As the UK grapples with increasing pressures in the housing market, the notion of delivering ‘Truly Affordable Housing’ (also often called ‘Genuinely Affordable Housing’) presents an opportunity to rebalance and optimise housing provision to better meet local needs – but to do this, we need a shared understanding of the term.  Despite the intricacies of the concept, agreeing a definition for what it actually means to deliver something that is truly affordable brings forward new opportunities and tools for local authorities tackling the depth and breadth of the housing crisis. 

How do we define affordability? Average salaries, not market values  

There lacks a universally agreed-upon definition of ‘Truly Affordable Housing’, and it is well recognised that ‘affordable’ housing means different things to different stakeholders.   

The cost-of-living crisis, coupled with an undersupply of housing, has made it increasingly challenging for many households across the UK to afford either rent or mortgage costs, as earnings struggle to keep up with housing costs.  Subsequently, there is a growing gap in what is considered ‘affordable’ in planning policy, funding terms and residents’ expectations.  

Local authorities have begun to look again at options to tackle these challenges and deliver the homes that their residents need; often by making a policy commitment to increase the delivery of ‘truly affordable homes’ in future developments.   

A local focus rather than a national one  

The growing focus of local authorities on delivering ‘Truly Affordable Housing’ is predicated on using bespoke local affordability data to offer homes that are affordable in this local context and better reflect local incomes.  Our own affordability modelling has demonstrated that when you consider local household income data, particularly in high-cost areas like London, residents can often afford housing across a range of tenures and at a range of rental points, depending on their very specific local circumstances.  The national definitions, whilst taking into account local circumstances to some extent, are a blunt tool in tailoring the offer to local circumstances.  Provision is often skewed in order to maximise access to the current grant schemes, rather than this provision being driven by real local need.    

Making this switch and utilising metrics such as local household income, for example, as an affordability metric, enables the offering of a broader range and combination of tenures on new developments that improve choice and remain affordable, whilst still supporting those in greatest need.  Too often a focus on social rent, or affordable rent alone, to reduce waiting lists and maximise grant have left large swathes of the populace under served, resulting in a swollen and poorly regulated middle tier of private rented homes.  Switching to this approach serves real local need more effectively.  It also presents an opportunity for local authorities to improve the viability of schemes, unlock better value from investments and generate higher income through rents to bolster the financial resilience and sustainability of their housing delivery strategy.  

What is ‘Truly Affordable Housing’  

A key step in unlocking these opportunities is being clear about what we mean by ‘Truly Affordable Housing’, thus expanding the acceptance that local authorities must deliver a range of affordable rental and sale products, beyond just focussing on social rent.  To support this, we have developed a working definition for Truly Affordable Housing which encompasses four fundamental components:  

1. Below market rates: Truly Affordable Housing should be available for sale or rent at rates below prevailing market rates. This ensures that housing remains accessible to individuals and families with limited financial means.  
2. Available in a variety of tenure and types: To cater to diverse housing needs, Truly Affordable Housing should be offered in various tenure types, including social rented housing, affordable rent housing, shared ownership, and intermediate rent homes.  
3. Reflect local incomes: The costs of Truly Affordable Housing must align with the income levels of the local population. This approach ensures that housing remains affordable and sustainable for households in the medium term. 
4. Affordable, sustainable, and secure: Truly Affordable Housing should not only be affordable in the short term but also sustainable and offer long-term security for its residents. 

Our working definition of Truly Affordable Housing is:   

“Truly Affordable Housing is housing for sale or rent at below market rates that is available in a variety of tenure and types, at costs that reflect local incomes and are at a level that households could afford and reasonably be expected to sustain in the medium term”.  

Through the adoption of a shared definition of Truly Affordable Housing, a recognition, and a commitment to select the optimum combination of tenures for future developments that remain affordable at a range of rental points related to local household incomes; local authorities can play a pivotal role in providing improved access to affordable housing for all those that need it.  

If you’d like to understand more, discuss how we can support you to explore your options to accelerate housing delivery, or specifically if you’d like some support in exploring our affordability modelling capability, please get in touch: info@31tenconsulting.co.uk