The government’s Pathfinder project is aimed at re-developing nine run-down areas in the Midlands and North of England, with those living in the areas affected offered money to relocate.
However, the report ‘Addressing housing affordability, clearance and relocation issues in the Housing Market Renewal Pathfinders’ revealed the affordability gap between the compensation offered and the price of a new home was, on average, £35,000.
It said: “Many owner-occupiers affected by demolition have encountered a substantial gap between the amount of compensation they receive for their existing home and the cost of purchasing a suitable alternative in an appropriate neighbourhood. The size of this affordability gap varies, but estimates provided by the Pathfinders suggest an average of £35,000.”
The report showed both relocation grants and loans were offered to those affected but these often fell short of the amount needed.
There were also social factors which the scheme was struggling to cope with, especially when dealing with the concerns of the elderly and ethnic minorities.
Neil Johnson, PR and policy manager at the Building Societies Association (BSA), commented: “We agree with the report’s findings, but people are actually losing around £55,000 because as soon as an area is designated a Pathfinder zone, the value of housing plummets. Also, they are breaking up communities as people will not be able to re-settle in the same area.
“The government is coming at the problem from the wrong end. The reason an area is in a poor state is often due to wider economic factors. Unless addressed now, these issues will repeat themselves 10 or 15 years down the line.”
