Combined authority redefines ‘affordable housing’

The West Midlands Combined Authority (WMCA) has become the first region in the country to introduce its own definition of ‘affordable housing’.

The new definition is based on local people paying no more than 35% of their salary on mortgages or rent.

Affordable housing is normally defined as being priced at 80% of current market value, making this the first time the definition has been linked to people’s incomes, rather than the value of a home.

The new definition sets it at around 35% or less of the average gross earnings of the lowest quarter of wage earners in the local area.

It will be applied alongside a more flexible approach to the types of housing products classed as affordable in new developments. 

The guidelines will be reviewed regularly to make sure prices reflect real incomes of local residents and the scheme is delivering its intention and purpose.

The new definition is also significant because any development schemes receiving WMCA investment from its devolved housing and land funds must make a minimum of at least 20% of the homes in their scheme affordable.

‘The current ‘affordability’ definition is 80% of market value, which for many people in the West Midlands still leaves homes frustratingly out of reach,’ said West Midlands mayor, Andy Street.

‘By linking the definition of affordability to local people’s earnings rather than property, and using this alongside our minimum 20% requirement, we can help make the prospect of homeownership a very real one for many more hard-working individuals and families. 

‘It also sets out a very clear ambition to developers and partners who want to work with us to deliver homes. This is the kind of inclusive growth that is key to building the future of the West Midlands.’

The leader of Walsall Council, Cllr Mike Bird said: ‘This is another example of how the WMCA and its partners are changing the housing market, using our funding to deliver the homes we need in the places where we need them. 

‘By building on brownfield land, regenerating local areas, supporting living in town centres and linking affordability to local incomes, we are leading the housing revolution.’

Photo Credit – ArtisticOperations (Pixabay)