An image of a paper house made of money.

Affordable Housing

There is a lot being written about housing developments in the District and I know from many conversations there is much confusion about the term ‘affordable housing’. From a practical standpoint affordability will mean something different to each Rochford resident, whether renting or buying. However, in housing provision terms, affordable housing has a specific government defined meaning that is distinct from the broader concept of affordability. I thought it might helpful to explore how we deal with the delivery of ‘affordable housing’ in the district.

If we look at the housing market (houses, flats, etc. offered for sale new by a developer or second hand by an owner), then, for first time buyers, the ability to obtain a mortgage with an appropriate deposit, is key to success. This can equally apply to an existing home owner seeking to move up the housing ladder. In Rochford District, where houses prices are high, the multiplier of annual salary to purchase price for a house is about 12 times. That being the case, is there a solution?

In basic terms, there is generally considered to be a link between supply, demand and price. The economic case is put that increasing supply reduces price, as demand is satisfied. Of course, there is ongoing debate about how well this simple economic equation applies to housing and most owners are reluctant to contemplate a fall in the value of their home. Nevertheless, there is a case for suggesting that an increase in housing supply would limit the increase in value of existing homes and, make the housing market more affordable over a period of time.

Leaving aside affordability of market housing, there is a weight of empirical evidence to support the need for an increase in the rate of delivery of housing and the overall number (supported by suitable infrastructure); the conversation about further allocations of land for housing in the district over the next 20 or so years has started with the publication of our Issues and Options document. However, that’s a separate discussion to this conversation about understanding the concept of ‘affordable housing’

The government definition is set in the National Planning Policy Framework (NPPF) where ‘affordable housing’ is defined as:

“social rented, affordable rented and intermediate housing provided to eligible households, whose needs are not met by the market”.

From the definition there are, at present, three principal types of affordable housing:

1. Social rented housing – owned by local authorities and private registered providers (often referred to as housing associations) – the target rents for such properties are determined through a national rent regime.

2. Affordable rented housing – let by local authorities or private registered providers at 80% of the local market rent. Affordable rented housing in the District is owned by registered providers. This category of housing is important as it makes up the bulk of the affordable housing provided on new development sites

3. Intermediate housing – part rented through a local authority or registered provider, and part purchased with a mortgage (often referred to as shared ownership). An occupier will pay a mortgage and some rent. Typically, about 20% of the affordable homes on new development sites are intermediate homes.

Rochford District Council’s Core Strategy, adopted in 2011, includes a policy requiring a total of 35% of homes on new development sites to be affordable. In other words, part of a development site will comprise houses for sale on the open market, but a substantial part of the site will be used for affordable housing. For most of the sites granted consent in recent years, the 35% target has or is being delivered.

To give one example, the planning consent for housing at Hall Road, Rochford has the following housing breakdown:-

2 bed houses, 62, Market
2 bed flats, 8, Market
3 bed houses, 117, Market
4 bed houses, 150, Market
5 bed houses, 66, Market
Sub-total 1, 403, Market

1 bed flats, 84, Affordable
2 bed houses, 61, Affordable
3 bed houses, 66, Affordable
4 bed houses, 6, Affordable
Sub-total 2, 217, Affordable

TOTAL 620 dwellings

Note: On this site it has been agreed that 65 (30%) of the affordable homes will be intermediate housing.

The first phase of the development is well underway, but how is the affordable housing delivered and what are the arrangements for occupation? The usual arrangement on new sites is for the developer to offer the affordable homes to a number of registered providers who will bid to acquire these properties. The successful housing association on the Hall Road site was CHP, who are based in Chelmsford. So, all the affordable homes on the Hall Road site will, as they are built, be owned by CHP.

An important point is that Rochford District Council benefits directly from these homes as they become available, since 100% of the nominations for tenants of these new properties are from the Council’s housing register. At the time of writing, 32 properties on this scheme are occupied. All affordable homes provided by a housing association on new development sites in the Rochford District provide homes for local families.

All this is well and good you say, but how does a developer on a new site know the mix and tenure of the affordable homes that are required? The District Council’s housing team provides information about the size and mix of affordable homes required based directly on their knowledge of families on the housing register. At present, we know the greatest demand is for 1 and 2 bedroom properties and, that being the case, the information provided to a developer will promote this as a preference in the final agreed mix of properties. The detailed arrangements for the delivery of the affordable housing are included in a binding legal agreement between the developer and the Council (usually referred to as a Section 106 agreement).

The other point I hear you asking about is that properties rented at 80% of market rent, where market rents are high, are still not affordable. This is a fair point, but experience is indicating that there is not an issue in finding tenants to occupy these new properties. Most tenants will be in receipt of housing benefit payments, but are usually working and, therefore, able to pay any difference between their benefit payment and the rent. In some instances, tenants move from their current property to a new property, from a 2 bed to a 3 bed. This means a smaller property is made available to a family on the housing register.

There is one further matter I am often asked about. Rumours abound that we are allocating affordable housing to families from London Boroughs. I hope the above explanation makes it very clear this is not the case – nominations for new affordable homes come from Rochford District Council’s Housing Team and go to local families. This is tremendously important as a pipeline of new affordable homes gives us the opportunity to ensure that all families in the district are able to access good quality housing and reduces the need for temporary accommodation.

It could be the case that another Council, such as a London Borough, decides to buy some of the houses marketed on a new development site and rent these to families on their own waiting list. If this is the case, Rochford District Council has no additional control or influence than it does of any purchase of private housing. I would though reinforce the point that all the affordable and intermediate homes go to local families.

Just one final comment before I finish. I’ve not mentioned the private rental market. Of all the homes in the district, about 84% are owner occupied, with the remainder being roughly split between affordable housing and private rented. The issue of affordability also applies to private rented accommodation and, in some cases, the families seeking help through our housing register are put in that position as a result of not being able to afford private rents.

I hope this has helped to explain what we mean when we talk about ‘affordable housing’. Of course, if you’d like more information, do get in touch.