Affordable housing guide

Affordable housing guide

Affordable housing is social rented, affordable rented, and intermediate housing provided to eligible households whose needs are not met by the housing market.

Affordability is a huge issue for many households in our district. Many house prices in South Cambridgeshire are out of reach for those on an average income, and private rentals at the lower end of the market are few and far between. This has made finding an affordable home extremely difficult.

For those that can’t afford to buy on the open market or rent privately, the only option is to seek affordable housing.

Eligibility for affordable housing is determined by local incomes and local house prices.

We've produced an affordable housing guide [PDF, 0.3MB] to help explain what affordable house is, the different tenure models available, who it is aimed at and how it is allocated.

Affordable housing common questions

Affordable housing is housing for eligible households whose needs are not met by the housing market. Affordability is tied to the area of the housing, and a house price of 3 to 3.5 times the homeowner’s income is considered affordable. Affordable housing should always remain at an affordable price, for future households in need of this housing.

We recognise the need to provide choices to those pushed out of the private market. From those requiring social rented homes to those aspiring to own their own home. As such, we work to provide a ‘basket of options’ to meet the varying needs of those looking for affordable housing. On all new developments that provide affordable housing, we expect a mix of 70% affordable rented homes and 30% intermediate.

However, schemes are looked at on an individual basis and the mix may be altered where viability is an issue or local circumstances would demand a different split.

3 bungalowsA young family standing outside a home

There are 3 different kinds of affordable housing:

1. Social rented housing

This is owned by local authorities and registered providers, for which guideline target rents are determined through the national rent regime.

2. Affordable rented housing

Let by local authorities and Registered providers to households who are eligible for Social Rented Housing.

3. Intermediate housing

Intermediate housing is housing provided for sale that provides a route to ownership for those who could not achieve home ownership through the market. There are multiple types of intermediate housing:
  • Intermediate rent, this is for those who have difficulty affording market rents and lack a mortgage deposit.
  • Shared ownership, which enables households to buy a share in their home (usually between 25% and 75% of the home’s value). A subsidised rent is payable on the remaining share.
  • Fixed equity. These are sold at a fixed equity (generally 75%) with no rent payable on the remaining share held by the Registered Provider.
  • Rent to buy. These homes are rented for around 20% less than the market rent values, and have the option to buy shares in the property in the future in the same way as shared ownership.
  • Rentplus - This is a new approach to affordable housing, offering an opportunity to purchase a home through a combination of Affordable Rent and a 10% gifted deposit.
  • Starter Homes. These are intended for first time buyers aged between 23 and 40, offering homes for sale with a discount of at least 20% of the property value, capped at £250,000.

A young family standing outside a homeAffordability is a huge issue for many households looking for a home in South Cambridgeshire. Affordability is figured out using affordability ratios. You can find an affordability ratio by dividing a house price by the yearly net household income. A house is considered to be affordable with a ratio of 3 to 3.5. In South Cambridgeshire, the affordability ratio of the 25% lowest house prices and 25% lowest incomes is 10.8 (September 2020, Housing Market Bulletin) - more than 3 times what would be considered affordable.

An alternative for those that can’t afford to buy on the open market is to rent privately, but private rentals at the lower end of the market are few and far between. Those relying on Universal Credit to pay their rent often have a shortfall of £163.58 per month, on average (September 2020, Housing Market Bulletin).

Everyone needs a home. If purchasing on the open market or privately renting is not affordable, the only option available for many is to seek affordable housing, and it is in high demand. Over 1,900 people are currently on our affordable housing register, and 860 applicants on the Home Buy Register seeking intermediate housing.

A woman giving a presentation to an audience

Our Local Plan states that 40% of the homes on a development site, with an increase of 3 or more homes, are to be affordable. 

We are also very proactive in bringing forward rural exception sites for affordable housing. These are developments to meet local housing needs on small sites just outside a village's development framework boundary. 

