What is Affordable Housing?

'Affordable' is a highly subjective term. © Can Stock Photo / zimmytws

‘Affordable’ is a highly subjective term. © Can Stock Photo / zimmytws

Affordable for whom? The term ‘Affordable Housing’ often appears to be something of a misnomer – many homes that are classified as such are still completely unaffordable to many working people and families.

There is no universally agreed definition of what constitutes ‘affordable’, and even the government notes that it is a term which means so many different things, it is becoming “unhelpful”.

What most of us would consider to be truly affordable are the levels of rent paid by council or social tenants, which generally work out at around 50% of market rates in an area. For example, home.co.uk measures the average rent in Southend for a three bed as nearly £1200 pcm.
Council or affordable rent under this definition should be roughly around £600.

In 2010, the government created a new type of affordable tenure, which created a definition of “affordable rent” at 80% of market rates.
In this definition, a rent in Southend for a three-bedroom property would be £960pcm – unaffordable for most of us.

Affordable housing which the occupier owns covers a number of definitions, but not many include houses owned entirely by their residents. They include shared ownership, equity percentage arrangements, and shared ownership trusts. These are sometimes called “intermediate housing”. Monthly costs will vary depending on mortgage rates and property value.

A number of campaigns and organisations have calculated that truly affordable housing should be linked to income, not property value in the local area. For rent, or a mortgage payment, to be affordable, it should not exceed more than around a third of someone’s income.

What does affordable housing mean in Southend?

Southend Council’s own targets on affordable housing have not been met for a number of years. When the council reviews planning applications, their policy states that a minimum of either 20% or 30% of homes, depending on the size of the site, should be affordable.

Since 2001, only around 12% of homes built in Southend have been affordable by the council’s own definition. (Page 44 of their Annual Monitoring Report, here

The council also has a policy that 60% of affordable homes built on a site should be for social or market rent, with only 40% of them being allowed to be “intermediate” affordable – for example, shared ownership schemes.
However, council policy is also clear that its starting point with developers is not to ask them to do this. The council says to developers that they will not make them build homes for affordable rent, as they will accept all “affordable” homes on the site being built under the “intermediate” category – unaffordable to most people in Southend, but much more profitable for developers.

This is explained further in point 4.3 of the council’s interim affordable housing policy document. 

(c) Can Stock Photo / zimmytws