Affordable Housing Definitions


We accept that there is a distinction between affordability and affordable housing. What the new definitions aim to do is set out in clear terms the types of housing that are considered as affordable housing and what is considered as low cost market housing.

We have adopted this definition of affordable housing because we wish to ensure that developer contributions are used to help provide genuinely affordable housing for households in need over the long term. The definition includes homes owned or managed by private sector bodies and provided without Government grant, and new models of affordable housing.

Affordable housing is one of the following types of housing:
  • Social rented housing.
  • Intermediate rented housing.
  • Discounted sale housing.
  • Shared equity housing
  • Shared ownership housing

Affordable housing should also:
  • Be available at a cost low enough for people to afford, determined with regard to local incomes and local house prices.
  • Be retained for future eligible households or if these restrictions are lifted, for any subsidy to be recycled for alternative affordable housing provision.

Definitions

Social rented housing
Social rented housing is rented housing for which guideline target rents are determined through the National Rent Regime. It may also include rented housing owned or managed by other persons and provided under equivalent rental
arrangements to the above; as agreed with the Isle of Wight Council or with the Homes and Communities Agency as a condition through regulation, or contract to meet criteria.


On the Island only households on the Island housing register are eligible for new allocations of social rented housing.


Intermediate rented housing


Intermediate rented homes are provided at rent levels above those of social rented but below private rented.


Discounted sale housing

Discounted sale homes have a simple discount for the purchaser on its market price, so the purchaser buys the whole home at a reduced rate.

Shared equity housing

Shared equity is where more than one party has an interest in the value of the home e.g. an equity loan arrangement or a shared ownership lease. There may be a charge on the loan, and restrictions on price, access and resale.

Shared ownership

Shared ownership is a form of shared equity under which the purchaser buys an initial share in a home from a housing provider, who retains the remainder and may charge a rent. The purchaser may buy additional shares (stair-casing), and this payment should be ‘recycled’ for more affordable housing. In most cases, a purchaser may buy the final share (staircase out) and own the whole home, though this may be restricted in some rural areas.

Other products that are available include HomeBuy housing schemes.

Why is Low Cost Market Housing is not classed as affordable housing?

If a housing scheme does not:
  • provide accommodation at a cost low enough for people to afford, determined with regard to local incomes and local house prices;
  • provide accommodation retained for future eligible households; or if these restrictions are lifted, for any subsidy to be recycled for alternative affordable housing provision.

Then it is not considered as affordable housing.

Eg – Homes sold at a discounted price should only be considered affordable housing if they meet the criteria in the definition. If they do not, even if offered at less than market price, they should be considered low cost market housing, outside the definition of affordable housing.


November 2009



Page last updated on: 02/11/2009