Report

Living rent that works

This report from UK think tank the Centre for Social Justice looks at unlocking genuinely affordable homes for thriving lives.

The Government supports those least well off through the provision of “affordable housing”. However, too often these homes do not live up to their name. Previously, we have found that less than a quarter of the public believe the Government’s definition of affordable housing is truly affordable for local people.

This paper looks at this issue in greater detail. At its heart is the rise, since the early 2010s, of funding for new “Affordable Rent” housing in place of “Social Rent”. Rents in the former are set by linking them to open market rental housing costs in the local vicinity, rather than the incomes of local people. Rents in the latter, by contrast, are set as a proportion of local people’s incomes—a more genuine measure of ‘affordability’. This causes stark problems in areas with high rental market housing costs compared to the incomes of less well-off households—for example in city centres and in the capital. A policy literature has developed suggesting that we should move back towards delivering income-linked housing, often under the term ‘Living Rent’.

This paper documents how major city authorities in London, Manchester, Bristol, and the West Midlands have developed initiatives and policies which aim to challenge the government’s definition of affordable housing by seeking to link housing costs more closely to incomes—often, too, using the term ‘Living Rent’.

The paper also documents opinion polling showing that more of the public believe this is a fairer system than market linkage. At the same time, the paper considers the implications of income linkage for housing providers and government finances. Any system must be fiscally responsible and ensure that revenue streams of housing providers are robust and capable supporting maintenance, decarbonisation, regeneration, development, and community investment.