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why we need an alternative model

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Lithos front roomThe crisis in the affordability of housing has become a major factor in the recruitment and retention of staff for key public services and other areas of the local economy.

In the past four years, the cost of buying a house has nearly doubled in Britain. As a result, home ownership is out of reach in over half of the counties of England, even for two full-time household incomes. In 2003, average prices rose by about £30,000. This is far more than the salary of bus drivers, nurses or most teachers. Many key service providers cannot afford home ownership and have to live in insecure, expensive, substandard housing. Many spend long hours commuting to work from lower cost areas and congestion in public transport and on the roads has worsened in the past five years. Many public sector workers feel they will never be able to afford a home large enough to start a family. As a result, public services in many areas are stretched to the limit; the recruitment and retention of staff is becoming increasingly difficult because employees are leaving to move to areas where the housing costs less.

Land cost is central to the affordability of housing. Land for development is in short supply in many areas, both in the city and in the countryside. This has escalated housing costs – especially in the cities, market towns and rural villages of southern England.

The aim of mutual home ownership is to provide a way of separating the cost of the land from the purchase price of the housing on it. This is achievable in practice by taking the land out of the marketplace through a Community Land Trust. This innovative American mechanism can make housing much more affordable and keep the cost of home ownership in a closer relationship with average earnings in perpetuity. Like other owner occupiers, mutual home owners will have the opportunity to invest in their home and the incentive to look after and improve it. At the same time, the land can be held in trust for the benefit of future generations and the community as a whole.

The current range of affordable home ownership schemes, operated by Registered Social Landlords and funded by the Homes and Communities Agency, include the Starter Home Initiative, Shared Ownership and Homebuy. They have proved to be popular and successful programmes but in recent years, even these options have become unaffordable for public sector workers in some areas.


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