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August 25, 2022

What is Affordable Housing? A Guide

August 4, 2021
Written by
Laura Williams

Affordable housing can be anything from public housing, flats, rental homes, or apartments that are subsidised and priced lower than market value.

Evening clouds over the City of London, affordable housing, England, UK

Table of contents

What is affordable housing? The term refers to any form of affordable living accommodation. It can be anything from public housing, affordable flats, affordable rental homes, or affordable apartments.

The most common misconception about affordable housing schemes is that they are only for low-income families and individuals. This isn't true! cheaper housing comes in all shapes and sizes, and anyone who meets the criteria may apply for one. In this post, we have covered the most frequently asked questions that might cross your mind. So let's get started.

The Beginning of Social Housing in the UK

above view of affordable housing in London city in rainy winter day

Margaret Thatcher's government introduced the 'right-to-buy housing scheme' following the 1980 Housing Act. This gave tenants the ability to buy their council homes outright and marked an essential step in fighting poverty within England. Many families were able to move from public residences into privately owned houses after they purchased it at low prices of around £7,000 per unit.

What is affordable housing and why do people need it?

The UK government defines affordable housing as "social, affordable, and intermediate homes provided to specified eligible households whose needs cannot be met independently".

The housing crisis in the UK can be attributed to three reasons:

One, rising populations over the past twenty years have led to a shortage of homes.

Two, builders haven't been able or willing to keep up with demand for new properties.

Three includes an increased interest from people who want property prices outside London that are still relatively cheap compared to other parts of Europe, leading many investors abroad, which is driving down rental rates as well as house building numbers within England itself.

According to the UK government, affordable homes cost no more than 80% of the average local market rent. This is so that those looking for a new place to live can afford something decent without spending too much money on it and still save up for other essential things like food or transportation.

However, there's good news! Starter homes announced earlier this year would come with at least a 20% discount from their original price due because these houses will be reserved just for first-time buyers under age 40. These affordable housing schemes will help people in the lower-income bracket find a home more easily.

The Need?

Homes are a fundamental need for all of society, yet many cannot afford it. The debate over affordable accommodation in the UK has been at the forefront of modern Britain. Everyone deserves to have a good home with sustainable communities they can pay for. The UK's population has soared in the first two decades of the Twenty-First Century. This trend is driving new demand for housing, but house building numbers have stayed low during this same time.

As such, prices are skyrocketing all around Britain, especially so within London and its surrounding areas. Affordable homes provide social stability and help people find jobs in their local area. This is because they allow families to settle down, giving them more time on weekdays for the job hun. Plus, an opportunity for children who grow up here to attend school locally.

Various Forms of Affordable Housing

Buildings in cityscape, affordable housing, London, Greater London, England

There are several options available. However, social housing and affordable housing are interlinked.

Social Housing

Social housing schemes in the United Kingdom provide people with homes and offer a cheaper renting alternative than privately rented properties. It can also give you stability. It's the long term, so that means more security for your family or yourself to have an affordable home of their own.

In the wake of Grenfell and other tragedies like it, social housing has been thrust back into public awareness. Councils or Housing Associations provide this vital service on a regional basis, with those in need given preference. But quality issues have meant that many people now question whether they are safe to live in.

Shared Ownership

Shared ownership offers the ability to buy a share of the property (between 25% and 75%) with an initial fee that is less than what you would pay for full ownership. It's also perfect if your credit score isn't high enough, but it allows you to still have some equity in a home even when renting out other areas inside or outside.

When considering buying your first place, shared ownership seems like one possible option since it can be affordable on top of owning partial rights as well! The military has the priority regarding shared ownership, but not all councils' share schemes have this policy.

Affordable Rent

The government created affordable rents to allow social housing providers to charge up to 80% of market rent levels within the local area. This model replaced the capital grant supply subsidy for social housing with a revenue subsidy. They were looking for ways to replace or supplement it due to its ineffectiveness and costs associated with maintaining such programs.

Affordable housing in Central London

Evening clouds over the City of London, affordable housing, England, UK

London Living Rent is a part-buy, part-rent product for those taking their first step onto the property ladder in London. This can be either through shared ownership or outright purchase, and it allows you to buy your own home while still renting from them.

London Living Rent offers an affordable way to get into a home without having all of that hefty upfront cost associated with buying. You can share ownership costs over time until owning becomes eventually feasible. This may not happen right away if any significant repairs are needed on your new place before purchasing outright. Still, at least now, you're off the rental market.

Housing for the future is on its way! Helping tenants save, this program allows them to have their own home for a minimum of three years.

Affordable Housing vs. Social Housing

Affordable housing is a relatively newer trend that has been growing in popularity as income inequality grows. It offers the same benefits as social housing. Still, different tenancy arrangements make it more accessible to lower-income individuals who want a place they can call their own and can pay rent without assistance.

Eligibility for Affordable Housing

A magnifying glass looks at a wooden house. The concept of buying and selling real estate, renting. Search for a house. Affordable housing, credit and loans. Investments

Living costs are becoming more of a burden on households in the United Kingdom. The government has put into place measures to help, but it is still difficult for many families who cannot adequately provide housing for themselves and their children without assistance. Recently, changes have made qualifying even more challenging than before. One increases from two years of waiting time to five years with no exceptions or exemptions based on citizenship status.

Another change was adding UK nationals as those prioritized first over other EU citizens when placing people on a waiting list because they were already living in the country prior long enough. In recent years, the construction of affordable housing has been steadily increasing.

According to government data, more than 57,600 units were delivered in 2019-20 alone. A rate that's up from 2015 when completions fell after the 2011-2015 Affordable Homes Programme ended.

The wait times may be hard now, but if you want priority placement, get started early! In order to provide housing for refugees, the UK has created a series of different guidelines. The most common type is where priority given goes to MoD personnel and people in demonstrable need. Such as overcrowded conditions or facing harassment from others. In addition, some categories provide potential access based on when they applied for asylum.

Funding behind Affordable Housing

The government allocates a housing grant to build affordable homes for those who are in need. The current four-year settlement is worth £4.5bn, which has been reduced by 60%. On average, it works out that the Housing Grant amounts to around £20k or 14% of its cost per home, according to London School of Economics research.

What is an affordable rent?

Wooden house in a Supermarket trolley. The concept of buying a house or apartment. Affordable housing. Profitable and cheap loans for real estate. Buying a home. Mortgage and loan. Place for text

People who need affordable housing are no longer limited to the social rent model that was previously available. Affordable Rent tenancies allow people with lower incomes a chance at affording decent living conditions. It avoids pushing people into poverty by paying for more than they can afford to live decently.

Affordable rents make up 60% of newly-built houses. This is excellent news because it means less pressure on those individuals and families struggling financially.

However, there are drawbacks as well. One such downside is that these apartments only last ten years before becoming market-rate properties again. This time putting higher prices out of reach for many low-income earners.

So how much are affordable rents?

The cost of living can be lower in some regions than in others. It is essential to note the price difference. For an average 800 square foot apartment where utilities are included, central London rents could start at £2,200 a month. For example, in Oxford or Brighton, there would likely only be around 1000 pounds rent monthly even with three bedrooms, which leaves many people without enough income left over after their housing has been paid for according to UK average wages.

Conclusion

If you're looking for affordable housing, the information in this guide should be helpful to you. You'll learn about what it means to have an affordable home and how they can work with your current budget. We also provided a list of some common misconceptions that people often make when considering their options.

If any of these ideas seem appealing or if there's anything we left out, feel free to contact us! The most important thing is not just finding low-cost housing but somewhere safe where you can live comfortably and securely.

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