What is affordable housing?
In the UK, affordable housing is defined as housing provided at a cost below market rates to meet the needs of those who cannot afford to buy or rent at market prices. The National Planning Policy Framework (NPPF) outlines several types of affordable housing:
- Social Rent
- Affordable Rent
- Shared Ownership
- Discounted Market Sales
- Rent to Buy
- Mortgage Guarantee
Social Rent is set according to a formula including local wages. Homes are rented from the Council or Housing Associations which have government-subsidised rent for people on low incomes or meet other eligibility requirements.
Affordable rented housing which is permanently discounted. These are often provided by Registered Providers such as Housing Associations. The rent is usually set at 80% of local market rents.
A scheme where people buy a share of a property (usually between 25% and 75%) and pay a subsidised rent on the remaining share owned by a landlord. There may also be monthly ground rent and service charges, for example towards the maintenance of communal areas.
Housing in this category are sold at a discount below the local market value to those who are eligible for the scheme. For example the First Homes scheme which offers eligible first-time buyers a discount between 30% to 50% less than the homes market value.
A scheme where people rent at around 80% of market rents in order to save for a deposit to buy the property in the scheme. To qualify, applicants must be in full or part-time employment, be a first-time buyer, and demonstrate the ability to pay rent while saving for a deposit.
A UK government-run scheme that offers UK citizens the option to apply for a mortgage with just a 5% deposit. The new Mortgage Guarantee Scheme is set to be announced in due course as the current scheme ends in June 2025.