16th May 2024
We know from our landmark Two Nations research that poor quality, unaffordable housing is a source of deep worry and stress for the least well-off households and neighbourhoods in England today. Fully 73 per cent of the most deprived people in the country worry about housing; its affordability, quality, and security.
The Government supports those least well off through the provision of “affordable housing”. However, too often these homes do not live up to their name. Previously, we have found that less than a quarter of the public believe the Government’s definition of affordable housing is truly affordable for local people.
This paper looks at this issue in greater detail. At its heart is the rise, since the early 2010s of funding for new “Affordable Rent” housing in place of “Social Rent”. Rents in the former are set by linking them to open market rental housing costs in the local vicinity, rather than the incomes of local people. Rents in the latter, by contrast, are set as a proportion of local people’s incomes—a more genuine measure of ‘affordability’.
This causes stark problems in areas with high rental market housing costs compared to the incomes of less well-off households—for example in city centres and in the capital. A policy literature has developed suggesting that we should move back towards delivering income-linked housing, often under the term ‘Living Rent’.
This paper documents how major city authorities in London, Manchester, Bristol, and the West Midlands have developed initiatives and policies which aim to challenge the government’s definition of affordable housing by seeking to link housing costs more closely to incomes—often, too, using the term ‘Living Rent’. The paper also documents opinion polling showing that more of the public believe this is a fairer system than market linkage.
At the same time, the paper considers the implications of income linkage for housing providers and government finances. Any system must be fiscally responsible and ensure that revenue streams of housing providers are robust and capable supporting maintenance, decarbonisation, regeneration, development, and community investment.
In addition, we look at more specialist applications of income linkage, including employer-provided accommodation and ‘stepping stone’ housing to enable people to move from supported housing into a fully independent life and full-time work. The paper shows how such accommodation can face obstacles from Government due to minimum space standards, planning permission, and tenancy rules. We argue that these should not be obstacles to investment and such housing should be encouraged in public policy.
The paper details bespoke opinion polling which demonstrates public support for income-linked housing, using public land for affordable housing, introducing stepping-stone accommodation, and the taking of decisions around affordable housing at local levels.
