What is truly affordable housing?

Affordable Housing

12 September 2014 | 12 September 2014

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We believe that a safe, secure and affordable home provides the foundations for people on low incomes to find a way out of poverty and achieve their aspirations.

Of course, ‘affordability’ means people can pay their rent, which helps us to create more homes. But it’s also a critical part of supporting communities, and it has the power to change lives.

As part of developing our strategy for the next few years, we wanted to know if we could balance the needs of the individual, wider society and Sovereign as a business.

We started by asking ourselves whether our homes and services really meet our residents’ needs? Do we support their aspirations? What is the impact on society and our business of the different types of housing options we provide?

These were big questions, and to answer them we needed a much deeper understanding of our residents and what ‘affordable’ really means.

We found that our ‘typical’ Sovereign household is a working couple with two children, managing on a low income. We found that while our residents don’t lack ambition, they often have low expectations, and this starts from a shockingly young age.

To then understand the true affordability of housing costs, we developed a new measure: household ‘living income’. It takes into account varying household income, tax credits, benefits and housing costs across our wide geography to reveal which housing options really help people get on in life.

The results weren’t always what we expected, and I shared a real example of our findings in my presentation at the National Housing Federation conference. In West Oxfordshire, families of two adults and two children on low incomes were pushed into benefit dependency by Affordable Rent. Over in Swindon, Shared Ownership was more affordable than Affordable Rent.

This deeper understanding of what’s truly affordable has shaped our strategy, and is guiding our plans for housing management, development and community investment for the coming years.

Our research highlights how people’s circumstances and needs change, as they achieve their aspirations. Social rent remains key for those on low incomes, and can help to support ambition. When their incomes improve, we want people to have the choice to stay in their homes, making their communities places of stability and opportunity. So a range of tenure options is an important component of our strategy; flexed to respond to people’s changing circumstances.

Our long term commitment to investing in people is equally important. We are focusing on access to financial services, and digital skills, as well as helping people into education or sustainable employment.

Ultimately this all means we’ll be providing more than just a home. Some of our residents will escape the benefit trap and move towards home ownership if that’s their goal. But we’re equally committed to making sure everyone we house gets the support they need to become a successful householder. We won’t set people up to fail.

So perhaps the most surprising result of the research is that we don’t have to choose between our commercial head and our social heart. Doing the right thing can bring tangible benefits to residents, society and our business.