Helping Wells’ next generation to stay

Affordable housing is one of the area’s biggest issues, and Holkham’s Managing Director Peter Mitchell shares emerging thinking on overcoming the challenge.

Wells-next-the-Sea and many of North Norfolk’s other desirable towns and villages have seen profound and structural change in housing provision over the last 20 to 30 years. During this time, house prices have risen much faster than local salaries. A contributing factor is that North Norfolk, like Cornwall, Devon and the Lake District, has become one of the hotspots for holidaymakers, fuelling the purchase of houses in the area for second homes and holiday let properties.

Houses that have been rented to local families for decades are, one-by-one, being taken out of the market and turned into holiday lets. The traditional centre of Wells town, with its narrow lanes and small cottages, has become largely a zone of holiday cottages and second homes. House prices put much of the housing stock in Wells far out of reach of those whose parents could afford to buy a house a generation ago, and the supply of rental properties has almost dried up.

Consequently, many locals have moved to live in Fakenham, King’s Lynn or other inland villages. Is this simply an inevitable consequence of the gentrification of highly attractive coastal towns and villages? Perhaps. But the impact on the community is real.

Heart of the community

One of the strengths of Wells is its wide range of key workers. Wells has two teams of school teachers, medical staff at the GP surgery, an RNLI crew and coastguard service, a fire and rescue crew, along with those who run the community hospital and day care centre. Wells has its fishing fleet, a harbour team, a cultural arts centre and a number of skilled independent retailers.

Everyone has unique personal circumstances, but collectively this group is a good example of a key part of our community which often falls between the gaps in housing supply.

Homes for Wells defines the rental property that should be, but isn’t, made available to mid-income families, couples and individuals as intermediate rental. Intermediate renters are often priced out of the few remaining open-market rental properties, but are never going to make it to the top of North Norfolk District Council’s (NNDC) housing list and be eligible for social housing.

Homes for Wells has done a remarkable job over the last 14 years. From nothing, today it provides housing for 30 families and has a waiting list of 48 more. It provides intermediate rental properties and its small team takes on the responsibility for matching (as far as is possible to do so) any property coming available to the right local family and then managing those tenancies.

Assessing the need

Three years ago, Holkham commissioned a specialist research company, Housing Vision, to design and undertake a Housing Needs Study to help us to understand and quantify the need for housing in Wells and neighbouring Warham, Wighton, Holkham and Walsingham villages. Wells Town Council accepted our invitation to work alongside us on this study, and we also shared the findings with Homes for Wells and the Walsingham Estate.

The study confirmed that among the resident population in Wells and the four villages, there were 104 families – 57 in Wells alone – looking for more suitable properties. It also highlighted how the supply of rental properties coming onto the market was so slow that it would never dent the unmet need.

By interviewing employers, the study confirmed that local businesses and public organisations struggle to recruit and retain the staff they need, because of the difficulty faced by these potential recruits in finding somewhere to live. Using published statistics on average salaries, the study concluded that buying a house in the area is out of the reach of the vast majority of those working locally.

Our own experience highlights this point even more strongly. Today, we have a live enquiry list of 200 families, couples or individuals interested in renting a Holkham property. That is ten times more than the total number of properties we can offer to new renters each year.

It is clear there is a profound shortage of rental property in NR23 and PE31 postcodes across social housing, intermediate and open-market rentals, and it is difficult to envisage how properties in Wells will revert from being holiday lets and second homes to year-round rentals for local families without Westminster’s intervention.

Some are calling for holiday home owners to be charged double or treble the standard Council Tax rate. Others want to see a change which would require a planning application for the change of use of a residential house to a holiday home. Opinion is divided over whether either will have any impact, but neither solution feels imminent.

Importantly, there is concern among Wells’ business community that the town should not appear anti or unwelcoming to those who contribute to Wells’ reputation as a successful and welcoming holiday destination.

Does PRP work?

Within the community there is a widespread feeling that ‘something needs to be done’. The ‘something’ put forward for consideration by the current draft of the Wells Neighbourhood Plan is the Principal Residence Policy (PRP). This restriction requires that the house must be the principal residence of the owner or occupier. It would apply in perpetuity to new houses given planning permission during the years that the policy was in effect.

There are several issues about the integrity and enforcement of this policy which are responsibilities that will fall on NNDC. This article is not the appropriate place to make those points or to speak on behalf of the council. The issue to consider here is about the unintended consequences of a PRP policy.

