The lexical challenge of building more affordable homes

At the launch of the Affordable Housing Commission in October, the chair, Lord Best, a veteran of august commissions spanning the past 30 years, related an experience he’d had with one that was looking at The Future of the Family.

More than halfway into the process, its chair came to meet its sponsor (then plain old Richard Best) and admitted that they were a little behind schedule. They hadn’t managed to agree on a definition of “family”.

From the off, members of the commission – of which I am honoured to be one – are therefore highly conscious of the need to get the basics right. But not only do we need to know what “affordable” means (already the subject of much controversy in the housing world), but I think we also need to define “home”.

Just imagine: it would be easy to tick the box saying “build more affordable housing” if we simply tore up planning rules and allowed developers to produce tiny rooms with a single bed, a sink and a hotplate each, and then rent them out at less than what one-bed flats go for. It would be housing, it would be affordable - but it wouldn’t provide homes. Especially not for the families who are most in need.

What is a home, then? These are some early thoughts, which I hope the commission will knock into shape in the course of its work.

The basics

A home has to provide shelter, warmth, and space for its occupants to sleep, cook, sit (to eat/do homework), wash, and store food and belongings safely. It needs to be wired, lit, plumbed and free from hazards and disrepair. Accommodation that lacks one or more of these things shouldn’t be considered a home.

Space

The government defined a decent home in the Decent Homes Standard of 2006, and in 2018 introduced a minimum bedroom size standard for houses of multiple occupation (HMOs). The latter defines the minimum space someone should expect to have to sleep in, depending on their age (children under 10 are usually expected to share). But we should go further and set a standard for communal space that is large enough for all occupants to use at the same time. A 4-bed house with two living rooms converted into bedrooms should not have only a kitchen serving up to 6 adult couples if we are to consider it a home.

Energy efficiency

Once we are happy with the size of the property we should also consider what costs the people living there incur by occupying it. Even if the rent is cheap, the property could be poorly insulated or have an inefficient heating system, which raises the cost of keeping it at a comfortable temperature. What you might save in rent goes to your energy supplier instead. In theory Energy Performance standards should help minimise the risk of fuel poverty.

Commuting

Similarly, the home might be a long commute from any centres of employment, which would see any savings in rent go to bus operators or petrol stations. The extra time spent commuting would reduce quality of life as well. Given the complexity of employment and transport patterns, this is harder to address than energy efficiency, particularly as there is a severe shortage of affordable homes in rural areas. But the commission should consider the impact of commuting – perhaps a “home” should be within 10 minutes’ walk of public transport or shops, or an hour’s walk (or less) from the nearest town centre?

Stability

Finally, a house is not much of a home if you can be turfed out of it without doing anything wrong. Generation Rent is campaigning for an end to Section 21 which enables eviction with no reason required. Tenants must have much greater security in their home to enjoy the benefits of decorating it, investing time in the local community, and saving money instead of spending it on unwanted moving costs.

We’re lucky that Shelter has already covered a lot of this ground in its Living Home Standard, produced in 2016. They explore these questions further, including what people have left after they pay their rent.

Once we have a reasonable definition of a home, we need to ask how much it should cost to rent - but not necessarily own. With more security of tenure, private renting would be a viable long term option that would close the gap in quality of life with owner-occupation and social housing. Without getting into questions of whether people are better-off putting their savings into a pension or their home, we ought to focus our efforts on making rent affordable rather than home ownership.

One rule of thumb we could use is that if you work full time, are the household’s sole earner and are raising two pre-teen children you should be able to afford a two-bedroom home with no more than 30% of your gross salary.

Workers on the National Minimum Wage get £313.20 if they work 40 hours per week, so based on this, an affordable rent would need to be £93.96 per week, or £407.16 per month. In most parts of the country even the cheaper rents exceed this, so such workers will rely on housing benefit. Perhaps reducing rents low enough that housing benefit is unnecessary for most full-time workers could be a long term aspiration.

More intermediate goals might be to ensure the lower quartile rent is no more than 30% of the lower quartile monthly wage. As the table below shows, this would be easier to achieve in some parts of the country than others – in the West Midlands rents would need to drop by 4% but in London they would need to nearly halve. In more expensive areas even the median rent is not affordable for the median full-time earner, so addressing that might be the priority there.

Selected regions

Lower quartile rent on 2-bed home (VOA)

LQ monthly wage (ASHE)

Maximum affordable rent for LQ worker

Median rent on 2-bed home (VOA)

Median monthly wage (ASHE)

Maximum affordable rent for median worker

London

£1250

£2245.00

£673.50

£1450

£3179.50

£953.85

West Midlands

£525

£1675.17

£502.55

£595

£2309.67

£692.90

North East

£400

£1628.92

£488.68

£451

£2191.42

£657.43

South East

£750

£1849.58

£554.88

£875

£2568.83

£770.65

An exercise to identify the maximum affordable rent for the lower quartile earner (or other benchmark) could help develop living rents based on the area of a home. For example, if an 80sqm home is considered adequate for a family of four, and a household at the lower quartile in London can afford £673.50 a month, then a living rent could be set at £8.42 per sqm in London.

These back-of-envelope numbers are an indication of where we could go. The Affordable Housing Commission's work will invite the wider public to contribute ideas and expertise about where the problems lie and what the solutions are. But to make it all worthwhile we need to ask them the right question, and be clear about what each part of it means. 

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