News: Why are new Rotherham town centre apartments still empty?
Rotherham Council has shared more on why part of its multimillion pound housing scheme in the town centre has stayed empty since it was completed a year ago, despite the houses and flats on the same development being filled with owners and tenants.
Rothbiz reported last month that at Wellgate Place, 11 one and two bedroom apartments remain unsold and that the authority was considering changing the tenure from shared ownership to affordable rent.
The first home opened in February 2022 as part of an ambitious £30m+ development of more than 170 homes across three key town centre sites, heralding the next stage in Rotherham town centre's transformation.
The ‘Trilogy Collection’ includes Westgate Riverside, Wellgate Place and Millfold Rise and properties have been made available for sale, affordable rent and through shared ownership.
Council documents show that the 11 shared ownership apartments at Portland House at Wellgate Place remain empty having been handed over to the authority in May 2022, with officers concluding that the "market has reacted well to shared ownership houses, but not to shared ownership apartments."
Shared ownership involves buyers purchasing a 25% - 75% share in the home and then paying rent on the percentage of the property not purchased along with a service charge. The Wellgate Place examples were on the market with a total value of the properties at £100,000 for the 1 bed, and £120,000 for the 2 bed.
On the site of the former car showroom on the edge of the town, 20 houses have all sold - including 12 through shared ownership and eight on the open market. Elizabeth House has 23 apartments for council rent for the over 50’s and the council's rented homes "are almost all let" despite the uptake being slow. For Portland House and its apartments for shared ownership, all 11 remain available.
A council report shows that previous strategies included the aim that grant funding bids would be expected to deliver circa 88% shared ownership. This was later reduced by national housing body (and part funder), Homes England, but it was still substantial when funding bids were being submitted.
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The report states: "Shared ownership however was not a significant part of the Rotherham housing market at that time and in being an early adopter, the Council effectively took on a market making role in delivering this tenure at reasonable scale into areas where shared ownership had little existing presence.
"There was also the view that the creation of homes in the town centre, particularly through home ownership products, would benefit the wider regeneration of the town centre.
"Learning from the delivery of the town centre programme has established that the market has reacted well to shared ownership houses, but not to shared ownership apartments. The likelihood is that the combination of a mortgage requirement, payment of rent on the unowned share in addition to service charges on apartments may be too much for the market to bear in what is still a borough of relatively depressed market values. This is also reflected in other shared ownership schemes across the borough. Shared ownership houses generally have no, or minimal service charge obligations.
"One block of apartments at Portland House, Wellgate place is proving difficult to sell under shared ownership terms. They were handed over to the Council in May 2022 and no sales or reservations have been taken. There has also been limited interest overall. The Council are now incurring costs while ever they remain empty."
The high level of service charges are likely to be the main concern for buyers. The report explains that the average service charges per property is
estimated to be around £2,224 per year / £185 per month. In some instances, it can work out cheaper to purchase a house from the other town centre developments, as these do not generally include a service charge.
Other issues relate to the volatility in the housing market and the difficulty for prospective buyers in obtaining mortgages for the shared ownership properties. The report adds that the location of the development "has caused some concern with surveyors in terms of valuations" with some zero valuations being returned from "one or two particular surveyors who have limited knowledge of the area and the Council's ambitions."
Having looked at other options, such as financial incentives and addressing the service charges, or putting the properties on the open market, Rotherham Council has now made the decision for a change in tenure from shared ownership to affordable rent.
The properties are due to go out to council tenants and not be restricted to the over 50's like the adjacent apartment block.
Trilogy Collection website
Images: Google Maps
Rothbiz reported last month that at Wellgate Place, 11 one and two bedroom apartments remain unsold and that the authority was considering changing the tenure from shared ownership to affordable rent.
The first home opened in February 2022 as part of an ambitious £30m+ development of more than 170 homes across three key town centre sites, heralding the next stage in Rotherham town centre's transformation.
The ‘Trilogy Collection’ includes Westgate Riverside, Wellgate Place and Millfold Rise and properties have been made available for sale, affordable rent and through shared ownership.
