East Cambridgeshire has led the way in the provision of heavily discounted homes for first-time buyers. Specific local conditions have been a big part of what has driven this. Cambridge City has become a fast-growing high-tech hub. The city itself is becoming increasingly unaffordable, even for well-paid high-tech professionals. As a result, they are moving out into the villages nearby, including those in East Cambridgeshire, a traditional fenland agricultural area.
The local working people, employed mainly in agriculture and local services, cannot compete in the housing market with this recent wave of “out-commuters”. There was a realisation within the various authorities involved that something had to be done to prevent the area losing its vibrant rural communities.
In a recent survey of 1000 rural people, 79% blamed the lack of affordable housing for driving young people out of rural areas. The dangers facing the area were clear. The villages would lose their younger generations; employers would be reluctant to invest locally; village schools, shops and pubs would close; and the communities would slowly die.
The CPCA Revolving Fund
The first significant initiative on discounted housing was by the Cambridgeshire & Peterborough Combined Authority [CPCA]. When the CPCA was created, part of the devolution deal was that the Authority received £100m from central government, to help tackle the critical housing affordability problem in the area, particularly in the areas within commuting distance of Cambridge City.
A survey of locally-based SME home builders was conducted. They reported that the biggest constraints they faced were first, uncertainty in the planning process, and second, the availability and cost of raising finance.
The first of these was a matter for District Councils. East Cambs DC led the way with a clear written policy on Affordable Housing Exception Sites. To tackle the second constraint, the then CPCA Mayor, James Palmer, decided to allocate £40m out of the £100m received from central government for a Revolving Fund, which would provide loan finance to support the development of Affordable Homes. Loans to home builders, once repaid, could then be recycled into new loans. Thus, that £40m could be used again and again, to keep supporting more and more new homes.
East Cambs Policy on Exception Sites
The council’s GROWTH 6 policy was the first in the country to give preferential treatment to Community-led Development [CLD]. It states that developments outside of the Local Plan “envelope” around a village can be permitted, provided they provide Affordable Housing. The main conditions are these.
- The site must be well related to an existing settlement, with good access on foot or by cycle.
- The scheme should consist of a range of dwelling sizes and types of tenure.
- The scheme is being led by a local community group, such as a Parish Council or a CLT.
Under the GROWTH 6 policy, an element of market housing can be considered, if it is demonstrated that this is the only way that the development can be financially viable.
The £100k Home
In about 2018, Mayor Palmer and his Housing Advisor, Charles Roberts [previously Leader of ECDC], came up with the concept of the “£100k Home.” The scheme was adopted by the CPCA in 2019. The idea was to make available to first-time buyers a simple one-bedroom apartment, priced at a heavily discounted price of £100k. As and when the original owners wanted to sell, these homes could only be sold to other first-time buyers with a strong local connection. In this way, these £100k homes would remain affordable for local first-time buyers in perpetuity. For more on this scheme, see this article from the CPCA website: https://cambridgeshirepeterborough-ca.gov.uk/news/mayor-james-palmer-backs-bold-innovative-and-ambitious-housing-strategy-to-help-tackle-the-housing-crisis-in-cambridgeshire-and-peterborough/
Several housing developments in the CPCA area have included £100k Homes. The first of these are now sold and occupied. However, fairly soon after the launch of the £100k Homes initiative, there were CPCA elections. As a result, there was a change of Mayor. The new Mayor, Nik Johnson, scrapped the £100k Homes Scheme, arguing that it would never reach the scale needed to deal with the huge affordability crisis in his area. The focus shifted to rented properties.
However, given that several £100k developments were in the pipeline in East Cambridgeshire, the ECDC decided to take over the £100k Homes programme for its area. As a result, more £100k Homes have been built, or are being built in East Cambridgeshire.
More recently, the Government launched the First Homes Scheme. This later national scheme is similar in concept to the CPCA’s innovative £100k Home Scheme. The main differences are firstly, that the First Homes Scheme stipulates a minimum discount of 30%, whereas the £100k Homes Scheme stipulated an absolute maximum price of £100k. Secondly, First Homes may have more than one bedroom. Given the national legislation now in place, the ECDC is expected now to shift focus from the £100k Home to First Homes.
A Focus on Community-led Development
As indicated already, ECDC wanted to make sure that the use of Exception Sites, potentially politically contentious, garnered local voter support. Otherwise, Exception Site developments could rightly be criticised as representing unfair competition against developers restricted to building within the Local Plan envelope. What the council has discovered from experience is that, in order to build community support, there needs to be a desire within the village to solve a problem. The problem could be the lack of affordable homes for local people. But it could also be the lack of a GP surgery, or a ring road.
The emphasis, in East Cambridgeshire, has been strongly on Community-led Development. The website,
https://www.communityledhomes.org.uk, promotes CLD in the UK. The essential concept is that CLD:
- involves meaningful community participation and consent;
- a community group [very often a Community Land Trust] owns, manages or stewards the homes being built for community benefit; and
- the development is of real benefit to the local community, and is legally protected to be of benefit in perpetuity.
