Affordable Housing
Appendix F
Example Of Calculation Based On TCI Method And Affordable Rental Levels
TCI Calculation
The transfer of the property from the developer to the Housing Association is to be calculated based on the current grant rates from the Housing Corporation. Grant rate calculations have reference to Total Cost Indicators (TCI) and other financial information from the Housing Corporation.
These figures are reviewed on an annual basis, and will used as a basis for negotiations for provision of affordable housing e.g.-
Total Cost Indicator 2003/2004
| Dwelling size 45-50 sq m e.g. | 1 bed flat | £65,500 |
| Dwelling size 55-60 sq m e.g. | 2 bed flat | £74,100 |
| Dwelling size 75-80 sq m e.g. | 2 bed house | £91,300 |
| Dwelling size 85-90 sq m e.g. | 3 bed house | £99,900 |
| Dwelling size 954-100 sq m e.g. | 4 bed house | £108,500 |
These amounts are subject to a percentage grant rate, which for Plymouth is taken to be 55%.
The developer will then sell the property net of this amount, e.g. the grant amount will be deducted and the developer will sell the property at that rate.
For shared ownership the developer would sell at the TCI rate net of a 30% grant rate calculation.
Example
For a three bed house the 100% TCI = £99,900
A grant rate of 55% of £99,900 = £54,945
£99,900 - £54945 = £44,955
i.e., sale price would be £44,955. If a capital contribution were to be made this would equal £54,945
This methodology can be applied to any scheme simply by applying the formula to the percentage of affordable houses in the development, according to the number and types of properties.
The TCI values for various dwelling floor areas can be supplied on request.
Affordable Rental Levels
Incomes data from "New earnings Survey" indicates that nearly 25% of Plymouths population earn less than £250 per week, this equates to £13,000 or less per annum. As most in this position are unable to buy their own properties they are largely considered the quartile of the population most in need of affordable housing, particularly affordable rented properties.
Affordable rented accommodation should not exceed 20% of net average income levels of those in the lowest quartile. At the time of preparing this guidance this would be approximately £50 per week for a one bedroom property.
Proposed weekly rental levels
| Number of Bedrooms | One | Two | Three | Four |
|---|---|---|---|---|
| Plymouth | £50 | £59 | £64 | £68 |
These figures can be compared to weekly Private rented, RSL and PCC rental prices as follows:
Rental levels (price in £ per week)
| Number of Bedrooms | One | Two | Three | Four |
|---|---|---|---|---|
| Average of 14 local RSL rents (April 2002) | 50.87 | 55.39 | 60.84 | 66.80 |
| Plymouth City Council (2001/2002) | 35.57 | 45.35 | 52.54 | 61.88 |
| Private rented Accommodation (09.2002) | 69.23 | 86.77 | 103.85 | 115.38 |
|
Plymouth Affordable rented Suggested levels |
50 | 59 | 64 | 68 |
This chart indicates that while more expensive than Council rent levels the figures generated using 20% of £13,000 are much more affordable than the private rented sector and similar to a number of levels used by RSLs.
