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Revised definition of 'affordable' housing could spell end of cheaper rents

Barratt Homes, Britain's largest housebuilder - housing scheme
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A government proposal to broaden the definition of affordable housing so it includes starter homes could mean the end of low-cost rented homes, architects have warned

Jo McCafferty, director at Levitt Bernstein, said that while the idea of discounted starter homes for first-time buyers was a good one, ‘if they are swept into the definition of “affordable housing” in the way that the government intends, they will undoubtedly replace affordable rented housing.’

Starter homes are defined as new homes for first-time buyers under the age of 40, priced at least 20 per cent lower than their market value. There is a price cap of £450,000 in Greater London and £250,000 outside it.

McCafferty added that ‘affordable housing’ had ‘already been subject to redefinition to 80 per cent of market rent, easing out social rented housing which is still very badly needed by the least well off’.

A government consultation on changes to national planning policy, which closed in February, proposed broadening the definition of affordable housing so it ‘encompasses a fuller range of products that can support people to access home ownership’ including starter homes.

A separate technical consultation on starter homes regulations, which runs until 18 May, proposes a national requirement that 20 per cent of homes delivered as part of most residential developments should be starter homes, with this requirement secured through a section 106 agreement.

The percentage of homes in a development that must be affordable under the current definition varies between local plans but is generally 20-35 per cent, according to the consultation document.

‘If starter homes are classed as affordable housing, that may be the only affordable housing we get under section 106,’ said McCafferty. ‘A government-produced impact assessment shows that you can deliver between 1.4 and 1.8 starter homes for the cost of delivering one affordable rented home.’ Given the choice, she said, most developers will provide starter homes rather than affordable rent because they will get an instant return. 

She said the question mattered to ‘any architect who minds about mixed communities and the right of everyone to a decent housing’.

In light of the proposals on the percentage requirement for starter homes, the government has allowed people to make additional representations on the proposed changes to the definition of affordable housing, with comments to be submitted no later than today (22 April).

Alex Ely, principal at Mae, said there was a danger broadening the definition ‘does away’ with social and affordable rent. ‘It seems a means for the government to get rid of affordable housing as we have known it,’ he said.

‘Unless there are specific requirements for social or affordable rent, I think it will always be in the interest of the housebuilder just to meet their affordable housing requirement through the discounted market sale option.’

Both he and McCafferty suggested starter homes should, potentially, be classed as a separate category of housing.

The starter homes consultation states: ‘The government … recognises the importance of local planning authorities’ continuing to have the local flexibility to secure additional section 106 contributions beyond the starter homes requirement, for shared ownership and other forms of affordable housing where it is both viable and there is a demonstrable local need.’ 


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