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The future of affordable housing

Posted 24/08/20

We work with executives in the housing and construction industry every day, so we know the challenges the industry continues to face. According to the National Housing Federation, the housing crisis is affecting up to 8.4 million people in England. That means around 15% of the country are living in ‘an unaffordable, insecure or unsuitable home’.

The solution to this growing problem is more affordable housing, but what exactly is ‘affordable’ and what does the future of the housing industry look like?

What is affordable and social housing? 

Both of these terms are used by governments, councils and private companies to describe housing that is accessible to people on low to medium incomes. While social housing has its roots in 19th century England, the concept of affordable housing came to prominence in the mid 80s.

Affordable housing

Affordable housing is defined by the House of Commons as any housing, for rent or sale, which is offered at least 20% under the local rental market or house price market.

Social housing

Social housing is slightly different in that it generally refers to only rented accommodation offered by local councils, not-for-profits and housing associations. Rent is cheaper than private lets and tenants tend to be offered more long term rental contracts, which makes it a great option for families.

Affordable Housing Programme

The Affordable Housing Programme is a £4.7 billion scheme introduced by the UK Government in 2016 to encourage the building of affordable housing from private firms. Initially for building projects between 2016 and 2021, the deadline was extended to 2023 due to the pandemic for building work to start on approved projects.

The programme aims to build at least 135,000 homes for Help to Buy and Shared Ownership, 10,000 homes for Rent to Buy, and 8,000 homes for supported and older people’s rented accommodation.

Future challenges for affordable housing

While there is certainly a more clear future for affordable housing thanks to government funding, the industry still faces many challenges. We will look at a couple of these challenges and explore what developers including our partners, are doing to make a difference.

Affordable additionality – Lee Sale, Managing Director at Lovell 

“At Lovell, we see the delivery of more affordable homes as the most significant challenge in the market. Our planning structure requires new consents to deliver up to a maximum of around 30% affordable homes on mixed tenure schemes.

“With this in mind, our approach is to push for and provide affordable additionality on all projects, taking the affordable levels up to 50%. This allows us to deliver the scheme at a higher build pace and provide additional affordable and balance risk.

“This approach reduces what you would perceive to be a standard return on a mixed tenure scheme, but provides us with a more balanced project delivering the much-needed increased levels of quality affordable housing.”

More sustainable living

As we all move towards a more sustainable way of living, it’s important that energy efficient housing is accessible to everyone. That means buildings that are well insulated, have access to renewable energy sources and can recycle natural resources like water. There is currently very little incentive for developers or local authorities to make homes more sustainable, which means it’s often not a priority.

Thankfully, the Future Homes Standard, which will come into effect in 2025, will require a national minimum energy performance for all new homes in England which is a positive step in the right direction. The problem is that much of our existing housing stock was never built with sustainability in mind.

The good news for governments and councils is that new housing could save them money in the long term. Analysis by The Committee on Climate Change has shown that water efficiency and flood resilience measures, for example, can be up to 10 times cheaper for new builds than to retrofit on existing buildings.

Fostering community

One of the major challenges in any new housing development is the ability to build a community. This is especially true in developments such as urban apartment complexes. Despite being in close proximity, it is hard for communities to grow. Residents in affordable housing, for example, are often the most deprived of green spaces and areas to interact with their neighbours.

Many housing associations and private developers are already tackling these issues by introducing more green spaces in urban areas and even working with residents to create community gardens. Schemes like this have been shown to increase neighbourhood social ties and residents’ sense of safety.

If we are to offer residents of affordable housing the same opportunities as everyone else, then it’s clear that the community has to be at the heart of new developments.

Building more affordable housing in the UK has to be a priority. While there are the challenges of affordable additionality, sustainable living and building communities, with the government’s dedicated investment, we can all work together to achieve the goals and targets set out in the Affordable Housing Programme.