Building affordable homes with the help of a loan

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“We couldn’t draw down the grants until the project was fully funded.” Lesley Bowlby, a director of Above Derwent Community Land Trust, shares some of the challenges of building affordable homes.

Why is there such a need for affordable housing in your area?

Back in 2015, a third of the houses in the Above Derwent area were either second homes or holiday lets. According to the Lake District National Park, that’s now increased to 42%. We also have a lot of people who’ve moved here to retire. That all pushes house prices up. Plus, local jobs are often in hospitality, which isn’t well paid.

All of this means that the younger generation who grew up here can’t get onto the housing ladder. In many cases, they’re struggling to even rent a property as landlords can earn more from short-term holiday lets than from long-term rental. We’ve reached a real crisis point.

A few years ago, the parish council started looking into the demand for affordable housing. We held a meeting, got some residents together and formed a group, which became the Above Derwent Community Land Trust. We’re a community benefit society and independent from the parish council.

You’ve built four three-bedroom homes so far. What challenges did you face building the properties?

Our main difficulty was finding land. We needed a grant to pay for the plot and it took us nearly two years to find a plot that we could afford. When we did, the location was perfect, but the site slopes. So it’s a difficult plot, but it was our only option.

Another challenge is that nothing is free, even when you’re a voluntary organisation with no income. Allerdale Borough Council have been absolutely fantastic. They’ve helped us all the way through the process.

And your aim is to ensure that the properties stay affordable?

Yes. They’re shared ownership – people can buy a maximum share of 80%. Three families have bought a 40% share and one has bought a 50% share. They’ll pay rent of 2% on the remaining portion, which coves our costs. We had strict eligibility criteria, and if a property is resold, the same criteria will apply for the new buyers.

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Above Derwent Community Land Trust home

What funding have you had?

We got small grants from Locality and Allerdale Borough Council to help us set up. Allerdale Borough Council also gave us a grant towards the land purchase and development costs. Homes England gave us a large grant too, but that was only payable at the end of the development.

Could you have got the land and development grants without getting a loan?

One of the grants was approved before the loan, but we couldn’t draw the money down until the project was fully funded.

Why did you choose Charity Bank for your loan?

There’s a very small group of banks who will offer loans for this kind of thing. We did initially approach another provider. They couldn’t help, but they recommended Charity Bank. We're members of the National Community Land Trust Network, and Charity Bank has worked with a few other members, so it seemed like a good fit.

How did you find the loan process?

It was fine. We’d already pulled lots of information together for Homes England, and had gone through a formal tender exercise for our quantity surveyor, architect and contractor. So we had all the costings and pretty much everything else we needed for the loan already in place.

Jeremy Ince was our first point of contact and Sue Potter from the admin team kept us on the straight and narrow with all the bits and pieces we needed to do. So it was all pretty straightforward. We also got extra support from Jeremy, which was definitely needed at times and helped us to move forward when we were stuck. As an example, our solicitors didn’t have experience with community land trusts. Jeremy’s help meant we switched to solicitors who actually understood what we needed to do.

What’s next for Above Derwent Community Land Trust?

At the moment, we're all a bit shell shocked! It’s a time-consuming, long-winded process to build affordable homes. But we do want to do other projects. We might look at more new builds, or at buying ex-council houses and bringing them back into the affordable housing market.

When you’re applying for a loan, it helps to work with a provider who understands your sector. Charity Bank has lots of experience with community land trusts and other not-for-profits. Please call us on 01732 441919.

About Charity Bank

Charity Bank is the loans and savings bank owned by and committed to supporting the social sector. Since 2002, we have used our savers’ money to make more than 1,100 loans totalling over £400m to housing, education, social care, community and other social purpose organisations.

Find out more about us here.

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