September 2021 

In the July 4Bs blog I planned to look next at the Government’s commitment to home ownership and its regular use of the term ‘affordable’ in policies relating to provision of new homes for ‘those whose needs are not met by the market’. 

The definition of affordable housing is published in the updated version of the National Planning Policy Framework (NPPF) July 2021 by the Ministry of Housing, Communities and Local Government. The full version can be found at the bottom of this blog. It is long and complex. In this definition ‘affordable’ is defined as ‘at least 20% below market rents, or below market values’. Nowhere in the definition is the notion of ‘affordable’ linked to income. 

One wonders how can it be right to set something as ‘affordable for those whose needs are not met by the market’ when it does not meet the needs of people on low incomes? 

Local councils and housing associations, the registered providers of Social Homes, now rely on a separate definition for those for whom ‘affordable’ is ‘unaffordable’ – social rent is linked to income, and generally set at no more than 33% of household incomes. 

The present government is unequivocal in its commitment to home ownership. The opening sentence of Ministerial Foreword in its Shared Ownership and Affordable Homes Programme 2016 to 2021 states: 

‘This is a government that believes in home ownership. Anyone who works hard and saves responsibly should have the chance to buy a home of their own.’ 

The NPPF definition of affordable housing reflects this commitment outlining the various ways

Organisations that have influence in the housing sector are asking for ‘a common-sense definition of housing affordability based on household incomes’ (Affordable Housing Commission, May 2020). 

The cross-party House of Commons Housing, Communities and Local Government Committee set up to examine the expenditure, administration, and policy of the Ministry of Housing, Communities and Local Government investigated the long-term delivery of social housing, including how much was needed, the adequacy of current funding levels, and the effectiveness of the Governments approach. Its report Building more Social Housing was published in July 2020 and the first recommendation addresses the problem of defining affordable housing 

Recommendation 1 – We believe rents are only affordable when they do not exceed one third of household income. There are numerous ways to define this income and other related factors and the Government should identify its preferred method, in consultation with the Local Government Association, the National Housing Federation, Shelter, and other key players in the sector. It is crucial that the Government links local incomes to a definition of affordability, rather than using affordable” as a synonym for below market rent or market value. 

The government response is as follows:- 

The Government does not a prescribe a definition of affordability, it is a complex and ever-changing picture that is better understood and monitored at a local level. 

However, we recognise that the fundamental purpose of social housing is to provide affordable, safe and secure homes to those who cannot afford to rent or buy through the open market. This purpose is reflected in the definition of affordable housing in the National Planning Policy Framework and in our approach to setting maximum rent levels in social housing. The vast majority of rented social housing in England is let at Social Rent using a formula that takes account of relative county earnings (among several other factors). 

In the case of Affordable Rent, the initial rent is capped at up to 80% of the equivalent market rent….. 

The Government continues to invest to deliver different types of rented social housing to meet the needs of a wide range of households including those at risk of homelessness in areas of the country where affordability is most pressured. By providing routes to develop social rented housing through both grant funding and the planning system, we aim to develop more social housing across the country. The increased costs of providing social housing in higher cost areas will always limit the types of property that will be available. 

(Government Response to the Housing, Communities and Local Government Select Committee report on the Long-term Delivery of Social and Affordable Rented Housing, October 2020) 

A number of organisations view the determination by the government to link housing affordability to 80% of market values as a deterrent to progress with provision of adequate social housing. There is also the suggestion that it places unfair pressure on the quality of life for millions who struggle to afford their home. 

The Building More Social Housing Report quotes the following from its research. 

‘Terrie Alafat, then chief executive of the Chartered Institute of Housing (CIH), said: 

‘Affordable rent was never intended to be a forever product instead of social housing, and that is very important. That is not to say there is not a need for an intermediate product, but the reality is that it cannot be instead of social [rent], because it is not truly affordable.’ and ‘Action with Communities in Rural England, a network of 38 rural charities, told us that: 

‘At its heart Government policy needs to be built around a statutory definition of affordable using a definition that no more than 33 per cent of locally earned lower quartile incomes should be spent on housing costs.’ 

