Due to the variation in house prices and rents across the country, housing need varies significantly, and therefore the balance between tenures required to meet need. In London, almost half of households in need have incomes in excess of £30,000; this is due to the challenge of very high house prices and rents, even for those earning above average wages in a national context. By contrast, in the northern regions, 80% of households in need have incomes under £30,000.

Diversifying the tenure offering

In all regions, we need to be building more affordable housing, but a key part of the policy solution is diversifying this supply and the tenure offering across different markets. Local markets are diverse, therefore, matching housing need to supply will produce the best outcomes for households. Providing a mixture of tenures, which won’t be the same in every area, is needed to get the best value for money from limited grant funding.

Our research highlights that in London and much of the South, housing need is best met by prioritising social rented homes as the biggest discount to market pricing is required in these areas. Other tenures will still have a role to play alongside social rented supply, particularly when supporting scheme viability. In other regions, the mix of tenures is likely to be more varied, with a greater range of intermediate and AHO tenures as part of the supply solution.  Affordable housing can also help meet housing needs for specific groups, through the provision of intermediate housing prioritised for key workers, for example, as reported in our recent note.

^{1To calculate the mixture of tenures required, we have made the following assumptions: 1. Affordability is determined by having a sufficient income to access a product. Products are sorted by increasing discount, starting with Affordable Home Ownership tenures (Affordable Home Ownership / Discount Market Sale, First Homes, and Shared Ownership), Affordable Rent (including London Living Rent and Discount Market Rent), with residual households unable to afford any product allocated to Social Rented housing. 2. Affordable Home Ownership products assume no existing equity on the part of the buyer, a discount to the median capital value in each local authority in 2023 (of 20% for Affordable Home Ownership, 30% for First Homes, and a 25% first tranche for Shared Ownership), and a 95% LTV mortgage at 5% rates over 30 years. An income cap of £80,000 is applied to First Homes and Shared Ownership outside of London in line with policy. A cap of £90,000 applies within London. 3. Affordable Rent products assume a discount to the median rent in each local authority in 2023. London Living Rent is priced at a 30% discount with an income cap of £67,000. Affordable Rent is offered at a discount of 50% outside of London, or 60% inside London, based on evidenced discounts from the Private Registered Provider Social Housing Stock in England dataset.}

_{Read the articles within Spotlight: Beyond a one size fits all housing policy below.}