What is affordable housing?

In recent years, the term “affordable housing” has become increasingly common in discussions about the UK’s housing crisis. But what is affordable housing? For many, it suggests homes that the average person can reasonably afford. However, the official definition is much less clear, sparking debate among politicians, the media, and the general public.

What is affordable housing? The official definition

The first thing to clarify is that the term “affordable housing” covers both buying and rental markets. According to the Government, affordable housing is defined as housing provided at a cost below the market rate, aimed at meeting the needs of people whose incomes do not suffice to afford market housing. According to the National Planning Policy Framework (NPPF), affordable housing may include the following.

Social Rent

Social Rent is usually the most affordable housing option, typically set at about 50% of market rent levels and is provided by local authorities or housing associations. According to Government data, around 17% of households live in social housing. This equates to approximately 3.9 million people.

Affordable Rent

Affordable Rent (also known as Intermediate Rent) was introduced in 2011. This type of rent is set at up to 80% of the local market rent. As it is termed ‘low cost’ rental accommodation, it is classed as ‘social housing’ and therefore comes under the control of the Regulator of Social Housing. Although it is termed “affordable,” critics argue that in high-rent areas such as London, it can still be prohibitively expensive.

Shared Ownership

Shared Ownership is a scheme where individuals buy a share of a property (between 10% and 75%) and pay rent on the remaining part, usually to a housing association. It is important to note that you might also need to pay service charges, for example, to cover the costs of maintaining communal areas.

Discount Market Sales

Discount Market Sales (also known as Council Shared Equity) are homes sold at a discount to help eligible first-time buyers. Under this scheme, a local authority partners with a developer to offer a reduction on the purchase price of (usually) new-build properties, often around 20% but sometimes as high as 50%, making them more affordable than homes sold on the open market. There is an income limit of 45% of the Discount Market Sale price for eligibility, and the discount is maintained in perpetuity, ensuring the homes stay affordable for future buyers.

Why the definition is controversial

The affordability of so-called “affordable housing” is widely debated. Many campaigners and housing experts argue that setting rent at 80% of market rate, especially in areas with high rents, does not make housing truly affordable for many low or middle-income households. For instance, in parts of London or the South East, even 80% of market rent may still be more than many working families can afford.

Relying on market rates as a benchmark can make “affordable” a misleading term, especially when wages have stagnated while housing costs have soared.

The real-life impact

For millions of people across the UK, the lack of genuinely affordable housing means being priced out of their local communities, living in overcrowded conditions, or enduring long waits on housing lists. The shortage of social housing, in particular, has led to increased reliance on the private rented sector, where tenants often face higher costs and less security.

Government schemes, such as Help to Buy (which is closed to new applicants in England) and First Homes, aim to support people onto the property ladder, but critics argue these often benefit higher earners and do little to address the fundamental issues of housing supply and affordability.

Clarity is required

Many people are calling for a clearer, income-based definition of affordable housing – one relating to what people can actually afford to pay, rather than simply a percentage discount on inflated market prices. In Scotland, for example, affordable housing is more often tied to income levels rather than market value, offering a more targeted approach.

“Affordable housing” in the UK is a term that carries significant weight, but its meaning is not straightforward. While the official definitions provide a framework for developers and policymakers, they often fall short of addressing the real economic pressures faced by those in need of housing. As the housing crisis persists, the need for a more realistic and transparent approach to affordability has never been greater.