Affordable Housing
February 22, 2007•382 words
Rochester Riverside regeneration. The picture was taken from the viewing platform off Gas House Road in Rochester. A very helpful lady called Emily who is a Senior Project Officer with Medway Renaissance arranged for access. I'm planning on taking more pictures as the work progresses over time. Hopefully they will turn out a bit better than this effort.
The plan is that 25% of the residential properties built here will be so called affordable housing. Wondering what that is?
Affordable housing is a con. You end up paying about the same each month if you were to buy the whole property yet a proportion of your monthly payments goes on rent instead of reducing your mortgage. Consequently over time it ends up being a fair bit more expensive than buying the property in the first place. For example -
Affordable Housing Option
- Property Value = £180,000
- Percentage purchased = 50%
- Deposit = £2700
- Monthly Rent = £206.25
- Monthly Service Charge = £115
- Monthly Mortgage Repayment = £569.09
- Interest Rate = 6%
- Term = 25 years Monthly repayment = £890.34
Repayment Mortgage
- Property Value = £180,000
- Percentage purchased = 100%
- Deposit = £2700
- Interest Rate = 6%
- Term = 25 years
- Monthly repayment = £1119.54
So you rent half your house from a "social" landlord for the benefit of "saving" £229.20 or in other words paying about 20% less each month than a repayment mortgage would cost. As it goes that is just £22.95 more than the amount paid in rent each month in the first example.
If you take into account that the mortgage will reduce over time but that the monthly rent (with service charge factored in) is more likely to rise you can see that the affordable option is a sham that hammers people who by default can afford it the least.
No wishing though to put a damper on the regeneration; what they are planning to do is pretty good. As you can see from the picture a once contaminated brownfield site next to the river will in time become a pleasant place to live, work and play - if you can afford to after paying the rent that is.