on mortgage, rent and service charge, and these costs should never exceed 50%

The Housing Corporation, which commissioned the report, has published a summary of the findings on its website as best practice. But L&Q believes that all housing associations should use the calculator on all future schemes, right from the initial feasibility stage.

Steve Nunn, Managing Director of Tower Homes, says: “There’s still no standard consistent way of measuring affordability. With private developers moving into the sector, keeping home ownership truly affordable should be the unique selling point of housing associations.”

“Tower Homes runs stringent eligibility checks to ensure its customers can afford their homes in the longer term. We’re proud to keep our affordability levels low; despite reducing grant rates and rising property prices our typical buyers remain people with household incomes of £25,000 to £35,000, and we have particularly low levels of arrears and repossessions.”

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