A new report by independent group Affordable Housing Commission (AHC) proposes a new measure of housing affordability in England.
AHC suggests defines housing affordability by what people can afford – to rent or buy – rather than market rents and house prices.
Under the existing affordable rent scheme, housing associations can offer tenancies at rents of up to 80% of market rent levels within the local area – but AHC says this does not take into account a household’s income.
It favours an alternative approach based on an affordability threshold, where rents or purchase costs exceed a third of household income (for those in work). This also takes into account the different ways people experience housing stress – including struggling renters, low-income older households, struggling homeowners and frustrated first-time buyers.
AHC is also examining how the definition and measures can be effectively applied to housing policy, funding and planning to help deliver more affordability in different places, for different people.
According to the report, 4.8m households have housing affordability problems – equivalent to a fifth of all households. This number overall has increased by over 0.5m households since 2010, with the largest rise in the private rented sector. The number includes 2.9 million struggling renters of working age, the majority in the private rented sector, one million low-income older households and 0.9 million struggling homeowners.
Furthermore, there are 1.3 million in unaffordable housing in the social housing sector, due to the shortfall in benefits. A smaller percentage of these are paying over 40% of their incomes in rent.
Nic Bliss, head of policy at the Confederation of Co-operative Housing, said: “We support the principle of a people based definition of affordability based on a third of a person’s income. It is also welcome that the AHC has identified various cohorts who are suffering affordability problems that cross tenure.
“Various affordable community-led housing schemes are developing across the country, which are cross-tenural and aimed at people on differing income. We look forward to hearing the AHC approach to tackling affordability problems.”