The definition of affordable housing depends on who you ask…


The government has promised to invest an additional £2bn in its Affordable Homes Programme in a bid to tackle the UK housing shortage, but what constitutes affordable housing isn’t always clear.

House prices in the UK have been accelerating faster than wage growth, with the average home at the end of 2017 costing £211,000, a 2.9% annual increase according to Nationwide, compared to an average wage of £511 a week – a 2.2% rise from the previous year, according to the Office for National Statistics (ONS).

The ONS also estimates that people must now pay around 7.6 times their annual salary, on average, in order to be able to buy a home, while 20 years ago, the average property cost around 3.6 times earnings.

As the number of houses being built is still short of the level of demand, pushing prices up further, the government has made housing in the UK a major issue on its agenda, with Philip Hammond’s Autumn Budget setting out a target of building 300,000 new homes every year for five years. Developers are also required to create a certain number of affordable homes, as well as contribute towards local infrastructure and councils, but it seems there is still a lack of affordable housing supply available.

What is affordable housing?

On the government’s website, the way affordable rent is defined is “rent controls that require a rent of no more than 80% of the local market rent (including service charges, where applicable)”. In terms of home ownership, it isn’t as specific – the government states that it must be provided at a level where the mortgage payments on the property should be more than the cost of rent on council housing, but below market levels, which leaves a very broad range.

In the National Planning Policy framework, it also states: “Eligibility is determined with regard to local incomes and local house prices. Affordable housing should include provisions to remain at an affordable price for future eligible households or for the subsidy to be recycled for alternative affordable housing provision.”

Housing charity Shelter wants a more direct definition to remove uncertainty over the thresholds and provide a more realistic picture of what people can afford. It believes that affordability roughly equates to spending 35% of your net household income on accommodation. As average private renters typically spend 47% of their net income on rent, according to the charity, it seems there is a general lack of affordability in the market.

Different ends of the scale

However, Shelter acknowledges that stumping up 35% of your income will be considerably more difficult for workers on minimum wage compared to those on high salaries, so it still does not provide the whole picture.

Affordable housing can also be defined by looking at what type of property it is, with a number of government schemes that are not in the private housing market falling under this bracket – social rented housing (low-rent housing prioritised by need), affordable rent housing (higher rent, less secure housing prioritised by need), shared ownership (where you buy one part and rent the other part of the property), and intermediate rent homes (charged at 80% of the market rate).

According to Shelter, the most vital thing needed to solve the housing crisis and affordable homes deficit is to build a full mix of different types of homes so that people at all ends of the income scale can afford somewhere to live.

BuyAssociation partners with social housing developers, find out more about how you can become an investor in this market.

CityGreens, Solihull, Birmingham

City-style apartments directly on Birmingham's largest park

  • Limited pre-launch prices.
  • ZERO ground rent
  • Excellent tenant demand

£182,000 - £419,000

Highgrove Mews

High Net Yield Freehold Houses

  • Commutable to London (27 mins to central Paddington station)
  • Rental demand extremely strong with large industry presence in Reading
  • Freehold with 4% net yield

£284,955 - £457,000

St Petersgate – Stockport Manchester

New Launch - Stockport Manchester, apartments from £160,000

  • Discounted launch prices from £160,000
  • Excellent transport links with 3 trains per hour to London Euston and only 9 mins journey to Manchester Piccadilly
  • Experienced development team

Assured Rent Housing Association Leases

Assured Rent Housing Association Leases

  • Assured rent & no rental voids
  • Tenant damage cover & newly refurbished inline with requirements of a corporate sitting tenant
  • Free property and lettings management

From £62,000

Emerging Birmingham Commuter Town With Properties From Just £104,000

The emerging Birmingham commuter town where properties are selling in an average of just 24 days

  • A collection of 62 two bedroom apartments and 28 one bedroom apartments.
  • DE14 is one of the fastest selling postcodes in the West Midlands.
  • 23 minute train journey into Birmingham New Street Station.

Properties from £104,000

Mill, Stockport

The Northwest's emerging property hotspot

  • Discounted off-plan 2-bed prices from £162,000
  • Completion date - Q4 2021
  • Rental yields - 6% plus

Discounted off-plan 2-bed prices from £162,000


Talk to us

Speak to our UK property experts today: 

+44 (0) 333 123 0320

Open from 9am-6pm GMT

+852 9865 4446

Open from 9am-6pm HKT

Stamp Duty Calculator


Unlock members only investment opportunities and full development details. Join now – it’s free, quick and easy.


Not a member? Sign up for free

house building

The definition of affordable housing depends on who you ask…


By submitting your details via this online form you agree to be contacted via email/phone/SMS by Direct Marketplace Ltd t/a BuyAssociation in relation to property investment and property developments . We do not share your personal details with third parties.  To view our full Privacy Policy click here.