Rural exception sites should have only affordable housing, though a small amount of market housing may be allowed to enable the scheme to be developed. All affordable homes built on a rural exception site will have a local lettings policy. This is to ensure the homes are offered to local people in the first instance.

A development site for new homesA registered provider is the term used for all social housing providers. Homes England, as regulator, maintains a statutory register of all social housing providers. We also maintain a list of registered providers in South Cambridgeshire. The majority of affordable homes in South Cambridgeshire are provided by and managed by housing associations.

There are currently 28 Registered Providers who own and manage affordable housing in the District, with an estimated 3,200 rented homes and 940 shared ownership homes.

We have retained our housing stock and currently own and manage 5,246 rented homes, 123 leasehold, 283 equity and 53 shared ownership homes.

We have our own homes development programme, as well as supporting housing associations to bring forward new affordable housing through its enabling role.

Those that are renting and are unable to meet their rent in full, may be able to claim Universal Credit to help.

A man and a woman operating an oversized calculatorIf you are renting privately, the amount of housing benefit you can get from Universal Credit is calculated using the Local Housing Allowance (LHA). It's based on bedroom entitlement, rather than the cost of the actual rent. 
Anyone living in social housing will get their full rent as part of their Universal Credit payment. This is reduced by 14% if the household as one spare bedroom, and 25% for 2 or more spare bedrooms. This is known as Removal of the Spare Room Subsidy.


LHA rates are set in line with the bottom 30% of average market rents within a Broad Market Rental Area (BRMA). 

South Cambridgeshire is set within 3 Broad Market Rental Areas:

  • Cambridge
  • Huntingdon
  • Stevenage and North Herts

Most homes in South Cambridgeshire are in the Cambridge BRMA.  

For most people there is a cap on the total amount of benefits they can claim, which includes Universal credit. You can find out if the benefits cap affects you, and if so what that cap is, using the government benefits cap calculator. This does not apply to anyone over the state pension age (65). 

Some of the main benefits included in the cap, comprise child benefit, housing benefit, incapacity benefit, income support and job seekers allowance (although this is not an exhaustive list).

The provision and allocation of rented affordable housing is through Home-Link. Applicants must register on the Housing Register.

The Intermediate housing is generally administered through the Government’s appointed Help to Buy Agent for the East and South East.

Home-Link

Home-link logoHome-Link is the choice based lettings scheme for all council and housing association homes in Cambridgeshire and West Suffolk.

Properties that are available to rent are advertised each week on the Home-Link website and applicants bid for properties that they are interested in. Bids can only be made on properties that the applicant is eligible for, such as relevant property size.

To participate in Home-Link, applicants need to have a local connection to the local authority who they wish to register their application with. 

Allocations are let in accordance with the Council’s Lettings Policy. All applicants will be assessed to determine their eligibility to be placed on the housing register. This ensures homes are let to those with the greatest need. It also ensures that we meet the legal obligations as set out in the Housing Act 1996.

Once an applicant has been assessed they will be placed in one of the following banding categories. This is dependent on their housing need:

  • Band A – Urgent Housing Need
  • Band B – High Housing Need
  • Band C – Medium Need
  • Band D – Low Housing Need

 

A family being given the keys to their home

Properties are allocated to bidders in the highest banding who have been waiting the longest.

Where properties have a local connection requirement that is village specific such as for schemes on rural exception sites), priority is given to those who live, work, 

or have family connections in the village. In these situations, the banding priority is secondary to local village connection.

Help to Buy East and South East

Help to Buy agents are registered providers appointed by the Government’s Homes and Communities Agency (HCA). They support the administration of most types of intermediate housing.  

Further details of the various Help to Buy products can be found on the Help to Buy website, and the website for the Help to Buy local agent.

Applicants interested will need to register on the Help to Buy Register.

As well as the options available for intermediate housing, there are various Government initiatives that can also help households into home ownership. These are mainly supported by the Help to Buy Agents and include equity loans and Help to Buy ISAs.

