Future of thousands of community-led homes uncertain as government fails to renew fund

‘We need funding and we need it fast’

James Neward is a director at YorSpace, a York-based CLT that he started with his best friend Sue in 2014, which is aiming to deliver a 19-home, low-carbon co-housing community.

The project pilots a new model of housing tenure, named mutual homeownership, under which residents pay a deposit and make monthly payments under the terms of a long-lease. By making payments they accrue collective ownership of a co-operative society.

“We set YorSpace up in order to take control of our own housing situation while helping others find a way into a home in a city that is becoming increasingly difficult for people on low incomes to settle in,” Mr Neward said, adding that the approach allows them to “pool our resources so we share the risk and the reward of a self build together”. 

YorSpace began working with City of York Council on the project in 2016. In March 2019, it gained planning permission for 19 homes on land that was sold to them at a discount by the council. 

The project was due to start on site in the summer of 2020, however the business plan was reliant on £855,000 worth of capital grant from the Community Housing Fund and no capital funding has been available through the fund since March 2020. YorSpace cannot access money from the AHP because mutual homeownership is not currently recognised by the government as an affordable housing tenure. 

The project is now trying to proceed without capital grant funding, however six residents have now left the scheme and projected build costs have risen 98% since the organisation finalised the design that was submitted for planning. 

Mr Neward, who hopes to live in the finished development with his family, said YorSpace has “poured our heart and soul into getting this off the ground for over 8 years”.

He added that it has been “heartbreaking to watch friends leave the project since the pandemic began as funding has dried up and costs have spiralled”. 

“The cost of living crisis is worrying for me and my partner as we're renting in a poorly insulated, gas-fired home and have a landlord who raises the rent every year… so we need funding and we need it fast,” he stated.  

‘It could all fall apart’

Robin McDonald is the treasurer of Sussex-based Angmering CLT, which is aiming to build 12 homes for affordable rent and shared ownership on land sold to it for £1 by the local parish council. 

After going through the planning process, the CLT got a contractor on board last year. It received some funding from the Community Housing Fund to help it get to that point. 

However, since appointing a contractor, the project has been hit with unexpected costs, including site contamination issues and problems with the site’s electricity supply. 

These issues have delayed the project, during which time build costs have been rising. Mr McDonald said costs have risen from roughly £2,400 per sqm to £3,000 per sqm – costing the project roughly £500,000. Rising interest rates have also posed a major problem, with Mr McDonald explaining that each 0.25% rate rise “hits us badly”. 

He said the winding up of the Community Housing Fund means “there’s not chance of us getting any more additional funds that would enable us to offer shared ownership at levels that people can actually afford”.

The CLT has already had to increase the number of shared ownership homes on the scheme at the expense of affordable rent due to viability issues. 

Mr McDonald spoke to Inside Housing ahead of a meeting with the project’s contractor to discuss engineering out costs. 

“We’re not in a very happy place at the moment,” he stated.

“If this meeting today turns out that we can engineer costs out of this scheme we may have a viable scheme, but right now it looks very very doubtful, which is a shame because there has been eight or nine people for the past three or four years working very hard to make it happen and it could all fall apart.”