CLD initiatives in East Cambridgeshire have so far all involved Community Land Trusts [CLT’s], headed by local trustees. Some have used Exception Sites to create a mix of market homes and Affordable Housing. Some have used S.106 Agreements. [The case for CLT’s is well argued in this article: https://www.lgcplus.com/services/housing/jenevieve-treadwell-councils-should-support-not-fight-community-land-trusts-01-04-2022/ ]
How Discounted Homes were made financially viable
In East Cambridgeshire, the average price of agricultural land is generally reckoned to be around £10k per acre. According to recent published figures, the average price of land with Planning Permission for market housing [within the envelope] is around £900k. Some CLT’s in East Cambs have been able to negotiate the purchase of land for Affordable Housing Exception Sites for around 10 time the agricultural price, around £100k per acre, about one-ninth of the price for normal market housing land.
This is what makes these schemes financially viable. They do not have to rely on the Section 106 “tax,” loaded onto the price of market homes. It is the much lower cost of the land that makes these schemes work.
At least one CLT in the area has been able to negotiate a deal with the developer, so that the saving on the land cost is shared between the developer and the CLT, with the CLT getting 30% of this saving, paid in cash at the time of the land purchase. This substantial sum was enough to enable the CLT in question to get started building around half of the Affordable Homes planned for the site. Sales of this first tranche then financed the rest.
These Exception Sites are oftens made financially attractive to developers by allowing for a proportion of market homes, alongside the First Homes and other Affordable Homes. Also, there is typically agreement that the market homes are sold first, before the discounted homes are made available.
Developers get “soft benefits” as well, from being involved in community-led schemes. See, for instance, this segment from the website of a local Cambridgeshire house-builder, “Supporting Communities”: https://laragh.co.uk/community/
An unusually supportive District Council
East Cambs DC has gone out of its way to promote Community-led Development, and the CLD/CLT model. As well as its pioneering CLD policy, which has been crucial, the council has set up East Cambs CLT, which can be used by communities which don’t want the bother of setting up their own CLT.
Also, the council provides £5,000 start-up grants to local community groups, to help them establish their own CLT. It has recently approved a £100k grant fund, to further help CLT’s with pre-development costs.
The council also employs a full-time advisor, to support local community groups, and help them create CLT’s, find land, and put together Exception Sites schemes. In addition, the council has its own trading company, East Cambs Trading Company. One of its trading identities is “Palace Green Homes,” which is used to promote specific schemes, and even sometimes to build homes itself.
Through Palace Green Homes, the Council worked very closely with the local CLT in putting together what is considered locally to be a “flagship” development, Kennett Garden Village. This is a major development next to the small village of Kennett, which in spite of being small, happens to have its own rail station, as well as being right next to the motorway network. The new village will eventually comprise 500 new homes, and will be low-density and ecologically sustainable. It will include a much-needed ring road and a GP surgery, both very attractive to the existing community.
150 of the 500 homes will be Affordable. Of these, the CLT will own 60. Palace Green Homes was used to put together this major development, which is a co-operation between the CLT, Palace Green Homes and the developer selected, Bellway. Planning Permission is now in place. The development is expected to go on-site later in 2022.
It is not always the local village community that initiates the process
What is interesting is that, in a number of cases, it was the land-owner that initiated the process. Large land-owners, who have land just outside the Local Plan envelope, and which they would be willing to release for development, face a choice. They can wait “for a generation,” in the hope that the envelope will gradually expand to include their land. Or they can go for a CLD Exception Site, release around 10 times the agricultural value, and use this to expand their total holding elsewhere. And if they have interest in being seen to support the local community, so much the better.
Also, other players sometimes take the initiative. There is an example in Cambridgeshire of where a local architect was the one who took the initiative. The architect had lived in the village for many years; had been a parish councillor; and was well connected locally. He was asked by another parish councillor to help a local land-owner, who wanted to use a small meadow for development.
However, this land-owner wanted to use it to provide some sort of legacy to the village, and provide something that helped the community. She wanted to be paid for the land, but this needed to be balanced with her wish to create local. community benefit.
After extensive consultations, both with the land-owner, and within the local community, the architect put together a scheme, and found a local developer to work with. The scheme involved a proportion of discounted homes for sale to younger people with local family connections. Initially, these were to be £100k Homes, but with the change of CPCA Mayor, they were eventually built as First Homes.
- Poll of Voters, Country Land & Business Association [CLA], April 2022.
- East Cambridgeshire Local Plan, April 2015, Policy HOU 4.
- The effective discount was reckoned to be around 40-50% below market prices.
- Ministry of Housing, Land Value Estimates, 2019.
- Eastern Community Homes, https://easterncommunityhomes.com, serves a similar role, but it serves the whole of the East of England.