Housing Shortage and the Snowline

Recently, the shortage of affordable homes across the UK has been highlighted by the ‘Homes for Britain’ rally in Westminster.  Research on the situation in Wales suggests that an additional 284,000 homes are needed between 2006 and 2026, with 183,000 in the market sector (houses available for sale on the open market) and 101,000 in the non-market sector (houses that have been made more affordable through some sort of intervention).  Despite this shortage, some developers are reluctant to build in the northern areas of the South Wales Valleys because of concerns about the viability of projects and local sale prices.  Given these difficulties, how can we encourage more homes to be built in these areas, particularly affordable homes?

One barrier to the development of affordable housing is the availability of credit and reductions to social housing grants.  A private finance option such as the model developed by Bellerophon could be considered as part of the solution.  Cardiff-based Bellerophon is a property development company with specialisation in regeneration.  They approach investors and broker funding agreements which have the potential to be replicated across other housing associations and local authorities. Their model offers an alternative to raising finance to fund schemes directly. It could deliver affordable, intermediate and market rented homes using cross-subsidy from higher rental areas such as Cardiff and the Vale of Glamorgan to provide affordable rented units in areas such as Rhondda Cynon Taff. In this way, affordable homes could be built in the northern areas of the South Wales Valleys, above the so-called ‘snowline’.

Working with RCT Homes’ development company, Porthcwlis, Bellerophon pioneered a new funding model and sought investment from the private sector.  Bellerophon attracted investment from M&G Investments for the RCT Homes development.  M&G has acquired a 200-year long leasehold interest in the land and is providing the finance to RCT Homes for the development. RCT Homes has initiated a 37-year lease with annual reviews linked to inflation and will be responsible for all outgoings, maintenance and repairs during the term.  On expiry of the 37-year lease, RCT Homes will have an option to take ownership of the properties, adding to their social and affordable housing stock.  The first of the new homes for rent are set to be built at Cwmbach in the Cynon Valley, thus bringing affordable housing development above the ‘snowline’.

Artist's impression of Cwmbach development
Artist’s impression of Cwmbach development

Increasing the opportunity for alternative developments could also help increase the availability of affordable housing. The co-operative approach offers affordable housing in a climate where mortgages are difficult to obtain and house prices too high for buyers at the bottom of the property ladder.  Co-operative housing in most cases is also about local people coming together to share their housing costs, usually making the housing more affordable for all.  For example, co-operative housing can provide an innovative, affordable and alternative model for home ownership in Wales, as demonstrated by the case-study below.

We have seen the development of co-operative housing schemes above the ‘snowline’.  For example, the Gellideg Co-operative (pictured at top of page) is being developed as a joint venture between Merthyr Valley Homes and Merthyr Tydfil County Borough Council to provide homes for low income people at 90% of local market rent. Members will be able to take a small but growing member dividend with them when they leave. With Merthyr Valley Homes owning the properties, and the Council providing prudential borrowing to support the scheme in one of the most economically deprived areas of Wales, the Joint Venture Company will lease the homes to the co-operative, covering the cost of finance and administration. The rest of the rent paid will cover management, maintenance, the dividend and other costs, with the potential for the co-operative to make a small surplus. Recruitment of the founder co-operators started in March 2015.

Our Co-operative Housing project is working hard to bring all the co-operative housing pioneers together to learn from each other and support each other through their development.  Ultimately the aim is for these new pioneers to help support other new housing co-operatives in to the future, creating a sustainable legacy for this project and mitigate the effects of poor quality and unaffordable housing across Wales.  For more information about our co-operative housing project, please visit our website.

New initiatives such as these can help to increase the number and availability of affordable homes across Wales, including in areas which may not be attractive to mainstream property developers.  We’d like to hear your ideas on what else could help to increase the supply of affordable homes across Wales.


  • peter@rounded-developments.org.uk'

    Co-ops are a great idea, especially if combined with things like self build. I think that it is important to look at alternatives like Bio Solar House (see http://www.bio-solar-house.com) that are low carbon both in building and use. Giving people a chance to actually help in building their home (to keep costs down, but also to instill a sense of place) is important.

  • melissa@melissawarren.co.uk'

    As a member of the “Creative Spaces” project, initiated almost 3 yrs ago, ( a live/work complex for artists/makers) I am keen to see this type of development, in an ecological way, for economic and environmental benefits. Self build would be important to some, sweat equity could feature and any development should be mixed age and type and would need studio/workshops. Done properly, this could be iconic.

Leave a Reply

Your email address will not be published. Required fields are marked *