What Is Affordable Housing On A New Build Estate

The demand for housing in the UK has risen significantly in recent years, and it has become increasingly difficult for many to get on the housing ladder. With house prices and rental costs climbing at a shocking rate, the need for affordable options has never been greater.

New build estates are one way of addressing the housing shortage, and affordable housing plays a crucial role in these developments, providing a way for low-income families, key workers and first-time buyers to get a property.

In this article, we’ll explore what new build estates have to offer, the different affordable housing options available and the pros and cons of the different schemes.

Read on for more…

What Is A New Build Estate?

A new build estate is a residential development consisting of newly constructed homes. The government has pledged to build more than 1.5 million homes by the next election, meaning these new build estates look set to become more and more commonplace in the coming years.

Often, these estates are built on previously undeveloped land or sites where older buildings have since been demolished. They are designed to provide modern living spaces and usually feature a mix of housing types, including detached and semi-detached properties.

New build estates will typically be planned around existing infrastructure such as roads, parks, schools and even retail spaces. They are developed by private housing companies, usually in conjunction with local councils and housing associations to meet the increased demand that is being witnessed across the country.

What Is Affordable Housing On A New Build Estate?

Affordable housing on a new build estate refers to the homes that are made available at lower prices or lower rental costs as a way to support people who may not otherwise be able to get on the property ladder. These homes are usually provided through government schemes, housing associations or by private developers who may be required to include a percentage of affordable housing as part of their planning permission. Most new building developments will have affordable housing requirements, but this will vary depending on the area.

First-time buyers, low-income families and key workers are the main beneficiaries of affordable housing.

Examples Of Affordable Housing Initiatives

There are several types of affordable housing schemes available on new build estates. Each scheme has different eligibility requirements as well as various advantages and disadvantages. Let’s take a look at the different options:

First Home Scheme

The First Home scheme is perhaps the main initiative that people will be aware of. A government scheme, it is aimed at helping first-time buyers get on the property ladder. As part of this scheme, new-build homes are discounted at between 30%-50%, depending on the area. This makes the property more affordable than it would have been otherwise.

To be eligible for this scheme, you must:

Be a first-time buyer and have never previously owned a property
Have a household income of less than £80,000 a year (£90,000 if buying in London)
Be able to get a mortgage for at least half the value of the property
You must intend for the property to be your primary residence

Local authorities may also have their own conditions and may give priority to key workers.

Pros of First Home Scheme:

You get a significant discount on market prices
It helps first-time buyers get on the property ladder when they may not have been able to

Cons of First Home Scheme:

Availability is sometimes limited
Mortgage affordability can sometimes be challenging
Resale restrictions may mean you can only sell to someone else in applying under the scheme

Shared Ownership

Shared ownership is another popular scheme. This involves buying a portion of the property rather than the whole thing. Usually, buyers will purchase between 25% and 75% of a property and pay rent on the remaining share, normally to a housing association.

Over time, the buyer can increase the amount they own through a process known as staircasing. This can be done gradually until you can afford to own 100% of the property.

To be eligible, you must:

Have a household income of less than £80,000 (£90,000 in London)
You cannot afford all of the deposit and mortgage payments on the property
You’re a first-time buyer or have previously owned a home but can no longer afford to

Pros of Shared Ownership:

It has lower deposit requirements
It’s a step towards one day owning your home
Rent tends to be lower than the market rate

Cons of Shared Ownership:

Selling the property can be complicated
Expensive service charges are often included
There is the potential for negative equity

Rent To Buy

The Rent to Buy scheme is an option for those looking to rent a property. The initiative offers a property with rent at 20% below the market rate. There is also the option to purchase the property in the future with initial tenancy agreements lasting two years. In some cases, this period can be extended if you still need more time to save for a deposit, but this will be up to the landlord.

To be eligible, you must:

Be a first-time buyer
Be in full or part-time employment
Can demonstrate you will be able to pay rent and save for a deposit at the same time

Pros of Rent To Buy:

It provides a chance to save for a deposit while paying a lower rent cost
It offers an opportunity to transition from renting to buying

Cons of Rent To Buy:

If you still cannot afford to purchase the property at the end of the initial agreement, you may be forced to leave
House prices fluctuate, meaning the property price could increase as you’re saving for it

Social Rent

Another rental scheme, social rent properties are managed by local authorities and offer lower rents than the market value. This can be between 50% to 80%, and this scheme is usually reserved for the most needy.

Eligibility requirements vary depending on where you’re based, but typically include:

You’ll need to be on a low income
You’ll have limited savings
You’ll be on the council’s housing register
You will have some connection to the local area (such as family links)