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rpwills
Apr 43 min read

Affordable homes nomenclature - its so messy!

The affordable homes area is one of confusion as various governments have introduced new categories over time. But here goes!

Details of the various types of affordable home provided in Cornwall from 190-91 to 2022-23 are set out in the table below. In all 9,500 dwellings were provided within this group. [Total new dwellings equalled 58,000 over the same period].

The traditional social rent category accounted for 10.7% of the total.
Category
No
%
Social rent
1012
10.7
Affordable rent
3802
40.0
Intermediate rent
954
10.0
Affordable home ownership
1963
20.7
Shared ownership
1769
18.6
Total
9500
100


Some definitions
The section below sets out details of the first three categories.

"What Is Social Rent?
Social rent is usually rent that is paid to registered providers and local authorities. It is low cost rent that is set by a government formula. This means it is significantly lower than the rent a tenant would pay in the normal market. Not everyone is eligible for social housing and so the next best alternative could be to aim for a provider that charges ‘affordable rent’.
What Is Affordable Rent (Also Called Intermediate Rent)?
Affordable rent is rent that is set at up to 80% of market rent (including service charges).These properties of affordable rents are defined as ‘low cost’ rental accommodation and and so also class as ‘social housing’. This means that they are regulated by the Regulator of Social Housing. This means that homes will remain more affordable than renting on the private rental market. You could argue that all rent should be ‘affordable’, but in this sense it means 80% of market rent.
What Is Market Rent?
Market rent is the value in which landlords base their rent off. It is the value that they should be charging around for the property."

They give estimates of the comparable rents applicable.
Social rent £300
Affordable rent £480
Market rent £600

Details of low cost home ownership are set out below.

"What is Low Cost Home Ownership?
Low Cost Home Ownership is the umbrella name for a number of initiatives to help people get a foot on the property ladder, including the government's Discount Market Sale, Shared Ownership and Rent to Buy."

How shared ownership works
"Shared ownership schemes allow you to buy a share of the property – between 25 per cent and 75 per cent. This is calculated on the full open market value.  You can usually buy extra shares and in some cases you may be able to ‘staircase’ to 100% ownership.  Some rural schemes do not allow full ownership, this is to make sure that there is always a stock of affordable housing in rural locations.
A housing provider owns the remaining share and you pay rent on that share. The annual rent paid is typically 2.5% of the share’s value.
Shared ownership properties are always leasehold homes.  This means you own them for a fixed period of time.
When you buy your home, you become the owner of the lease. The housing provider will grant you a lease for the fixed period, which also sets out your rights and responsibilities, and those of the landlord.
One of the requirements of the lease is usually to give the housing association first refusal to buy it back if you want to sell."
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