We had a Hammersmith and Fulham council meeting recently and as usual there was much spirited debate. However one point of agreement was that the term “affordable housing” is meaningless and should be ditched. All housing – whether for purchase or for rent – will be affordable to some people, unaffordable to others. I have written before about how it would be more accurate to call it subsidised housing. In my part of London “affordable housing” is less affordable than most of the housing that can be bought or rented in the rest of the country.

In many ways the fixation with “affordable housing” actually causes the supply of new housing to be constrained – and thus means that more people can’t afford to buy or rent. “Affordable housing” is defined as being “for eligible households whose needs are not met by the market”. Why not give the market a chance? We have all these severe constraints on housing supply and then the planners notice how expensive it is and bring in this requirement, which ultimately constrains supply further and makes the problem worse.

Often the excessive demands for new developments to include a high ratio of “affordable housing” – which is owned by the local council or a housing association – means that the developments do not go through. Or that if they do, the remaining homes cost more as the cost of development has been pushed up.

Take the example of Labour-run Oxford City Council. It has imposed a cap on new dedicated student housing via the planning system. This really is quite counter-productive, as new dedicated student accommodation takes pressure off the private rented sector, and avoids the problem of “studentification” of other housing. The council is also imposing Section 106 affordable housing levies on dedicated student accommodation – which again defies sense, given student housing is very low-cost (market) affordable housing, and frees up low-end private rented sector accommodation.

The Spectator’s Coffee House blog offers this example:

“In 2005, Oxford University came up with a plan to build 200 staff homes on the site of a disused paper mill at Wolvercote. No threat of noisy students, but the plan was still abandoned after council-related difficulties pushed costs too high.

“If new university-owned accommodation isn’t an option, the only alternative is to house students in commercial projects – but the council make this problematic too. The latest town-v-gown bust-up, for example, is over a commercial plan to build accommodation for 294 students on Merton College-owned land, just behind the deer park of my college, Magdalen.

“Despite this being an area long-earmarked for student accommodation, the city council decided, at a late stage in the discussion with the developer, that the plan would require a contribution towards the building of ‘affordable housing’ (as which student accommodation does not, bizarrely, qualify) – making the project, as it stood, economically unviable.

The perverse impact is that more “affordable housing” means less affordable housing.


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