NV said 79 on the first walk-round: I asked him do you mean 35% target rent, 65% full market rent [approx]? He agreed that was about what it was.
NV was clear the scheme is proposed to be a Lambeth housing scheme for rent plus the Oval House, catering training and other trimmings.
The core of it though is the Lambeth owned rental housing - which NV said Lambeth would be borrowing to finance. Borrowing from the Public Works Loan Board and unnamed as yet pension funds seeking an income stream secured on the rents. The special feature of this Somerleyton Scheme was that the council will retain control - and retain the freehold of the properties to be rented, unlike a conventional scheme where a property developer is given permission to build houses/flats for sale with a proportion set aside for social rent [now changed by the government to affordable].
I would like to see how the sums are worked out. If the council is able to specify everything about the scheme why can't they have 100% "target rent"? With interest rates at record lows, I would have thought that spread over many years it should be possible.
I am rather uneasy with a situation where council controlled housing becomes priced by class like travelling on the Paris Metro used to be - maybe still is [the Paris Metro has first class carriages - and also used to have free seats reserved for war invalids in the 2e Cl carriages].
I would like a briefing on how this is actually going to work - and I think the politicians should be pressing to get a proper 100% social housing scheme using the proposed funding method - not simply accepting the housing split normally done by the private sector.
What is the point of having 65% of a council housing scheme let at full open market rent? Is there a serious shortage of full market rent flats in Brixton?
If based on experience, I would definitely suggest you quiz NV on his numbers. At Cressingham Gardens we have often had to resort to Freedom of Information requests just to get the truth out of the council regarding numbers and what they mean. In most cases, the truth is the opposite to what the council was trying to argue.
Also, having sat through many council meetings now, even though Lambeth says it has a target of 40%/50% affordable housing in any new development, I am not aware of any recent new development that has achieved this based on what has been tabled at council meetings open to the public. The most seems to be 30% affordable, the definition of which includes share equity schemes requiring above average income levels (the L&Q shared equity scheme on Effra Road needed a minimum income of £35,700 for a single bed flat). This means that there has been a max of ~20% council homes in any new development if you are lucky. It seems that all new developments have a get out clause regarding "financial viability"... affordable housing is only provided up to the extent that it is financially viable for the developer to deliver it.
If you want to try back of the envelop calculations... in the buy-to-let mortgage market, the banks usually require that the rent is 125% of the actual mortgage payments as a rule of thumb.
So hypothetical rough calcs:
Let's assume it costs £50,000 to build a 1 bed flat and the council can borrow 100% of the cost, ie the full £50,000. Then, if they have to pay 5% interest on the loan, the monthly payments to pay off the debt over 25 years is £295.
Also, they have to repair & maintain the flat if they are renting it out. Lambeth's average annual maintenance cost per dwelling is currently £850pa... so let's say over the 25 years, there is £100 allowance per month to cover repairs & maintenance, and any another incidental costs like new kitchens, bathrooms, communal cleaning etc... and don't forget Lambeth Living's management fee ;-)
Add the two monthly amounts together £295 for debt repayment and £100 for repairs & maintenance, this gives £395 per month that it will cost the council. If the rent that they collect is less than £395 per month for the 1 bed flat that cost £50,000 to build, then it is loss making. So the rent for this hypothetical flat will have to be at least £395 per month. Or, if they want to charge less rent for this flat, then they will have to charge more on the other flats to make up for the loss... the actual ratio of flats at low vs high rents will be based on how many high rent flats are needed to make up for any losses on the low rent flats.
I hope this helps.
