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Building more social housing Contents

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2 Definitions and data

Definitions of affordability

17.As we note in our glossary of terms (see Annex A), there is no single statutory definition of affordable housing, social housing, council housing, or other terms. For determining appropriate contributions by private developers under the planning system, affordable housing is defined in England in Annex 2 of the National Planning Policy Framework as “housing for sale or rent, for those whose needs are not met by the market” which complies with a specific list of schemes.42 The term is broad and includes social rent, affordable rent, starter homes (soon to be replaced by First Homes), discounted market sales housing, shared ownership, and equity loans. In Government statistics, however, there are slight differences. Affordable housing is defined instead as social rent, affordable rent, intermediate rent and affordable home ownership (the majority of which are now shared ownership), but does not include discounted market sales or equity loans.43

18.There is further complexity when considering Help to Buy: shared ownership mortgages offered under the Government’s scheme count as affordable housing, but the broader Help to Buy programme is not classed as affordable housing, as it does not reduce the market cost of the property. To further confuse matters, the Government uses “affordable” as a descriptive term when referring to all of its Help to Buy schemes.44 In general, the Government does not seek to define affordability, nor does it include a relationship with income; affordable housing is instead defined in relationship to market rent levels or market value, or in terms of subsidy arrangements.

19.Shelter, the housing charity, lamented the Government’s decision to expand the definition of affordable housing to include low-cost homeownership and intermediate tenures designed for first-time buyers, as well as prioritising these tenures over social rent homes.45 The charity also criticised affordable rented homes as not being truly affordable compared to social rent, given the former relates only to market rents, whereas the latter is tied to local incomes (as well as property size and market values). Shelter recommended that affordability “must be defined in terms of local people’s ability to afford their housing costs.”46 The trade union Unite said that affordable housing included tenures that are “clearly unaffordable to many” and concluded the only way forward was a “meaningful definition that sets baseline rents at a level that everyone can afford.”47

20.In the absence of an agreed definition, the sector has begun to contort itself by separating the Government’s affordable housing from so-named genuinely affordable housing, which usually refers to social rent. This semantic precision can be found in local authority housing strategies, which often emphasise the delivery of genuinely affordable homes compared to wider affordable housing.48 In comparison, the Government prefers to use affordable housing as a broad term, including when answering written and oral questions in the House of Commons. During our session with the Minister, our questions on social rent tended to be answered by statistics on overall affordable housing; when we wrote a follow-up letter seeking further clarity, the Minister again referred to overall affordable housing statistics.49

21.We heard the use of “genuinely affordable” was primarily a response to the introduction of the affordable rent tenure in 2011, which offers rent up to a maximum of 80 per cent of market levels. The coalition government introduced affordable rent to “maximise the delivery of new social housing by making the best possible use of constrained public subsidy and the existing social housing stock”; the extra revenue raised through more expensive rents aimed to replace the reduction in public borrowing through capital grant subsidy.50 Our evidence criticised both the introduction of this tenure, and its name, noting that affordable rent levels were unaffordable for many across the country. Terrie Alafat, then chief executive of the Chartered Institute of Housing (CIH), said:

Affordable rent was never intended to be a forever product instead of social housing, and that is very important. That is not to say there is not a need for an intermediate product, but the reality is that it cannot be instead of social [rent], because it is not truly affordable.51

Cambridge City Council said that affordable rent was unaffordable to those on their waiting list: for an average weekly income of around £450, the affordable rent level in Cambridge is around £270 per week, which equates to 60 per cent of local income.52 However, it is clear that affordable rent can be affordable in some areas of the country. Ged Walsh, representing the north-east housing association, Karbon Homes, told us that “the difference between social rent and affordable rent in most of the north of England is not very great”.53

22.Most of the sector has coalesced around affordability meaning housing costs are less than a third of a household’s income. The Affordable Housing Commission—chaired by Lord Best—proposed an affordability threshold of one third of net equivalised income, while taking into account other issues such as quality, overcrowding, and regional variations. Based on the Commission’s analysis, housing costs of over a third (and especially over 40 per cent) often lead to serious issues such as arrears and debts.54 Action with Communities in Rural England, a network of 38 rural charities, told us that:

At its heart Government policy needs to be built around a statutory definition of affordable using a definition that no more than 33 per cent of locally earned lower quartile incomes should be spent on housing costs.55

23.We believe rents are only affordable when they do not exceed one third of household income. There are numerous ways to define this income and other related factors and the Government should identify its preferred method, in consultation with the Local Government Association, the National Housing Federation, Shelter, and other key players in the sector. It is crucial that the Government links local incomes to a definition of affordability, rather than using “affordable” as a synonym for below market rent or market value.