For more information, visit the Help to Buy website.

Help to Buy - Equity Loans

Through the Equity Loan scheme, the Government will lend up to 20% of the cost of a new home. Only a 5% deposit and a 75% mortgage is required.

No loan fees are charged on the 20% loan for the first 5 years of owning the property. The loan is paid back either at the end of the mortgage term, or when the property is sold.

The scheme is open to both first-time buyers and existing home owners, with no maximum household income to qualify. 

Applicants do not need to be registered with Help to Buy. But they will need to receive ‘Authority to Proceed’ by the Help to Buy Agents. 

Properties are only available under this scheme through participating registered builders.

Help to Buy - ISAs

Help to Buy ISAs are closed to new accounts, but accounts that are already open can continue saving until November 2029.

This scheme offers first-time buyers the opportunity to save into a Help to Buy ISA. The Government will then boost their savings by 25%. This means that if £200 is saved, the top up eligible for receipt is £50.

The most that each first time buyer (not household) can receive from the Government bonus is £3,000. This means that two savers from one household could receive up to £6,000.

Each first-time buyer can save up to £200 per month and the minimum Government bonus is £400, meaning that at least £1,600 would need to be saved before a bonus could be claimed. This bonus must be claimed by 1 December 2030

To receive the maximum bonus of £3,000 a total of £12,000 needs to be saved.

Further details can be found on the Help to Buy website.

A happy community

The following ladder demonstrates the weekly housing costs for the different housing products in South Cambridgeshire. 

Average gross earnings for those on a lower quartile income are £22,040. With those on a median income of £34,580 (as of September 2020). As a rough guide based on housing affordability ratios, those on a lower quartile income would be able to afford all housing types up to those highlighted green. Those on a median income would be able to afford all housing types up to those highlighted yellow.

Key:

  • Registered Provider (RP) affordable rent is set at up to 80% of private rents capped at LHA rates
  • Low cost social rent is approximately 60% of market rate
  • Lower quartile is the least expensive 25% of homes
  • Homebuy is shared ownership based on owning a 40% share
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South Cambridgeshire ladder of affordability (source: housing market bulletin September 2020)
Weekly rent Annual rent Income needed (based on 3.5 times income) Housing type
£80 £4,160 £14,560 1 bedroom local authority rent, or 1 bedroom low cost rent.
£100 £5,200 £18,200 2 or 3 bedroom local authority rent, 1 bedroom RP affordable rent, or 2 bedroom low cost social rent
£120 £6,240 £21,840 (low quartile income) 3 bedroom low cost rent
£130 £6,760 £23,660 2 bedroom RP affordable rent
£140 £7,280 £25,480 1 bedroom second hand lower quartile, or 1 bedroom intermediate rent
£150 £7,800 £27,300 3 bedroom RP affordable rent
£160 £8,320 £29,120 1 bedroom average second hand home or 1 bedroom homebuy
£170 £8,840 £30,940 (median income) 1 bedroom private rent or 2 bedroom intermediate rent
£200 £10,400 £36,400 2 bedroom lower quartile second hand
£210 £10,920 £38,220 2 bedroom private rent or 3 bedroom intermediate rent
£240 £12,480 £43,680 2 bedroom homebuy
£250 £13,000 £45,500 2 bedroom average second hand home
£260  £13,520 £47,320 3 bedroom private rent
£290  £15,080 £52.780 1 bedroom lower quartile/average new build home
£310  £16,120 £56,420 3 bedroom lower quartile second hand home or 3 bedroom homebuy
£320  £16,640 £58,240 2 bedroom lower quartile new build home
£330  £17,160 £60,060 3 bedroom lower quartile new build home
£350  £18,200 £63,700 3 bedroom average second hand home
£370  £19,240 £67,340 3 bedroom average new build home
£460  £23,920 £83,720  2 bedroom average new build home

 

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