1. Governance
April 30, 2015

General Election 2015: Labour pledges to change the definition of "affordable" rents and put a stop to developers' "smoke and mirrors"

By Barbara Speed

Back in 2011, something happened that would dramatically change social housing in London. Buried in a document called the “Affordable Homes framework” was a brand new definition of the phrase “affordable rent”.

Up until then, it had been used interchangeably with “social rent”, to mean a rent of about 50 per cent market rate or less, offered by local councils or housing associations to those who couldn’t afford market levels. And, as jargon goes, “affordable” seems like a word with a pretty stable definition.

But apparently, it is as prone to warpage as any other – because in that document, the government made clear that, from now on, “affordable” would mean 80 per cent of market rates. For most people in need of social housing, affordable rents have turned out to be anything but.

When the move was first mooted, Westminster council warned Boris Johnson that this would mean their 3-bed council tenants would need an annual income of £109,000 to afford to live there; at the time, more than half were on less than £12,000. It’s pretty fair to say that the change was either designed to end truly affordable social housing in London for good; or else it was a huge mistake. 

But there is a tiny, tiny glimmer of hope. Today, shadow housing minister Emma Reynolds appears to have added a new pledge to the three-year tenancies and half-hearted rent caps offered as the party’s original pledge on housing. According to the GuardianLabour would ditch this new definition of affordable, and replace it with one based on “average wages or house prices”. Here’s Reynolds’ reasoning:

In some parts of the country 80 per cent of market rent is simply unaffordable for people on low incomes or the most vulnerable. In London, Oxford, Cambridge, Brighton, there has been an increase in rent that far outstrips inflation. The coalition has totally skewed the definition of affordable.

She also said Labour is planning to crack down on the “smoke and mirrors” used by developers to worm their way out of affordable housing minimums (often with the apparently willing support of councils). That’ll mean removing their right to appeal to the planning inspectorate if they’re unhappy with the affordable housing levels demanded on a site. 

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Both plans have gone down badly with Brandon Lewis, the Conservative housing minister, who, rather ironically, said that “changing the definitions of affordable housing could backfire in their face” (well, he would know). He claims that the move could reduce the number of new affordable homes built, as less money would be raised from rents and a more stringent definition of “affordable” could scare off developers.

The promises do seem a bit like a desperate, end-of-election bone to throw to housing-obsessed voters, and anything containing the words “smoke and mirrors” probably isn’t fully costed yet. But frankly, the jump to 80 per cent market rents for some of the UK’s poorest people, and the huge number of developers dodging affordable housing minimums set by councils, haven’t been working out briliantly for us so far. If they can actually manage it, Labour’s plans seem like a step in the right direction.  


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