In its report, Coming Home, Tackling the Housing Crisis Together, February 2021, The Church of England Commission on Housing, Church and Community believes: 

‘That there is not just a housing crisis but an affordability crisis. At its simplest, this crisis is reflected in the proportion of income that lower-income households have to spend on housing. The report by the Affordable Housing Commission, chaired by Lord Best, suggests that: 1.6 million working age households in the bottom half of income distribution spend more than 33% of their net income in rent, with 1.2 million of these households paying more than 40%. It also shows that the problems of affordability are heavily concentrated in the private rented sector where tenants also have the least security…. In all, the Affordable Housing Commission found that 4.8 million households around England – one in five – faced some form of affordability issue. 

The lack of affordable housing has changed our personal lives, our family relationships and our communities. If we are to address the inequalities in our society, we must address the issue of affordability. 

Locally, Mendip District Council in its paper Providing Affordable and Social housing in Mendip, November 2020, acknowledges: 

‘There is an urgent, existing need for properly affordable housing in Mendip, both for social rent and for shared ownership. This is compounded by the economic and health fall-out of COVID. Housing costs, both for rental and to buy, are out of range of people in Mendip on an average salary or wage.’ 


‘Access to good quality housing is a basic human right. In Mendip, there are currently 1266 households on the Councils waiting list requiring housing at social rent, which is a form of housing tenure where rents are substantially below market levels. Social rents are pegged to local incomes, typically at about 30% of gross household income. Social rented housing is the least viable form of housing to produce and comprised only 4% of all affordable housing delivered through programmes managed by Homes England in 2018. Registered Providers (RPs) are building less housing of this type and its production often relies on subsidies from other more lucrative forms of housing such as open market sales or shared ownership tenures.’ (Report to Cabinet July 2020) 

Next time it is my intention to look at the decline in the provision of social housing and at what is being suggested to address this by key players in the sector. 


Affordable Housing Definition 

Ministry of Housing, Communities and Local Government, National Planning Policy Framework, 

updated version, published July 2021. 

Page 64. Annex 2: Glossary 

Affordable housing: housing for sale or rent, for those whose needs are not met by the market (including housing that provides a subsidised route to home ownership and/or is for essential local workers); and which complies with one or more of the following definitions: 

a) Affordable housing for rent: meets all of the following conditions: 

(a) the rent is set in accordance with the Governments rent policy for Social Rent or Affordable Rent, or is at least 20% below local market rents (including service charges where applicable); 

(b) the landlord is a registered provider, except where it is included as part of a Build to Rent scheme (in which case the landlord need not be a registered provider); and 

(c) it includes provisions to remain at an affordable price for future eligible households, or for the subsidy to be recycled for alternative affordable housing provision. For Build to Rent schemes affordable housing for rent is expected to be the normal form of affordable housing provision (and, in this context, is known as Affordable Private Rent). 

b) Starter homes: is as specified in Sections 2 and 3 of the Housing and Planning Act 2016 and any secondary legislation made under these sections. The definition of a starter home should reflect the meaning set out in statute and any such secondary legislation at the time of plan-preparation or decision-making. Where secondary legislation has the effect of limiting a households eligibility to purchase a starter home to those with a particular maximum level of household income, those restrictions should be used. 

c) Discounted market sales housing: is that sold at a discount of at least 20% below local market value. Eligibility is determined with regard to local incomes and local house prices. Provisions should be in place to ensure housing remains at a discount for future eligible households. 

d) Other affordable routes to home ownership: is housing provided for sale that provides a route to ownership for those who could not achieve home ownership through the market. It includes shared ownership, relevant equity loans, other low cost homes for sale (at a price equivalent to at least 20% below local market value) and rent to buy (which includes a period of intermediate rent). Where public grant funding is provided, there should be provisions for the homes to remain at an affordable price for future eligible households, or for any receipts to be recycled for alternative affordable housing provision, or refunded to Government or the relevant authority specified in the funding agreement