What’s all the fuss about housing affordability?

brightly painted housesBy Brelda Baum

In the Radio Times Magazine last Sunday, I read about a TV programme called ‘How rich are you?‘. This Channel 4 offering set out to examine the polarisation of wealth in the UK. Having watched the programme, I’ve become more aware that wage distribution has experienced dramatic changes over the last three decades and the majority of earners have become poorer in relative terms. It seems that our wealth gap is the widest in Europe and, to quote from a Richard Bacon article in the same magazine, on the subject:

‘…the richest 10% has more than 100 times the wealth of the poorest 10%; and Britain is the only G7 country where wealth inequality has grown since the start of the 21st century. It seems that ‘the rich are getting richer’… and ‘if you’re born into the bottom 10%, your chances of getting into the top 10% are between 3% and 6%’. 

This scenario clearly links with very real concerns about inequality and affordability. Put simply and in stark terms, if our major Smart Cities and towns become ‘unaffordable’ for the ordinary person, if he/she cannot afford to live in such urban areas, who is going to drive that train or bus? Take care of our health and social care needs? Who is going to collect our rubbish? The links between affordability and the likelihood of future localised labour market shortages goes on and on. For example, it’s been estimated that the economic output of London could reduce by £1 billion per year with a cumulative cost of £85 billion by 2025, due to the capital’s failure to provide suitable housing for core workers – including young, highly skilled, affluent renters.

Of particular interest is the use of the terms ‘affordable’ and ‘affordability’ within the housing context and how the impacts of affordability (or lack of affordability) spill over into a range of other social areas, such as poverty, health, education, wellbeing, and food choice. But what is meant by affordable/affordability?

The Oxford English Dictionary defines affordability as ‘The quality of being affordable; inexpensiveness’ and the adjective ‘affordable’ is described as something ‘That can be afforded (in various senses); inexpensive, reasonably priced’. The key terms here are surely inexpensiveness and reasonably priced.

A definition set out in ‘Affordable Housing and the Labour Market in Scotland‘ provided the following measures of affordability:

A household is considered likely to be able to afford a home that costs 3.5 times the gross household income for a single earner household, or 2.9 times the household income for dual income households. A household should be taken as being able to afford market housing in cases where the rent payable would constitute no more than 25 per cent of their gross household income’.

The Scottish Government defines affordable housing in the Scottish Planning Policy as ‘as housing of a reasonable quality that is affordable to people on modest incomes’. It indicates that ‘in some places the market provides some or all of the affordable housing needed, while in other places it will be necessary to make housing available at a cost below market value to meet an identified need. And that a range of tenure types can contribute to affordable housing, including social rented, subsidised low-cost sale, shared ownership and shared equity; plus unsubsidised low cost housing, mid-market or intermediate rented’.

According to a 2011 Shelter report, ‘the threshold of affordable housing costs … is at between 25% and 35% of net household income’. It also suggests that rents and service charges should cost no more than 30% of net household income. For example if a median average private rent for a two bedroom home takes up: 50% or more of median average full-time take home pay – it’s ‘extremely unaffordable’; at 40%-49% its ‘very unaffordable’; at 35%-39% its ‘fairly unaffordable’; at 30%-34% its ‘fairly affordable’; and at under 30% of take home pay, its ‘affordable’. Arguments for a ‘living wage’  continue to be voiced, and would go some way to address the affordability conundrum.

The Department for Communities and Local Government has developed a housing affordability model to consider the required levels of housing production, necessary to meet regional affordability targets.

Affordable rented housing is defined by the Homes and Communities Agency as ‘Rented housing provided by registered providers of social housing, that has the same characteristics as social rented housing except that it is outside the national rent regime, but is subject to other rent controls that require it to be offered to eligible households at a rent of up to 80% of local market rents.’

And in DCLG’s 2012 ‘National Planning Policy Framework’, affordable housing is defined as ‘social rented, affordable rented and intermediate housing, provided to eligible households whose needs are not met by the market. Eligibility is determined with regard to local incomes and local house prices. Affordable housing should include provisions to remain at an affordable price for future eligible households or for the subsidy to be recycled for alternative affordable housing provision.’

The focus of these definitions appears to be primarily on the relationship between income and housing costs (for purchase or rent). But there is also a need to consider wider affordability factors such as cost and quality of public transport, access to education, access to social and leisure facilities, and the range of local retail options etc. These are all considerations when making an affordability assessment of a neighbourhood, town or city and all need to be factored in when assessing the affordability of housing that is available.


Further reading

Florida’s planning requirements and affordability for low-income households

Housing and transport expenditure: socio-spatial indicators of affordability in Auckland

The Idox Information Service has a wealth of research reports, articles and case studies on a range of housing topics. Abstracts and access to subscription journal articles are only available to members.

