Singapore Markets close in 1 hr 49 mins

Ikea gets green light to build affordable homes in UK

Hilary Osborne
Photograph: Heinz-Peter Bader/Reuters

Homebuyers in a town where properties typically cost almost 12 times local salaries may soon have a low-cost option from Ikea after a UK council agreed to work with an affordable housing developer co-owned by the retailer.

Worthing council has signed up with BoKlok, a company jointly owned by the Swedish retailer and construction firm Skanska which specialises in factory-built housing that can be constructed at a low cost.

The firm sets property prices so that buyers have money left to live on after they have paid their housing costs, and its website says “a single parent can afford to buy and live in a newly built two-bedroom BoKlok apartment”.

It has built 11,000 homes across Sweden, Finland, Denmark and Norway, and is keen to break into the UK after a false start more than a decade ago.

Previous plans for a development in Tyneside were scaled back when the financial crisis hit, but its latest effort is a collaboration with Worthing council, which believes it can achieve more affordable homes through the deal than if it sells the land to a conventional developer.

Councillors in the coastal town have voted to work on a plan that would see 162 flats built on land that it owns.

The latest data from the Office for National Statistics showed that in 2018 average house prices in Worthing were 11.7 times average salaries, compared with a figure of 7.8 times across England and Wales.

In a report, the council said that access to homes was challenging for those on the average salary, which was £25,458 in 2015 – with only one-bedroom properties within reach, it noted.

Under the plans the council will license the developer to use the land rather than selling it off, charging it an annual ground rent.

In return it will get 30% of the properties to use as affordable housing to rent to local people, while the remaining properties can be sold by BoKlok based on its “left to live” affordability model.

Related: Kitchen for rent? Ikea to trial leasing of furniture

This looks at how much residents can afford to pay after tax and monthly living costs have been deducted, and usually assumes that people can use about 33% of their take-home pay for a mortgage.

The council, which has more than 1,300 households on its housing waiting list, said its analysis suggested the land could be used for 45 homes with just 13 of them available for affordable rent.

The company said it has “scrutinised our costs and trimmed them to the bone,” but there are no compromises on quality.

Flooring and wall tiles are included in the price, and homes are fitted with an Ikea kitchen. Worthing council’s plans show-homes that range from one-bedroom apartments measuring 50 sq metres (538sq ft) to three-bedroom apartments of 74 sq metres (800sq ft).

Councillor Kevin Jenkins, Worthing borough council’s executive member for regeneration, said: “In this current market it’s extremely tough for local people who are in full-time work to get on the housing market.

“This proposal could change that, giving these hard-working individuals a genuine chance to buy their own home without having to move out of the town.”

If the plans go ahead work on the site will begin in September 2020, with the first homes would be delivered and assembled the following January, and ready to move into in April 2021.

Further homes may follow, with the council and BoKlok agreeing a programme to provide 500 homes in the borough.

The project is one of a range of ways councils are working with developers to create more affordable homes for local people. Croydon council has set up a company called Brick by Brick which is building homes for social rent subsidised by homes sold on the open market.