Data

24.The Government publishes a considerable range of social housing supply statistics, but this does not provide the full picture.56 The annual report on affordable housing supply shows gross annual supply of affordable homes, which the Government accepts “includes new build and acquisitions but [does] not take account of losses through demolitions or sales”.57 In written evidence submitted in July 2019, MHCLG said that since 2010 it had “delivered over 430,000 new Affordable Homes, including over 308,000 Affordable Homes for rent.”58 This gross figure contrasts with the Government’s publication of overall housing supply, which is provided as net additional dwellings, including new builds, conversions, changes of use, and demolitions.59

25.By not including sales, demolitions, or conversions between tenures, this overall gross figure does not reflect the actual change in social housing stock. When we pressed the Minister for Housing on statistics through correspondence, he conceded that the total stock of social housing had increased by 100,000 since 2010, an average of 11,000 a year.60 This figure is a fraction of the overall figure used elsewhere in the letter—331,000 additional social homes since 2010. The primary reason for the discrepancy between the two figures is that 121,000 Right to Buy sales are not included, as well as 59,834 demolitions. Figure 4 shows the available incomplete data. The rest of the discrepancy is likely due to other disposals of existing stock, such as change of use, or change of tenure, as the Minister for Housing told us:

Data on other disposals of existing stock, such as change of use from affordable housing are not collected. Information on changing of tenure of existing stock is also not collected and neither is any information on disposals pertaining to non-registered providers. Therefore, it is not possible to calculate a net figure for affordable housing.61

Figure 4: Net addition of social housing (social, intermediate and affordable rent) in England, based on available data, by financial year 2010–2019

Year	Additions	Sales	Demolitions	Net additions
2010–11	36,053	8,431	8,092	19,530
2011–12	40,878	8,061	7,873	24,944
2012–13	26,100	13,276	8,754	4,070
2013–14	32,166	20,644	9,422	2,100
2014–15	51,296	20,455	5,828	25,013
2015–16	25,044	21,992	6,546	-3,494
2016–17	31,209	23,197	5,442	2,570
2017–18	34,484	21,935	3,526	9,023
2018–19	37,825	19,389	4,351	14,085

Source: MHCLG Live Tables 678, 684 and 1000

26.The Minister concluded there was no way to calculate a net figure for social housing, but he also stated that the social housing had grown by 100,000 since 2010, based on Live Table 104, which tracks dwelling stock ownership. We are unsure why the necessary data to establish net additions for affordable housing is not collected. Accurate data on the delivery of social housing is important, because, as we found while questioning the Minister, the different definitions and figures can cause the real change in stock to be nebulous. When we asked the Minister to provide us with a figure on how many social rented homes had been sold through Right to Buy since 2010, and what tenures they were replaced by, he wrote:

The Department does not collect data on the tenure of homes sold through Right to Buy nor on the tenure of their replacements by local authorities. So it is not possible to say how many Right to Buy homes sold by local authorities were social rent, nor how many have been replaced by another social rent home.62

Nevertheless, the Minister told us that 120,000 Right to Buy sales of social rent homes had directly led to 140,000 replacements.63 After being challenged on the figures, both the Minister and the Director General for Housing and Building Safety said that, while Right to Buy receipts contributed, the 140,000 social rent homes had not been fully funded by Right to Buy sales. After we asked for further details, the Minister wrote that “the Department does not collect data on the number of social rent homes which are funded directly by Right to Buy receipts”.64

27.We heard concerns that data on social rent homes in particular were unclear. The Chartered Institute for Housing conducted analysis in 2019 which found that 165,000 social rent homes had been lost since 2012, through sales or conversions to affordable rent.65 The Affordable Housing Commission found that social landlords had switched over 100,000 social rent properties to affordable rent, and concluded that last year there was a net loss of around 17,000 social rent homes.66 A blog by Shelter in January 2020 concluded:

in 2018–19 only 6,287 new social rent homes were delivered. In the same time period, sales and demolitions of social housing totalled 23,740 homes. Assuming the homes lost were previously let at social rents, this is a net loss of at least 17,000 social homes in a single year—and this is even before we account for social rent homes converted to less affordable forms of renting.67

Without full data on sales, demolitions and conversions, broken down by tenure, it is impossible to assess the veracity of these analyses, though it seems likely that there has been a net loss of social rent homes in recent years.

28.The right data are important for transparency and accountability. While an overall gross figure—and completions by tenure—are useful, it is important to know the net addition total to facilitate scrutiny of changes to the overall social housing stock. The Government uses net additions for its overall housing supply statistics. Unlike with the overall housebuilding figures, where the net addition number is higher than the gross completion number, affordable housing net additions are lower than gross completions. By choosing not to use net additions for affordable housing—in line with its approach to overall housing supply—the Government is inconsistent in its use of housing figures.

29.The Government must publish statistics on net additions of the different tenures of affordable housing per year, taking into account completions, sales, demolitions and conversions. These statistics are currently disparate or not collected. This is especially important to track changes in social rented stock which has been affected by significant number of conversions to affordable rent and Right to Buy sales. Data will need to be collected on Right to Buy sales for each tenure, demolitions per tenure, change of use per tenure, and all other reductions. This will bring social housing data in line with overall housing supply data.

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