What is affordable housing and why is it important in Cambridgeshire?
The term ‘affordable housing’ is frequently used by politicians and developers, but what does it actually mean? While it appears to suggest that houses are cheaper to rent and buy for people in Cambridge and across the UK, the reality is quite different. To make things a little clearer, we examine the true meaning of affordable housing and it’s important to people in Cambridgeshire.
What is affordable housing?
In an official capacity, the most commonly used definition of affordable housing can be found in Annex 2 to the National Planning Policy Framework (NPPF). Here it states that affordable housing is “social rented, affordable rented and intermediate housing, provided to specified eligible households whose needs are not met by the market."
This is the definition used by local planning authorities when making plans for affordable housing in their area, with social rent, intermediate rent and for-sale products all included under this umbrella. However, as recently as 2020, The Affordable Housing Commission stated that a large portion of products sold using the NPPF definition are unaffordable to many on mid-to-lower incomes.
The idea behind affordable housing was to bring more ‘intermediate’ rents to the housing market. This was intended to encourage housing associations to offer ‘affordable rent’ tenancies with rents that stood at a maximum of 80% of local market rates. However, this is often much higher than social rented housing rates, with the vast majority of housing associations using the more expensive ‘affordable rent’ rate instead.
How affordable is affordable housing?
Even though the term ‘affordable housing’ is now well established, there is still no officially agreed definition of what it really means, which is why it remains such a contentious subject. The NPPF definition does not make any reference to the proportion of household income that should be used for housing costs. This means what is deemed affordable by one household can vary greatly compared to another.
Shelter, the UK’s leading charity for homelessness and bad housing, suggest that about 35% of net household income should be the cut-off for what is allocated to rent or mortgage payments each month. However, they acknowledge that 35% for a household with a low income can be harder to afford compared to a household with a high income. And if benefits are added into the equation, things become even more complicated.
Affordable housing in Cambridgeshire
In September 2021, Cambridgeshire and Peterborough received an £18m funding boost from the Government that will be used to build 1,188 ‘affordable’ homes. Local councillors and politicians stated that this will help them deliver the targets set in their affordable housing programme by March 2022.
But will these new ‘affordable homes’ be affordable for people living in Cambridgeshire? As of October 2021, the average rental rate in Cambridgeshire stood at £1,464 pcm. According to the Office for National Statistics, average weekly earnings in October 2020 in Britain was £560 before tax.
Using the 80% local rate target often used by housing associations, this means that someone taking home less than £2,000 each month (after taxes) could still be paying rent as high as £1,212 each month. This is much higher than Shelter’s recommended 35% of net household income and will be unsustainable for many in the long-term.
Why is affordable housing important in Cambridgeshire?
Looking at the average earning figures in Britain it’s easy to see why there is a greater need than ever for truly affordable housing. Many accuse building firms and the Government for taking advantage of the lack of definition of what affordable housing really is, which has left a large loophole that continues to be exploited.
This has led to a housing crisis in Cambridgeshire over the past 5 years that cannot be solved through the current Help to Buy initiatives made available by the Government. And yet, as of June 2020, there were almost 3,000 empty properties in the county that remain empty and disused. The ongoing rise in vacant properties mean that 8 in every 1,000 homes remain empty for long periods.
On average it costs 15 times the average income to buy house, which is unaffordable to many people. The only way out of the crisis will be through government funding that will enable the council to build the thousands of affordable social housing units that are so badly needed.
Building an affordable home
If you are in a position to build your own home, or can’t afford to move to a larger property and are considering adding an extension, TEREYN Architects can help you plan, design and manage the entire project. We’re located in Cambridge and have years of experience working in the local area, so to find out more and to arrange a free consultation, get in touch today on 07984 760 920 or send us a message here and we’ll get right back to you.
