Shropshire Council

Types of affordable housing

It's our ambition, as stated in the Core Strategy 2011, to  “Provide for a mix of good quality, sustainable housing development of the right size, type, tenure and affordability to meet the housing needs and aspirations of all sections of the community, including provision for specialist needs and the elderly".

In responding to the overwhelming scale of housing need, we propose a broad range of affordable housing options which are available to qualifying people in perpetuity. These provide residents with access to well designed, high quality and environmentally sustainable housing at affordable prices, regardless of property size and tenure.

These homes can be for either affordable, discounted rent or low-cost home ownership, such as shared ownership.

In addition to traditional rented and shared ownership housing provided by us and by housing associations, we also recognise the role of other providers and individuals to deliver alternative affordable housing tenures that help to meet housing need in Shropshire.

These affordable homes for outright ownership (100% freehold) fall into two categories:

More information on each of these tenures can be found in the Type and Affordability of Housing SPD.

Registered providers (RP)

RPs are key to the delivery of affordable housing. They're independent housing organisations registered with the Homes & Communities Agency under the Housing Act 1996. Most are housing associations, but there are also trusts, co-operatives, charities and companies. They are usually run by a board of management.

RPs provide access to a range of types of homes, including houses, flats and bungalows, to suit the needs of the individual. Many RPs may, in addition to social rent, provide properties to part purchase under new-build Homebuy schemes.

Affordable housing isn't restricted to rented dwellings, but can include an increasing range of options.

New-build homebuy (also known as shared ownership/part buy-part rent) 

New-build homebuy offers an excellent way into homeownership - if you're unable to afford to purchase a property outright, you can part-buy and part-rent your home.

You can choose to buy a 25%, 50% or 75% share in your home. You pay rent on the share you don’t buy, and the rent is usually set at an affordable level of 2.75%. Its simple - the bigger share you own, the less rent you pay. Some schemes enable you to increase your ownership - this is called staircasing.

Social rent

These are rented homes owned by registered providers and local authorities. This type of housing is let at a low rent on a secure basis to those in housing need. The social housing sector is governed by a strict system of control to ensure rents are kept affordable. To apply to join the housing register, get in touch with Shropshire Homepoint.

Discounted ownership

This discount sale (DS) model allows you to buy 100% of a property, but at a substantial discount off the open market value. The sale administration is usually undertaken by a registered provider. The buyer obtains a mortgage for the discounted price but doesn't pay rent on the remainder. If you buy a discount sale home you can't purchase any shares in the property as it's a 'fixed equity' home.

When you sell your home, you'll have to sell it at the same discount percentage at which you bought it. When you want to sell you must notify the registered provider that manages your home. Your home must be sold to someone who is unable to afford a home on the open market.

Intermediate market

'Intermediate market' is a product available for registered providers to offer in those cases where they can demonstrate a need for intermediate rented housing. It caters for households which don't qualify for social rent homes, but who nonetheless can't afford to rent or buy a home in the open market. Typically the rent level is set at 80% of the local market rent.

Open market sites

Currently some open market sites are small enough not to attract any requirement for affordable housing as determined by planning policy, but emerging council policy will address that issue.

Open market sites that do require affordable homes are funded by the developer. It has to buy the land and sell the open market houses at a level that allows it to cross-subsidise building affordable homes, and sell them to an RP. Typically the RP can only afford to pay the developer considerably less for the home than it cost to build. This is why changes to policy attract such keen developer attention. The RP often buys the affordable home through a commercial mortgage at a value based on what they can charge the future tenant in terms of rent. That's the reason the property has a low value.

Exception sites

These are sites that are an “exception” to the planning rule, as they're built outside of a village's development boundary, but only for local needs-targeted affordable housing if there is an identified local need. Because market housing isn't allowed on the site, the land value is low (typically £10k/plot), but the construction costs are even higher than for similar sized open-market homes as required standards are higher. Again, the RP could only afford to buy these homes from the developer at about 60% of what they cost to build, so without other funding they can't be developed.

Single plot exception sites

The construction of a single plot is funded from the householder's own resources, which can include the sale of an existing property or through a commercial mortgage.

Homes and Communities Agency (HCA)

Previously known as the Housing Corporation, the HCA grant funds RPs or developers to develop local needs-targeted affordable homes from the developer, to bridge the funding difference highlighted above. For example, on an exception site, the RP receives grant aid from the HCA to add to their own funds so that they can have the site developed themselves or purchase the houses from the developer. The HCA would also consider grant aiding the extra provision of affordable housing on a site, or even converting unsold open market stock to affordable housing.