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Last Updated: Saturday, 10 March 2007, 14:54 GMT
Rent rise woes for 'key workers'
By Bob Howard
BBC Radio 4's Money Box

Terraced houses
Under the schemes the worker buys a proportion of the property
Public sector workers in shared ownership schemes say their rents are rising at double the rate of their salaries, making them unaffordable.

Under shared ownership, the worker buys part of the property, and rents the other part from a Housing Association.

Nurses in one London development found their rent is rising by almost 5.5% as it is tied to the Retail Prices Index.

By contrast, their salaries are now pegged to a lower inflationary measure and will only go up by 1.9%.

Louisa Fitzpatrick, a nurse living in South London, bought a 30% stake in her home four years ago from the Metropolitan Housing Trust.

She worries that a scheme that was supposed to help key workers like herself will leave her struggling financially.

"I'm paid by the government and this is also a government funded scheme. My rent continues to rise but my salary doesn't reflect that," she told BBC Radio 4's Money Box.

I'm beginning to realise perhaps I won't be able to afford this
Kate O'Flynn, nurse

The rental increases were written in the lease, but Louisa does not feel her housing association fully explained them when she bought her stake in the property.

Other nurses living in the block, like Kate O'Flynn, are also worried how they will afford to live there in the long-term.

"What worries me is I'm a senior nurse so I'm at the top of my grade. I don't have a great prospect for huge increases in my salary in the future. I'm beginning to realise perhaps I won't be able to afford this," she said.

Dr Peter Carter, general secretary of the Royal College of Nursing, agreed the latest pay settlement will make it even more difficult for his members to afford to buy even part of their own homes.

He told the programme: "This current award is going to hit nurses very hard in the pocket. Core basic salary is absolutely essential to getting into the housing market."

Independent advice

The Metropolitan Housing Trust insisted both Kate and Louisa would have had the rental increases explained to them when they bought, and it was clearly written in the lease.

However, it said that the trust now also employs independent financial advisers, who explain to buyers what they will be liable for.

HAVE YOUR SAY
More whingeing from nurses. When are they going to stop?
Ken Lewthwaite, Yeovil

The trust's director, Graham Moran, said although they will look at public sector pay deals when setting rents in the future, he cannot make any promises.

"We would be concerned to do that because most of our schemes are not solely sold to bundles of key workers from the same employment group," he said.

All new shared ownership rents have maximum limits set by The Housing Corporation which regulates this sector, but they are still based on the Retail Price Index.

Even so, John Rouse, the corporation's chief executive, said key workers in shared ownership schemes like Kate and Louisa should still be able to afford them.

He said: "One of the things we're extremely proud of is that of the 22 000 key workers we've helped over the last seven years, we've only ever had seven repossessions."

BBC Radio 4's Money Box was broadcast on Saturday, 10 March 2007 at 1204 GMT.

The programme was repeated on Sunday, 11 March at 2102 GMT.



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