Durrants Jasmine Philpott, Senior Planner and Development Surveyor looks at affordable housing and discusses why it is such a political hot potato.
In my experience, ‘affordable housing’ is a largely misunderstood term, despite being one of the most talked about topics in political discourse, particularly under the new government.
It is widely known that there is a housing shortage in this country, with a particularly acute need for affordable housing. But what exactly does ‘affordable’ mean, and why are we still struggling to deliver enough affordable homes?
Affordable housing is effectively today’s label for social housing (previously council housing). Unlike market housing, affordable housing is built specifically for those who are on the local authority’s housing waiting list because they cannot afford to rent or buy at market prices.
Affordable housing takes many forms, including social rent (the cheapest form of rent for those on very low incomes), affordable rent (up to 80% of market rent), and shared ownership (where only part of the property is purchased and the rest remains the ownership of the social housing provider).
The key difference between today’s affordable housing and the council housing built before the 1980s is that now, affordable housing is generally not delivered by local authorities. It is almost always owned and managed by Registered Providers (RPs). These are not-for-profit organisations which were set up when social housing was privatised in the 1980s. Some RPs build their own affordable homes, but many of them bid for affordable housing that is part of private-led housing schemes built out by private developers. In this situation, the RP purchases the homes at a percentage of market value, the developer builds them to the RP’s specification, and the RP takes ownership of them once completed, managing them under one of the various tenures listed above.
RPs receive some government funding, but this has been cut in recent years, meaning many of them have set up private development arms to fund their affordable element, which can also allow them to access funding from Homes England. An example of this is Clarion, the largest affordable housing provider in the UK, whose private development arm, Latimer, reinvests all of its profits into Clarion.
As you can imagine, this system is flawed, because it largely relies on private developers to deliver affordable housing, which is often unviable by the time ever-increasing build costs, land values and other costs like CIL, Section 106, biodiversity net gain etc are factored into the scheme. This then means that developers are forced to try to negotiate less affordable housing with the Council.
By comparison, in the 30 years following WWII, more than 100,000 social homes were built per year in England. Social housing made up a quarter of all UK homes by the 1960s. In 2018, just 7,000 were built. Right to Buy in the 1980s gave many people the chance to buy their Council house at a reduced price, but around 175,000 council homes were purchased every year throughout the 1980s under Right to Buy (over 4 million in total), and never replaced.
With around 1.2 million households on the waiting list (and 12,000 in Norfolk), it is easy to see the extent of the shortage and why this subject is inevitably a priority for government. However, some good news is that since the all time low of 2018, last year saw 63,605 affordable homes delivered in the UK. And in our area, Station View, Diss is a 100% affordable scheme, with others underway across South Norfolk.
It should be noted that councils often exercised their powers to compulsory purchase the land needed to deliver social housing during that era, which would be very unpopular today. Planning was also alot more straightforward then, with biodiversity, climate change or even location seemingly of little concern compared to now. So while tempting to yearn for a return of the pre-1980s social housing model, it was certainly not without its flaws.
This article first appeared in the Diss Express.
