Housing Core Strategy Review Issues and Options

Housing Issues and Options

21 Appendix 2: Key findings of Strategic Housing Market Assessment (SHMA) update 2012

Key findings of Strategic Housing Market Assessment (SHMA) update 2012

  •  The latest demographic projections suggest that in 2001 the Borough population was 165,200, an increase of 2.6% since 2001.
  • The Royal Borough continues to have the capacity to undergo continued economic growth and the proportion of economically active unemployed people amongst residents has decreased from 2.8% at the time of the original SHMA to 2.6% currently.
  • The mean earned income for employees in Kensington & Chelsea Royal Borough in 2011 is £79,066, notably higher than the equivalent figures for London and England.
  • According to data from the Land Registry, the mean house price in Kensington & Chelsea in the third quarter of 2011 was £918,352, the highest of all local authorities in England. Data shows that both prices and property sales have risen markedly since the original report.
  • The housing markets in operation in Kensington & Chelsea Royal Borough were re-examined and four price markets identified. The Central and South East price market is the most expensive part of the Borough and the North price market the cheapest.
  • The cost of housing by size was re-assessed for all tenures in the Royal Borough. Entry-level prices in Kensington & Chelsea range from £259,000 for a studio in the North West of Centre price market up to £2,340,000 for a four bedroom property in the Central and South East price market. Entry-level rents in Kensington & Chelsea range from £210 per week for a studio in the North price market up to £1,750 per week for a four bedroom property in the Central and South East price market.
  • An analysis of the gaps between each tenure shows that there is a very large income gap between the social rented sector and market rent indicating the potential for intermediate housing.
  • Based on the affordability criteria set out in the Practice Guidance, some 42.5% of all households in Kensington & Chelsea are theoretically unable to afford market accommodation of an appropriate size at the present time. This compares to a figure of 39.7% in 2009 from the original report.
  • It is estimated that a total of 11,587 households are living in unsuitable housing. This represents 14.4% of all (non-student) households in Kensington & Chelsea.
  • The needs assessment model shows a net need estimate of 5,786 affordable dwellings per year in Kensington & Chelsea. Larger affordable homes and properties outside the North price market are particularly required.
  • Factoring higher affordability thresholds households in the private rented sector pay in current market conditions and the supply of private rented accommodation (via LHA) to house those requiring affordable housing, the need for new affordable units reduces to 421 per year – however changes to the administration of Local Housing Allowance (LHA) mean that it is unlikely to continue to support households in need within the private rented sector to the same level.
  • Flexible Tenancies are being introduced as a new tenure. They will not give the tenant security of tenure for life and will allow Affordable Rent to be charged. Affordable Rent will be based on the open market value of each property.
  • Within Kensington & Chelsea, as bedroom size increases, the range of Affordable Rents possible increases.
  • The national upper LHA cap means that, unlike in many other parts of the country, households in Kensington & Chelsea are unlikely to be able to live in Affordable Rent with the support of LHA.
  • Very few households on the Register could afford Affordable Rent at 80% of the median market rent. The most practical level to set Affordable Rent to meet substantial need and be viable in terms of the viability of development is at 45%.
  • The GLA demographic projections suggest that there will be a notable growth of the resident population over the next 19 years, with a significant increases in particular age cohorts, particularly those aged 90 or over. In addition there are projected to be large increases in the number of lone parent households.
  • In terms of the accommodation required to provide housing market balance over the long-term, the model suggests that of the new housing required up to 2031 (7,970 dwellings in total), 52% should be market dwellings, 10% shared ownership, 24% Affordable Rent and 14% new LHA dwellings.
  • The introduction of the national upper LHA cap means that most of the new LHA accommodation required will have to be social rented housing.