What is Affordable Housing?

What is Affordable Housing?

What is affordability when it comes to buying or renting a home?

Affordability is a relative term and will mean different things at different times to different people in different parts of the country. In Surrey, where we are currently trying to establish the first wave of Community-led Housing, the debate continues, because house prices to buy and rent are just very high, no matter who you are. This stretches the credibility of the term ‘affordable housing’.

What does ‘affordable’ mean when an average house price in Guildford is £514,799 and you need a household income of £117,664 per annum to be able to afford that on an 80% mortgage? Or what does ‘affordable’ mean when the average rental in Walton-on-Thames is £1,577 per month, which takes over 50% of the average take-home earnings on rent?[i]

The government definition of ‘affordable’ rents has begun to render the term ‘affordable’ meaningless in a place like Surrey. This is that definition:

Affordable rented housing is let by local authorities or private registered providers of social housing to households who are eligible for social rented housing. Affordable Rent is subject to rent controls that require a rent of no more than 80 per cent of the local market rent (including service charges, where applicable [ii]

So, by this definition, an affordable rent in Walton-on-Thames could be up to £1,262 per month, and still fit within the definition of affordable housing, which, for many, if we described that as ‘affordable’ would sound ludicrous. Many homes within the definition of ‘affordable’ housing can be as low as 30% rent, which is much more affordable, but, as a scarce resource traditional known as Council Houses, these more truly affordable options are hard to get into, with Surrey waiting lists unable to cope with increasing demand. When available these homes are generally reserved for the very highest in need.

Homes for sale can also be sold at so-called ‘affordable’ rates, (adding to the confusion, they are also known also as ‘Intermediate’ housing, and can be part-rent part-buy) as per the government definition below:

Intermediate housing is homes for sale and rent provided at a cost above social rent, but below market levels subject to the criteria in the Affordable Housing definition above. These can include shared equity (shared ownership and equity loans), other low cost homes for sale and intermediate rent, but not affordable rented housing.[iii]

All a bit confusing, and often equally unaffordable or unattainable in Surrey. When it is legitimate within law for a developer to build ‘affordable’ housing that costs so much, we know that something is wrong with that definition.

What we hope to achieve with community-led housing is an alternative and an opportunity for local people to determine their own local area’s affordability and needs. At Surrey Community Action we see this as central to the idea and ethos of community-led housing, that we’re trying to make a significant difference to the Housing crisis in Surrey, and, crucially, allowing communities to set what is affordable, either for themselves in a self-build, Co-Housing or Co-operative set-up, or for their local community and family members in a Community Land Trust. All these options can set up rents or sales pegged to local incomes and, in a crucial difference to other ‘affordable’ housing, homes can remain truly affordable for local people in perpetuity (ie. For ever!)

Community-led Housing is hard work, no doubt about it, but it is an opportunity for local people to show the traditional housing methods that there is another way to deliver people-cantered community focussed truly affordable housing that people want to live in. So, what’s not to like? Get involved today, speak to us.

[i] https://www.housing.org.uk/resource-library/home-truths/

[ii] https://www.gov.uk/guidance/definitions-of-general-housing-terms

[iii] https://www.gov.uk/guidance/definitions-of-general-housing-terms

Nick Bragger is Head of Communities and Development at Surrey Community Action.

Nick Bragger