New to housing?

Affordable housing is an over-arching term for several different types of housing provided to eligible households whose needs would often not otherwise be met by the market. There is a mix of several different types of 'products' aimed at different groups of people. The most common forms of affordable housing are described below.

Social rented housing

This remains the most common form of affordable housing. The specific means by which rent is calculated varies from each part of the UK.

In England rents depend on a formula that considers government limits, the property's location and characteristics, and annual rent increases.

In Wales rents are set by the relevant landlord with target rent bands being put on hold due to the pandemic. The future of target rent bands in Wales is to be looked at collaboratively with the sector. Welsh Government has also set the maximum level of an annual rent rise based on the consumer price index. Where the consumer price index is above 3 per cent then the minister will set the maximum permitted rent rise.

In Scotland, landlords have more flexibility to set their rents, although there is a suggested benchmark for newly built homes and a regulatory requirement that they consult with tenants and take affordability into account when considering a rent increase.

In Northern Ireland, the Housing Executive and housing associations are able to set their rents according to property location and condition. Older tenancies prior to 1992 with housing associations are based on a points system and are in line with the Housing Executive rates, but those post this date are usually higher than Housing Executive homes.

In Republic of Ireland, rents are set using a system called differential rents. Rents are set based on the household’s income, so if household income is low, the rent will be low, but if income is higher the rents will be higher. This is set by individual local authorities and they may have minimum and maximum rents.

Social rented properties are often the cheapest form of housing available to tenants across the UK and Ireland. Social rented housing is particularly vital for those on the lowest incomes - for many, it is the only form of housing that is affordable. However, the high cost of housing affects the very poorest in society, and many landlords provide different types of affordable housing to meet different needs.

Affordable rented housing

Introduced by the Conservative/Liberal Democrat coalition government of 2010-15 and applied only in England. It is similar to social rented accommodation, but rents are up to 80 per cent of those charged in the private rented sector or ‘market rent’. It's generally more expensive than social rented housing, with the increased income from higher rents invested in building more affordable homes.

Mid-market rented housing

One of the officially recognised affordable housing tenures that the Scottish Government will allocate funding for, rents are higher than social rents but lower than in the private rented sector. A policy to provide a new ‘intermediate rent’ housing option has been introduced in Northern Ireland.

Cost Rental is a new housing tenure in the Republic of Ireland that was created under the Affordable Housing Act 2021. The rent on these homes must be at least 25% below regular market rents in the area.

Low-cost home ownership

Consisting of several different products, low-cost home ownership products are intended to make buying a home a viable option for those who would not otherwise be able to afford it. For example, shared ownership (also called shared equity or co-ownership) schemes, where a buyer purchases a percentage of a property and pays rent on the remaining percentage; equity loans, where a buyer can borrow at zero or low interest loan to give them a larger deposit, and First Homes (available in England), which are sold outright at a 30 per cent discount to those who are eligible.

There is also a First Home Scheme in the Republic of Ireland. This is a shared equity scheme which means that homebuyers can receive funds from the scheme in return for the FHS taking a percentage ownership of the property.

Affordable housing is provided by several different types of landlords, most commonly those described below. These different types of organisations are often collectively referred to as 'social landlords'.

Local authorities and the Northern Ireland Housing Executive

All local authorities (also known as councils) provide a range of services to households in their area, including refuse collection and highway maintenance. Their housing-related services include planning for developing new housing of all types and 'enabling' the development of more affordable housing specifically. In addition to this, some local authorities also continue to own and manage their own social/affordable rented housing and have a responsibility for statutory homelessness services. The Housing Executive is responsible for these landlord functions and strategic housing and homelessness policy in Northern Ireland, where councils have planning powers but no housing services.

Arms Length Management Organisations (ALMOs)

This type of organisation is a management agent that works on the local authority's behalf. The authority owns the properties, but the ALMO is responsible for managing and maintaining them. ALMOs are only present in England. As of 2023, 22 ALMOs were operating across England.

Housing associations

Also known as 'private registered providers', 'registered social landlords’ or 'approved housing bodies' – housing associations are private organisations that own and manage affordable housing. Most are not-for-profit organisations, and many are registered charities. Housing associations have become a major provider of affordable housing. They own and manage five to 10 per cent of housing in total. The housing association sector is exceptionally diverse, and around 1,700 housing associations are operating in England alone. Many of these are small organisations that own a handful of properties each, but some are large businesses responsible for tens of thousands of properties.

All of these types of landlords have one thing in common, they all perform several ‘core’ housing management functions. These include:

• allocating and letting properties to new tenants
• collecting rent and service charges and dealing with arrears
• managing estates and individual tenancies
• carrying out repairs and essential maintenance of properties
• tackling anti-social behaviour
• involving tenants in designing, improving and scrutinising their services.

Also, many organisations go far beyond these essential functions and provide other services to improve the communities they operate in and the lives of their residents. These may include:

• providing care and support services to a particular client group, such as people with a physical disability or learning difficulty
• providing money and debt advice
• helping people to work and training
• running services or maintaining amenities that benefit the local community, and that may not necessarily be directly related to housing