Across the UK we need to deliver 300,000 homes a year to have any impact on the crisis of housing affordability. At current pricing nearly 100,000 of these homes need to be submarket, and the scale and nature of this need varies greatly between regions. The 2016-21 Shared Ownership and Affordable Homes Programme fails to acknowledge the different needs of local markets and isn’t necessarily delivering the most cost effective housing across the country. Directing grant to the areas where it returns the most value in terms of benefit bill savings, ensuring it delivers the most appropriate tenures and plays a role in improving housing quality, is essential to solving the housing crisis.
Maximising value for money means using housing funding flexibly to help deliver the right homes in the right places, regardless of tenure
FIGURE 1The need for sub-market housing in London and the South is acute, and spans a wide range of incomes. In the Midlands and the North, very low incomes highlight the essential role of sub-market housing
Source: Savills Research using EHS, Land Registry, Rightmove, DCLG
In 2015 we reported that 70,000 households could be in need of sub-market housing each year. Using our modified version of the Government's proposed standard approach to housing need (1), and house price growth that has outpaced wage growth, this figure is now 96,000 per year. These are households who don’t have enough income to access their local market and their incomes vary hugely in different parts of the country. In London, 20% of these households have incomes over £35,000, and 20% have incomes under £10,000. In the North, 80% have incomes under £10,000 and none have incomes over £30,000. These income levels exclude housing benefit.
FIGURE 2In some of the cheaper parts of the country affordable housing delivery has been able to meet the majority of sub-market need, 93% of the shortfall is in London and the South
Source: Savills Research using EHS, Land Registry, Rightmove, DCLG | Footnote (1) See our policy response note: Planning for the right homes in the right places
Right homes. Right places
A one size fits all housing policy fails to address the variety of issues faced in different regions. In markets where affordability is the most pressing issue, a range of tenures is needed to meet the varied needs of local households unable to access the market. In other areas, housing quality is a key issue, including a need to renew poor quality private rented housing.
In more affordable markets the income range of households unable to access the market is concentrated in the lowest income bands. Low cost rental housing is essential in these areas whilst intermediate products and shared ownership don’t necessarily address the needs of the local community. Understanding the differences in sub-market housing need is crucial to getting the right affordable homes in the right places.
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