One in five households struggling with costs of housing, new ‘affordable’ definition proposed

4.8 million households in England are facing ‘grave’ financial problems related to housing, according to the Affordable Housing Commission.

They’ve proposed a new definition of the term ‘affordable’, which they say has been abused by developers.

The report paints a worrying picture of the UK’s housing crisis and says that one in five (21%) of all households and almost 40% of those in the lower half of income distribution are struggling with the costs of housing.

The Affordable Housing Commission, chaired by Lord Best, was established by think tank the Smith Institute with the support of the Nationwide Foundation, to examine the causes and effects of the current housing affordability crisis and propose workable solutions.

In the Commission’s new report, ‘Defining and measuring housing affordability – an alternative approach’, it launches a new measure of ‘affordability’ looking at it in the context of household incomes and what people can afford, be it to rent or to buy, rather than the market place which focuses on market rents and house prices.

This alternative approach would replace the current ‘Affordable Rent’ model, which the report claims fails to support the provision of new affordable homes.

The report also shows that it is in the private rented sector (PRS) that the greatest problems exist, with two million households facing affordability problems, equal to 43% of all households renting privately, rising to 51% for those households of working age in the bottom half of incomes.

Lord Richard Best, Chair of the Affordable Housing Commission, says: ‘The term “affordable” has become a much-abused word in housing circles. Successive governments have taken it to mean rents or purchase costs which are lower than in the open market.

‘But paying rents of, say, 80% of the market level is still far beyond the means of many who need a home.

‘At a time of national concern about levels of poverty and inequality, our Commission wanted to find out how people’s housing costs are fuelling the situation.

‘We have looked at the scale of the problem and redefined measures of “affordability”, to take into account the impact it has on people’s lives, looking at what people can pay for housing without risking financial and personal issues.’