Council documents show that the 11 shared ownership apartments at Portland House at Wellgate Place remain empty having been handed over to the authority in May 2022, with officers concluding that the "market has reacted well to shared ownership houses, but not to shared ownership apartments."
Shared ownership involves buyers purchasing a 25% - 75% share in the home and then paying rent on the percentage of the property not purchased along with a service charge. The Wellgate Place examples were on the market with a total value of the properties at £100,000 for the 1 bed, and £120,000 for the 2 bed.
On the site of the former car showroom on the edge of the town, 20 houses have all sold - including 12 through shared ownership and eight on the open market. Elizabeth House has 23 apartments for council rent for the over 50’s and the council's rented homes "are almost all let" despite the uptake being slow. For Portland House and its apartments for shared ownership, all 11 remain available.
A council report shows that previous strategies included the aim that grant funding bids would be expected to deliver circa 88% shared ownership. This was later reduced by national housing body (and part funder), Homes England, but it was still substantial when funding bids were being submitted.
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The report states: "Shared ownership however was not a significant part of the Rotherham housing market at that time and in being an early adopter, the Council effectively took on a market making role in delivering this tenure at reasonable scale into areas where shared ownership had little existing presence.
"There was also the view that the creation of homes in the town centre, particularly through home ownership products, would benefit the wider regeneration of the town centre.
"Learning from the delivery of the town centre programme has established that the market has reacted well to shared ownership houses, but not to shared ownership apartments. The likelihood is that the combination of a mortgage requirement, payment of rent on the unowned share in addition to service charges on apartments may be too much for the market to bear in what is still a borough of relatively depressed market values. This is also reflected in other shared ownership schemes across the borough. Shared ownership houses generally have no, or minimal service charge obligations.
"One block of apartments at Portland House, Wellgate place is proving difficult to sell under shared ownership terms. They were handed over to the Council in May 2022 and no sales or reservations have been taken. There has also been limited interest overall. The Council are now incurring costs while ever they remain empty."
Other issues relate to the volatility in the housing market and the difficulty for prospective buyers in obtaining mortgages for the shared ownership properties. The report adds that the location of the development "has caused some concern with surveyors in terms of valuations" with some zero valuations being returned from "one or two particular surveyors who have limited knowledge of the area and the Council's ambitions."
Having looked at other options, such as financial incentives and addressing the service charges, or putting the properties on the open market, Rotherham Council has now made the decision for a change in tenure from shared ownership to affordable rent.
The properties are due to go out to council tenants and not be restricted to the over 50's like the adjacent apartment block.
Trilogy Collection website
Images: Google Maps
32 comments:
Shared ownership is a bad idea anyway, but why would you want to buy somewhere when it's surrounded by renters who won't look after the property to the same standard as they would if they owned it.
They should have all been made available to buy to first time buyers and people on lower incomes, with a ban on buy to let for the first 10 years.
Completely agree with the first post.
Paying a service charge is one of the things that has always deterred me from buying a flat and it looks like I'm not alone in this regard. But the bigger question is why RMBC agreed to rubber stamp this scheme in the first place? Who did they think would leap on the band wagon. It's not like there's a shortage of small, pokey accommodation, whether that's in the town centre or further afield.
Piling up a load flats in the town centre may appear to be a good idea at face value (especially when you've got some out of touch councillors probably eyeing up the council tax bills they think they'll receive), but as usual, RMBC has gone with the headlines and overlooked the details.
Sadly it's a problem of their own making. So let's look at understanding the property market 101:
Rental values and property prices are based upon supply and demand.
Too much supply drives down need, he net result is a scheme that is not, and never was commercially viable.
I suspect if these flats are sold under shared ownership, then they are likely to work out more expensive than comparable properties. Why? Well, it comes down to basic maths.
One hand, you can buy a one bed property in the town centre for between £60,000 - £90,000. These ones are being sold for £100,000. Fair enough, it's a brand new building.