A PRP policy can’t and won’t reverse the change to Wells which has taken place in the last 20 years. While a PRP policy would ensure new-build houses coming on to the market are sold at lower than market prices, the chances are that prices on existing housing stock would rise.

However, the more serious flaw with PRP is that it will have a negative impact on the supply of new rental properties.

At the core of national house-building policy is the concept of cross-subsidy. By requiring house builders to provide a percentage of houses in a new development to a registered provider of affordable housing, national policy creates a higher price for open-market buyers and a substantially lower price for housing associations. The subsidy from the buyers of open-market properties funds the supply of affordable housing with social rent tariffs.

We asked our professional advisers to report on the likely impact of a PRP restriction in Wells and their view was that such a policy would lead to a substantial reduction in the open-market value of new housing.

This is because anyone buying a new home, even if their intention is to live in it as their principal residence, will face a restricted market when they come to sell the house, as would subsequent buyers and sellers.

We are worried that the PRP restriction will make it more challenging for the buyer to get a mortgage and more difficult when subsequently selling the property.

The reduced value will impact the very viability of the housing development. The effect may be that fewer affordable homes get built. Quite the opposite of what the proposers of PRP hope to happen.

Fresh thinking

There are better ways to create more affordable housing locally. We are in a very unusual position in Wells which we believe makes things possible that simply aren’t conceivable elsewhere.

The Holkham Estate is, unusually for a housing developer, willing to own and retain property for long-term use as year-round rental housing and has a long history of doing so. We are a house builder with a track record of building high-quality homes, and our role comes without the uncertainty or additional risks involving third parties with a different agenda.

In tandem with this, Wells is fortunate to have Homes for Wells as an established, credible and well-managed champion for local housing for local people.

We believe this unique position makes it possible to propose better solutions to increase the chances of the next generation of local families to be able to live and work in Wells. Holkham is willing to invest in the continuing vitality of the town to achieve this.

Our proposal – Policy Plus Plus

In the last 12 months, we have been developing ideas to try something innovative. By looking at the cost models for housing developments of different scales, we have established the viability of an approach which we describe as Policy Plus Plus.

Under the national standard policy model, each development is meant to have a percentage of social rent housing and subsidised starter home properties. The percentage is set by NNDC. Such houses would normally be sold by Holkham to a registered provider such as Victory Housing or Broadland Housing Association and they would be occupied or sold to people who meet the criteria of most urgent need on NNDC’s housing list who want to live in Wells. All the rest of the houses are normally sold on the open-market.

Under our Policy Plus Plus model, we would voluntarily reduce the number of open-market houses for sale so that the majority of properties can go into the rental market. The larger pool of rental and affordable properties would be split between a) normal registered providers b) Homes for Wells and c) our own retained rental properties.

We will soon be able to share the target numbers for specific sites as we bring these schemes forward for consideration by the planning authorities and for consultation with the community.

This year has seen significant inflation in construction costs and a faltering demand for open-market housing, so pinning down these numbers needs to be done with care.

However, it’s already clear we can provide more housing that local people can afford to buy and rent than under the standard policy and substantially more than under the PRP policy. It looks likely we will be able to add between 40 to 45 new properties to the rental and affordable stock within Wells in total across the three tiers of housing at the two new sites in the Local Plan at Ashburton Close and north of Mill Road.

Boosting rental supply in this way is the first ‘plus’ in our thinking. The second ‘plus’ is for us to champion and support Homes for Wells as the provider of the intermediate level of rental supply in the town.

This requires flexibility from NNDC and recognition of the importance of intermediate rental using a local list. However, we will link this to our willingness to go beyond the standard policy position expected by NNDC of developers, and to provide additional long-term rental properties.

The support and encouragement we have had so far from Homes for Wells for our Policy Plus Plus approach has been very welcome, and I am confident we can build on this. It is an exciting opportunity to see Homes for Wells substantially increase the number of local families it will be able to house in the town.

We hope that those who have proposed PRP will see that a Policy Plus Plus approach will achieve so much more for the community instead.

When we updated Holkham’s strategy at the start of this decade, we wrote about our Five Ambitions. One of these is, ‘We will be a force for good in helping local communities to thrive, by providing employment, homes and support for local businesses and charities’. I know we will struggle to meet everyone’s expectations of what that means in specific situations, and we will no doubt fall short on occasion, but this gives us a goal against which to judge our own performance.

I believe our Policy Plus Plus approach is a positive example of directing the resources and capabilities Holkham is fortunate to have in a targeted way for the long-term benefit of our community. I welcome feedback from those who agree and from those who don’t.