Affordable houses – what are they that and why do we need them
Here's a guide to what they are, why we need them and how we're involved.
In line with the official definition, set by The Office of the Deputy Prime Minister (ODPM): Housing, Planning, Local Government and the Regions Select Committee in Affordability and the Supply of Housing over 2005-06, affordable housing is subsidised housing that meets the needs of those who cannot afford secure decent housing on the open market either to rent or to buy.
In the past, this term was often used interchangeable with social housing, but it’s not strictly correct. Affordable housing is provided to qualified households, whose needs are not met by the market. This qualification is determined by local incomes and homes prices. They are available to people with low income, but also to those on moderate incomes, who are struggling to afford basic living costs.
Also, affordable housing is defined by the government as any rented or owned home, in which costs are not higher than 30% of the household monthly income.
This differs from social housing which is offered to people in need by local authorities but is in very high demand.
Why do we need affordable homes?
The UK is facing a housing crisis. In the past few decades, the costs of buying a home have risen faster than income. Significant numbers of households lack the resources to buy or rent a house.
Below you can find charts which show how median house price, median annual earnings and their ratio has changed in the past decades.
Source: Office for National Statistics, House price to residence-based earning ratio
Source: Office for National Statistics, House price to residence-based earning ratio
Source: Office for National Statistics, House price to residence-based earnings ratio
The house price to earnings ratio is one of the standard methods for determining housing needs for local authorities. It’s also the median housing affordability ratio. A higher ratio means that houses are less affordable in the area.
As the chart above shows, the ratio has increased since 2002; median house prices are 7.8 times higher than median earnings. That means that fewer people can afford to buy a house than in the past. Renting prices also increased in the last few years. According to ONS, Index of Private Housing Rental Prices, UK: June 2021, UK rental prices have increased by 10,6% since January 2015.
Those numbers show how much do we need affordable housing. Since 2010, the government has delivered over 542,400 new affordable homes, but that’s not enough. This year government decided to provide nearly 120,000 new affordable homes.
Affordable houses in 2021
On the 31st of August 2021, the government decided to allocate £8.6 billion to help people onto the housing ladder. Thanks to that investment, the Affordable Homes Programme will deliver around 119,00 homes, including 57,000 for ownership, 29,600 for social rent and 6,250 affordable rural homes.
As around half of the new homes will be available for affordable homes ownership, it will help more young people and families to get a new home. This follows another UK government scheme, First Homes. It offers new homes at 30% lower prices than those on the open market, and the 95% mortgage guarantee scheme.
Homes that will be delivered for Social Rent are typically 50-60% of the market price. It’s a helping hand to people, who need property the most.
This funding is an important step towards the government’s mission to deliver up to 300,000 new homes a year by the mid-2020s.
We are doing our best to provide houses to those in need. As a part of Stockport Homes Group, the biggest landlord in Stockport, we are involved in the maintenance and building of social houses around Stockport and surrounding areas. One of our biggest projects is the Offerton Estate Improvements Program, where we have been working on improving both internals (kitchen and bathrooms) and externals (cladding and wall insulation) in social and private houses. We also undertook a large project of installation and certification of fire doors in Millbrook Towers and other councils and private properties around Stockport. If you want to learn more, contact us.
