Affordable housing in the UK is a confusing topic. With overlapping programmes playing out over the last decade and a lack of clarity on exactly what has been achieved, published figures can seem contradictory, mystifying, and just plain difficult to understand.
In this Plain English Guide, find out exactly what England's affordable housing targets are, what progress has been made in affordable housing since 2015, and what there is left to do to relieve the housing crisis.
What is affordable housing?
There is an under-supply of housing in the UK, meaning that the demand far outstrips the supply. This has left house prices and rents skyrocketing over the last few decades.
Affordable housing is a response to this, being housing that is priced for people who cannot afford market prices.
The UK Government defines affordable housing as housing for which the rent is up to 80% of local market rents – for example, if the median rent in an area is £2000 per month, the affordable rent could be up to £1800.
What has England done to create affordable housing?
Since 2015, there have been three affordable housing programmes in England.
- Created in 2015 under the Coalition Government, the first programme did not have a house-building target but instead laid out £2.9 billion in grants for the building of affordable homes.
- Initiated in 2016, the second had a stated goal of starting construction on 250,000 new homes in the UK by March 2023. The Government publicly committed to 153,000 of these homes being funded by £4.7 billion in grants. In 2018, this was revised to a lower internal target for 246,000 new homes with a budget of £9.5bn.
- In 2021, HM Treasury's condition of funding for a third programme was for the Department for Levelling up, Housing & Communities to publish a public target of up to 180,000 new homes. The budget for this was £11.4 billion. However, the Department for Levelling up, Housing & Communities' internal business case was for a target of between 157,000 and 165,000 new affordable homes, with the latter number being considered a "stretch goal"
Outcomes of affordable housing programmes
In March 2022, the National Audit Office published a report on the Government's affordable housing programmes since 2015.
The NAO found that as of March 2022, a combined 51,947 affordable homes were completed under the 2015 programme by the Greater London Authority (GLA) and Homes England.
Of the 2016 programme, the published central forecast of the Department for Housing (now the Department for Housing, Communities and Levelling Up) was that Homes England and the GLA will collectively achieve 241,000 starts by March 2023. This is 96% of its original published target to deliver 250,000 starts by that date and 98% of the revised target of 246,000.
The Department forecasts that 219,000 of these expected homes will complete by March 2025, with the remaining 22,000 homes, all in London, being completed by March 2032. The NAO was told by the Department that while planning the 2016 programme, it did not seek any ministerial input on the feasibility of its targets.
The 2021 programme presents a slightly different case, as its recency combined with COVID-19 supply chain issues have led to little progress being made. In London, this was compounded by administrative errors leading to Greater London Authority failing to sign any contracts with housing providers for the 2021 programme by as late as October 2021. As of March 2022, the GLA had yet to achieve any housing starts under the 2021 scheme.
England's affordable housing needs
According to one study by the National Housing Federation, the UK needs to build 340,000 new homes per year, of which 145,000 should be affordable, in order to keep up with demand and alleviate the housing crisis.
In 2019, the Conservative Party manifesto stated that its Government would aim to build 300,000 new homes a year to increase the housing supply. In October 2022, Secretary of State for Levelling Up, Housing and Communities Michael Gove re-committed to this target. However, as shown above, the Government has yet to reach this target.
The UK's net-zero targets will become a larger and larger focus over the next few years as the legally-binding 2050 deadline approaches. Despite this, none of the 2015, 2016 or 2021 programmes set out any targets or parameters regarding net zero, instead relying on existing laws to guide construction.
In order to keep up with England's requirements for housing, future schemes will need to increase housebuilding targets and consistently meet them. Since 2015, the Government has not met Shelter's suggested 340,000 target or its own of 300,000. With the rising pressures of increasing prices and net-zero targets, future Government endeavours to meet affordable housing needs will need to outstrip all efforts that have come before.
👉Find out more about how Government housing policy affects managers in the private rental sector with our latest guide on regulatory changes.
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