Online access is now Free. If you have an existing subscription click here for more information
Defining moment
Published 29 September 2023
The term affordable housing is bandied about in official debates and appears in every document about housing need. Getting affordable housing into private sector developments is regarded as a sure-fire vote-winner. But while the term is loosely understood to describe housing available at less than full market value, it has never been defined in cash terms. For many households so-called affordable housing is not remotely what they can afford.
In the Zacchaeus 2000 Trust (Z2K) Memorandum to the Prime Minister on Unaffordable Housing (May 2005), affordable housing was described as housing where the rent or mortgage was such that, once it had been deducted from the household’s income, ‘there remains sufficient income to sustain safe and healthy living, to support children’s needs at school and to enable provision for the future and participation in the community.’
When this definition was offered to the chair of the inquiry into affordability early in 2006, she said that the difference between it and the official definition was a matter of semantics.
The definition remained uncalibrated until this year when it was realised that the minimum income standards (MIS) methodology developed by the family budget unit at York University could be adapted to yield a monetary value for affordable housing.
The methodology takes a number of standard households (two adults plus two children, a man living alone, etc), assumes normal working hours, a behaviour pattern (built up with use of focus groups) and patterns of energy and water consumption. It places locally determined costs on this behaviour pattern (housing, food, energy, water, childcare, transport, using the cheapest local suppliers) and arrives at a wage that will produce a net weekly income sufficient to meet this ‘low cost but acceptable’ living standard.
The methodology is well accepted (except by government) and has been used to determine a required hourly rate of pay in a number of areas including York, Swansea, Brighton and Hove. The London living wage (LLW) – £7.20 an hour – was based on applying the methodology to London.
The adaptation of the MIS methodology changes the givens. It assumes payment of the LLW – and the national minimum wage of £5.52 a hour – applies income tax, national insurance and benefits to determine the net income. It then locally costs non-housing expenditure, subtracts this from the net income and the residual is the amount that really is affordable for housing. We have termed this the Z2K housing affordability standard.
So far, working with a team at London Citizens, we have calculated the standard for three household types (two adults plus two children, one adult plus two children and a man living alone) in an area of East London and worked out their non-housing costs. These are before receipt of housing or council tax benefit – both socially damaging and cost-ineffective forms of housing support.
On these figures the two plus two household depends on social housing provision. On the LLW they can just afford a local authority or housing association letting, but cannot access a privately rented house or low cost home ownership property. The single parent household cannot access any form of housing without heavy dependence on benefits and exposure to the poverty trap. The lone man, not normally able to access a local authority or housing association flat, will find almost all his income swallowed up by housing costs.
At a meeting in Westminster in April, Boris Johnson, now mayor of London, agreed to adopt an affordable housing figure using this methodology and to publish an HAS figure annually. That decision is the first step towards wider acceptance of this evidence-based definition of affordable housing.
Peter Ambrose is visiting professor of housing at the University of Brighton.
