It’s clear that the quantum and delivery of new homes across the country is not happening fast enough. And those being delivered are still unaffordable for a significant proportion of local people.
We have been working with local authorities that want to bring a commitment to deliver truly affordable housing into their Housing Strategy. This has led us to consider in more detail what ‘truly affordable housing’ means and we have concluded that:
The most commonly used definitions for affordable housing focus on the tenure. For example, for local authorities it means subsidised housing through a variety of means:
For developers, affordable housing relates to the affordability of delivery (viability). And from a resident’s perspective it is about costs in relation to earnings – Shelter defines affordable housing as that which costs no more than 35% of net household income.
But it is not all about costs, having access to affordable housing is also about being given a genuine choice of homes available to you at all levels and to have the opportunity, flexibility and mobility to move across and within the housing market to adapt to changing household circumstances.
The CIH states in ‘Re-thinking Social Housing’ that ‘new homes must be the right type, in the right places, and at the right prices so that no one is left unable to find a decent place to live.’
The Institute for Public Policy Research (IPPR) state that for many the term “affordable” housing has lost all meaning. They recommend that a new measure of affordability should be developed to ensure all affordable homes to rent and to buy are in reach of residents on low to middle incomes.
Similarly, the National Planning Policy Framework (July 2018) defines affordable housing as housing for sale or rent for those whose needs are not met by the market.
The CIH also states that there needs to be a considerable increase in the housing stock to meet housing need. The Letwin Review, led by Sir Oliver Letwin, looked to explain the gap between the number of planning permissions for housing being granted against those built in areas of high demand. The analysis sets out that the fundamental driver of build out rates appears to be the ‘absorption rate’ – the rate at which newly constructed homes can be sold into the local market without materially disturbing the market price. One of the conclusions of the review states ‘If either the major house builders themselves, or others, were to offer much more housing of varying types, designs and tenures on the large sites that matched appropriately the desires of communities, then the overall absorption rates could be substantially accelerated’. This conclusion is supported by the Royal Town Planning Institute (RTPI) who agree that ‘a much greater variety of tenure and types of home is needed’.
So, it’s important to define the need in relation to the resident population and not just about the lowest rent or buying price.
We have modelled average net household income against the average price of different tenure types for our clients and an example is shown below.
Our analysis shows that:
Through a succession of white papers, policies and announcements, the Government has demonstrated a desire to improve the quality and supply of affordable housing in both the private and social housing sector.
But how this will be delivered needs to be determined locally. Local authorities have a role to play as an enabler or through direct intervention in the market to ensure the availability of a wider mix of tenures that are genuinely affordable for the local population.
Other useful links we found as part of our research: