Policy 3.10 Definition of affordable housing

Strategic and LDF preparation

A Affordable housing is social rented, affordable rented and intermediate housing (see para 3.61), provided to eligible households whose needs are not met by the market. Eligibility is determined with regard to local incomes and local house prices. Affordable housing should include provisions to remain at an affordable price for future eligible households or for the subsidy to be recycled for alternative affordable housing provision

3.61 Within this overarching definition:

• social rented housing should meet the criteria outlined in Policy 3.10 and be owned by local authorities or private registered providers, for which guideline target rents are determined through the national rent regime. It may also be owned by other persons and provided under equivalent rental arrangements to the above, as agreed with the local authority or with the Mayor.
• affordable rented housing should meet the criteria outlined in Policy 3.10 and be let by local authorities or private registered providers of social housing to households who are eligible for social rented housing. Affordable Rent is subject to rent controls that require a rent of no more than 80% of the local market rent (including service changes, where applicable)[1]. In practice, the rent required will vary for each scheme with levels set by agreement between developers, providers and the Mayor through his housing investment function. In respect of individual schemes not funded by the Mayor, the London boroughs will take the lead in conjunction with relevant stakeholders, including the Mayor as appropriate, but in all cases particular regard should be had to the availability of resources, the need to maximise provision and the principles set out in policies 3.11 and 3.12.
• intermediate housing should meet the criteria outlined in Policy 3.10 and be homes available for sale or rent at a cost above social rent, but below market levels. These can include shared equity (shared ownership and equity loans), other low cost homes for sale and intermediate rent, but not affordable rent. Households whose annual income is in the range £18,100–£66,000 should be eligible for new intermediate homes. For homes with more than two bedrooms, which are particularly suitable for families, the upper end of this eligibility range will be extended to £80,000. These figures will be updated annually in the London Plan Annual Monitoring Report.

Market housing is defined separately as private housing for rent or sale where the price is set in the open market.

3.62 To understand London’s distinct housing needs and to take account of government guidance to “identify the scale and mix of housing that the local population is likely to need over the plan period which addresses the need for all types of housing, including affordable housing[2]”, it must be recognised that lower quartile house prices in London are 74 per cent higher than in the country as a whole, 30 per cent higher than in the South East region and 50 per cent higher than in the East of England[3]. Increased provision of intermediate housing is one of the ways in which the supply of affordable housing can be expanded. The Mayor will work with the Boroughs and other delivery and funding agencies to develop understanding and provision of a range of relevant products, particularly for families. For the purposes of the paragraph 3.61 definition, eligibility criteria for intermediate housing may be set locally to recognise the individual characteristics of local housing markets but should not compromise Policy 3.11 to maximise affordable housing provision. In the absence of local eligibility criteria, in order to recognise strategic housing needs in the particular circumstances of London, the Mayor will seek to ensure that households whose annual income is in the range £18,100-£66,000 should be eligible for new intermediate homes. For family homes (see Glossary) the upper end of this range will be extended to £80,000. These figures will be up-dated annually in the London Plan Annual Monitoring Report. If boroughs wish to set eligibility criteria for intermediate housing below these levels, planning conditions or agreements should secure them at the reduced levels for no more than three months from the point of initial marketing (whether that be when new or at re-sale or re-let) and they should then be offered without further restrictions to those who meet the London-wide eligibility criteria as set out in the London Housing Strategy.

3.63 In view of the particular priority the Mayor gives to provision of new affordable homes to meet London’s very pressing need, boroughs should give particular weight to the criteria set by national government for the allocation of public resources for affordable housing in setting local plan targets (Policy 3.11) or negotiating provision in private housing or mixed-use developments (Policy 3.12) and should avoid imposing any requirements (such as borough-level caps on rent levels for affordable rented housing) that might restrict the numbers of new affordable homes.

[1] CLG. National Planning Policy Framework (NPPF). CLG, 2012

[2] CLG. NPPF 2011 op cit para 159

[3] Lower Quartile House Prices (land registry) 2011