But then lets look at what shared ownership would mean for one of these shiny new shoeboxes
Rental alone would likely to be between £450-500 pcm, inclusive of service charge.
Shared ownership just doesn't stack up. For example:
- 25% of a £100,000 mortgage over 25 years- £150pcm
- Service charge - £185pcm
- 75% rent: £200-300 pcm
Total cost pcm is actually higher than renting the flat, or indeed purchasing existing similar shoebox flats without the double whammy of rent and a mortgage to find.
I'm not suggesting for one moment that the figures above are accurate and I don't want to mislead, but you can see why no-one in their right mind would ever touch them!
And who on earth would want to live around there full stop....I'd sooner live in a tent!
I wouldn't live there if they paid me!Still po retty sure some people currently housed in hotels will love em!
That’s another problem with these, only a certain type of person would want to live in that location.
Somebody got shot right next to there a few weeks ago.
And I am po. retty sure your post is racist and that no one in their right minds would want you as a neighbour
Happy camping
And what type of person would that be?
Oh here we go ....wacist this wacist that,ffs
No I wouldn't want to live next to some foreign criminals,which incidentally most of them are ,so that's ok then,very little chance we'll be neighbours,it's that ok for you sunny🤣
Disappointing to see that home grown undesirables feel the need to air their rancid views on a business news site.
They just can't help themselves, can they!
Sort of comments you see on Millersmad quite often
A stupid person, why would you want to live on Wellgate if you had a brain in your head?
Would you want to live on Wellgate? If yes, why? and if no, why?
Listen here pal...I work hard f###ing hard for my money,I'm no undesirable,I've right to my opinion that I despise the idea that any scumbag from any part of world can simply turn up on a beach ,get board lodgings and free cash,while our own ex soldiers ect,sleep on streets,and if that makes me a racist ,then ok I'm a racist,infact if that's what a racist is,then get me a t-shirt with racist printed on it,and I'll wear it no problem!
Your belief that all refugees and asylum seekers are scumbags makes you not only a racist but a very nasty piece of work. Just my opinion of course. Something that like you I am entitled to
Where have they said that all refugees and asylum seekers are scumbags? I'm sure they don't think that at all.
It's people like you screaming racist all the time that has allowed Rotherham and many other towns to end up in the state that they're in.
I am not your pal. And yes, you are entitled to your opinion, within limits, just as anyone has the right to challenge racist comments
Typical bleeding heart liberals,same people to blame for the grooming gangs cover up here in Rotherham, dangerous people ,whos time of stopping debate with shouts of racist and facist is thankfully goimg to end pretty soon.
Your totally right,could never be a Pal with someone like you,My pals are hard working men and women,who wouldn't pi## on the likes of you if you were on fire(probably a student and more than likely not even from Rotherham)...your all what's wrong with this country,a tiny minority like yself get your opinion heard far too often,when the millions who believe in what I stated are called racist for airing the views of the majority!
Look at the post timed at 12.24!
It is impossible to debate with a racist, particularly one who has such a tenuous grasp of reality.
The post at 12:24 doesn’t say all refugees and asylum seekers are scumbags at all, you’ve interpreted it as saying that because that’s what you want to see it as saying. Nobody has a problem with genuine refugees.
This is a site for business news. Why does it always seem to decend into a platform for racist and intolerant comments. Are any of you actually part of the Rotherham business community? Please take your views elsewhere
You are one of those dangerous people who always believe you are speaking for the majority. I really hope this is not the case because if it is what a agodamned awful place we are living in
Sound advice, but unfortunately it will be ignored
When did Rothbiz suddenly become the Daily Mail Online?
Brexit!
Good question, though with the quality of some of the posts you have to think that they are Beano readers
You may well mock, but just look how much our town has thrived because we left Europe and we have had the government's levelling up agenda. Can you imagine what remaining in Europe would have done to our town centre? It doesn't bear thinking about.
Good point. If things get any worse I'm thinking of doing my weekly shop in Huddersfield. At least then I'll be able to visit their casino.
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