We talk about affordable housing – but what does it really mean?

By Mark Graham, Chief Executive of Co-Ownership.

The definition of affordable housing is housing that is sold or rented outside the normal market process and targeted at those for whom the market doesn’t meet their needs. Today, that’s quite a lot of people.

More and more are becoming homeless because they cannot afford their home, others are forced to choose between paying their rent or buying food for their family, and there are people paying so much rent they may never be able to save enough for a deposit to own their own home. To own your own home today, you need a higher income than a generation ago, and you need to save longer for a deposit, and in most cases will need financial support from family.

Affordable housing would solve these problems, but what exactly do we mean when we refer to affordable housing? The term can be confusing. One local house builder once said to me, “all the homes I build are affordable, and I know this because people can afford to buy them.” He had a point; house prices are set by the market, not the developer, and as a result we deviate further from providing affordable options for everyone.

When we talk about affordable homes, the assumption is usually social housing – homes with a low rent, and a secure tenancy provided either by the Housing Executive or a housing association. There are around 120,000 social homes here, with around 1,700 added annually. Certainly not enough to address the growing need in this climate.

For people on very low incomes and those who depend on benefits their only alternative is to rent privately and depend on benefits to help pay the rent. But benefit caps often mean private rentals are unaffordable for people. Even if affordable, homes in the private rental sector are of variable quality and don’t always provide the level of security that families in particular need.

So really, it’s fairer to say that unless you qualify for and have been allocated social housing, there are a lot of people feeling the inadequacy and unaffordability presented by the local housing market. To some extent, this is where Co-Ownership comes in. Our role is to alleviate these real hurdles for as many people as we can. And we do so by providing Northern Ireland’s only shared ownership model – an alternative and affordable route to home ownership.

Typically, our customers have a secure job and a low to moderate income. Their housing options are very limited as on one hand they are considered too well off to be allocated a social home – particularly in recent years with the severe shortage of social homes. But on the other hand, our customers typically cannot afford to save for a deposit either, or similarly, find that lenders decide they cannot afford a mortgage. Last year we helped more than 750 people into home ownership. All in all, there are now 10,000 shared owners across the province, all of whom would likely not be homeowners without our support.

Fortunately, decision makers are beginning to wake up to the fact that new solutions are needed.
For instance, the “cost-rental” product in the Republic of Ireland essentially provides a rent at around 80 per cent of the market rent with longer-term private tenancies. It could provide an option for those renting privately and dependent on benefits to pay their housing costs. The Department for Communities here has proposed this type of product for Northern Ireland, referring to it as “intermediate rent”. A consultation is underway, and an organisation is being sought to “operate” it.

Clear distinction between the different types of affordable housing has until recently only been of interest to housing policy professionals, but new policies are coming into force that could radically change how we think about future homes. Across each of the local councils new planning policies are being introduced – planning permission will only be granted for residential developments where a percentage of homes are affordable. Whilst details will vary, the objective is clear – all new housing developments should contribute to the housing need faced today.

But of course, it will take some time to build up a pipeline of new developments. In the meantime, we need to focus on building more new social homes through housing associations and at Co-Ownership we will continue to innovate and work with partners to ensure we can support those that aspire to own a home of their own.