Barker Gotelee

The credit crunch and the housing market

The credit crunch will almost certainly have a huge impact on the housing market this year with the squeeze on mortgage funds feeding through into a shortage of buyers particularly at the cheaper end of the market. Yet this is good news for those wishing to acquire an affordable home. Gordon Brown’s plan to build three million more homes (with 508,000 being built in this region alone) have been well publicised, with orders for new homes falling and some of the country’s largest house builders cutting their build programme these numbers are going to be harder to achieve. To combat this problem the Government has doubled the funding for Housing Associations making over £10 billion available over the next three years. One type of affordable housing project that is not dependent on speculative development from commercial developers is a scheme built under the Rural Exception Policy. This planning policy gives Local Authorities the power to grant planning permission for new homes in rural communities where there is a housing need in circumstances where planning would not normally be granted. Rural Exception developments are often outside the village envelope and on sites designated as “greenfield”.  New affordable homes in Rural Exception developments have to be allocated to people with a local connection in accordance with strict guidelines. Some houses are rented; others are sold under shared ownership schemes subject to a condition that the maximum share that can be purchased is 80%. This ensures that the houses are always sold to buyers with a local connection and cannot be sold on the open market at their full value.  Land is often  provided for Rural Exception Sites  by  farmers and other private landowners seeking further diversification for their business. The price achieved for land being sold for a Rural Exception development will not be as high as for a market value development but it is still much higher than agricultural land values. Some charities are also able to sell land for these schemes, boosting their income whilst still achieving their charitable objects. Other sites are provided at nominal value by local councils. The sites do not have to be large; as few as four houses may be built depending on the size of the village and the local housing need. The numbers may be relatively small but there will certainly be an increase in the number of these schemes and they should be of huge benefit to rural communities, particularly helping those who have grown up in a village to remain living there. Kerry Addison is a partner with Barker Gotelee Solicitors and specialises in all types of property development, including affordable housing. Kerry Addison © Barker Gotelee