To regulate or not to regulate? Housing standards in the private rented sector

To Let housing signs

Image from Flickr user Locksley McPherson Jnr, licensed for reuse under a Creative Commons License

The Scottish Government published its ‘Consultation on a New Tenancy for the Private Sector’ on the 6 October 2014. The paper states that 333,231 homes are rented privately in Scotland and it puts forward proposals to modernise the sector including giving tenants greater security of tenure, including:

  • Landlords to offer tenancies of not less than 6 months.
  • A bar on repossession except in specific circumstances.
  • The introduction of a model tenancy agreement.

The consultation poses a series of questions relating to rent levels, in particular ‘what action, if any, should the Scottish Government take on rent levels in the private rented sector in Scotland?’ Clearly the focus of the consultation is on the affordable private rented sector, but the implications of legislative change are likely to be far broader and impact across the whole rental sector.

The consultation raises a number of big issues for a range of stakeholders including tenants, landlords, citizens’ advice bureaux, local authorities, and indeed for the broader social rented sector, because any changes may well have knock-on implications far beyond the private sector tenant/landlord relationship.

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What’s being done to make our towns and cities age-friendly?

Mobility scooter on cobbled street

Image courtesy of Flickr user stemack_street using a Creative Commons license

By Brelda Baum

European Mobility Week takes place from 16-22 September and is themed around ‘Our streets, our choice’.  But what is being done to make towns and city centres age-and-disability friendly?

According to a recent DWP press release, high street income could be boosted by the £212 billion ‘purple pound’ if disabled people and their families could be attracted back to the high street. While the ‘purple pound’ refers to the spending potential of those with disabilities, the power of the ‘grey pound’ (the disposable income of older/elderly people) should also not be forgotten. Taking these two groups together, many of the reasons that they don’t use town and city centres are the same – urban environments are often not disability or age-friendly.

This also resonates with the ongoing debate about the viability of the high street articulated by Mary Portas and others regarding plans to help address the problem of economic decline on the high street and to help guide future change and development.

But what’s not to like about the current urban environment on offer in the high street? A recent report from Housing LIN ‘A research and evaluation framework for age-friendly cities’ looked at each of the 7 World Health Organisation (WHO) age-friendly domains and offers advice on how to embed them into city strategies.

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Nooks and crannies – 50,000 new homes on brownfield sites in London

work site

by Brelda Baum

The UK Government recently announced plans to build up to 50,000 new homes on 20 brownfield sites across London and plans to achieve this by creating 20 new housing zones in London (with a further 10 new housing zones outside the capital). The aim is to get new (affordable) homes built quickly. Local authorities will identify and package together brownfield land which could be used for development into a housing zone, remove all unnecessary planning restrictions across it and partner with a developer to build new homes. The absence of planning constraints in these zones should significantly accelerate construction and central government will also support housing zones by making loans available to local authorities for necessary infrastructure and other remedial work on the site. Continue reading

Housing associations – great places to work?

protect houseIn our second blog on housing associations we look at why they are consistently cited as great places to work and what the future might hold for them.

by Brelda Baum

Housing associations (HAs) are perceived to be great places to work according to The Sunday Times Best Companies to Work For 2014 survey (not for profit results) which is dominated by HAs and social housing employers. This seems to demonstrate that, despite the availability of other more lucrative options, people still want to work in the housing sector, perhaps because HAs and social housing organisations are at the forefront of a very rapidly changing environment, often at the cutting edge of a lot of social issues, so that by working for them, people see themselves in a position to do some good and see evidence of it. Continue reading

Does tourism pay? Assessing the evidence

Travel shutterstock_107480828

by Brelda Baum

It is estimated that tourism has the potential to generate $2 trillion globally by 2020 – as the economic situation improves and the ‘Great Recession’ is deemed all but over, let’s take a look at the evidence of the economic value of tourism to the UK and its regions.

The Deloitte and Oxford Economics report ‘Tourism: jobs and growth – the economic contribution of the tourism economy in the UK’ provides an analysis of the performance of the tourism industry Continue reading

A generation priced out of home ownership?

for sale sign

by Brelda Baum

Danny Dorling’s book ‘All that is solid: the great housing disaster’ has recently launched at the London School of Economics (on18th March 2014) where it was flagged as ‘a ground-breaking examination of the UK’s dangerous relationship with the housing market, and how easily it could, will, come crashing down’, and goes on to voice Professor Dorling’s argument that housing ‘is the defining issue of our times’. Continue reading

Promoting a high training culture in tourism

London 2012 volunteer

by Brelda Baum

Training and skills remain perennial issues for the tourism industry.  Therefore, the recent call by UK Skills Minister, Matthew Hancock at a Work Foundation conference on skills, held on 3rd March 2014, for a move from a low to a high ‘training culture’ resonates with the European Commission’s proposal to establish a set of voluntary European Tourism Quality Principles.  These are intended to ensure that tourists travelling to other Member States or visiting Europe from other countries will get value for their money. Training lies at the heart of these principles.

A newly published UKCES report on ‘The Future of Work: Jobs and skills in 2030’ offers a number of possible scenarios  including ‘skills activism’, Continue reading