Affordable housing

1) What is an affordable rent level?

  • 10% of renters in Lambeth have household incomes of £10-15,000.

£12,500 household income: max rent should be £42.31/week

  • 10% of renters in Lambeth have household incomes of £15–20,000.

At £17,500 household income, max rent should be £70.77/week

  • 10% of renters in Lambeth have household incomes of £20-25,000.

At £22,500 household income, max rent should be £99.23/week

  • 9% of renters in Lambeth have household incomes of £25-30,000.

At £27,500 household income, max rent should be £127.69/week

(Based on assumption that rent should not take up more than 40% of total housing costs.)


2) Costs

Most housing associations borrow today against future income from rents and sales.  Future income is affected by tenure mix, size of homes and time to pay back the original loan. The level of anticipated rental income determines how much money can be borrowed.

What does it cost to build a new home? What income can it generate?
£70,000 for a home for 2 people (50m2) 

£140,000 for home for 6 people (100m2)

Different options change costs

  • It costs £435,000 for 300m2
  • If self-finished = £304,500
  • If self-procured= £210,000.

300m2 could create:

  • 3 large homes for 6 people (18 people housed)
  • 4 smaller homes for 3 people (12 people housed)
  • 6 small homes for 2 people (12 people housed)
3 large 4 bed homes would generate: 

  • £1,800 if privately rented
  • £408 if social rented

4 smaller 2 bed homes would generate:

  • £1,360 if privately rented
  • £544 if social rented

Based on:

  • Median average private rent for 4 bed in SW9 @ £600pw
  • Median average private rent for 2 bed in SW9 @ £340pw
  • Target rent for 4 bed @ £136/week
  • Target rent for 4 bed @ £103/week

3) The money

Government subsidy rules tie housing subsidy to “affordable rent”, so less money is available from government than in past to support housing

Potential other sources of “extra” funding

  • S106 – planning obligations from developers
  • CIL – community infrastructure levy
  • Service charge on residents and facilities/commercial users

4) Definitions


Affordable housing: This is a catch-all term for all forms of housing provided for people at less than market cost.

This includes social rented, affordable rented and intermediate housing (see below for details).

Social rented housing: this includes the majority of council owned and housing association owned homes.

All social rented housing is let at ‘guideline target rents’ determined through the government’s national rent regime. It may also be owned by other persons and provided under equivalent rental arrangements to the above, as agreed with the local authority or with the Homes and Communities Agency.

Affordable rented housing: this is let by local authorities or private registered providers of social housing to households who are eligible for social rented housing at higher rents under the new “affordable rent” regime.

Affordable Rent is subject to rent controls that require a rent of no more than 80% of the local market rent (including service charges, where applicable).

Intermediate housing: homes for sale and rent provided at a cost above social rent, but below market levels. These can include shared equity (shared ownership and equity loans), other low cost homes for sale and intermediate rent, but not affordable rented housing.

Homes that do not meet the above definition of affordable housing, such as “low cost market” housing (eg “starter homes” that are lower cost because of their size or location) may not be considered as affordable housing for planning purposes.

What is “self build”?

This is where a group of men and women  join forces and become involved in the planning, design and building of their own homes. The approach gives residents a greater say over the type and style of their home and community. It can also reduce the cost of purchasing a new home by removing the need for developers.

What is a “community land trust”?

They are non-profit, community-based organisations that develop housing, workspaces, community facilities or other assets that meet the needs of the community, are owned and controlled by the community and are made available at permanently affordable levels

What is a community-led long-term management organisation?

Long-term management can be conventional (eg managed by a local authority or housing association) or involve creating a wholly new community organisation with specific responsibilities like a development trust or a co-op.

These responsibilities might include maintenance of public space, management of community assets, and/or the delivery of local services.

5) Benefits and trade offs

Option 1: Housing for rent that local people can afford

Benefits Trade offs
  • Housing that is affordable for people in Brixton
  • Rent that reflects local median incomes
  • Keep community benefit and value of development in the local area
  • More homes need to be built to increase rental income to make the scheme economically viable
  • Less money generated for community facilities
  • Less money generated to support wider costs of development (refuse etc)

Option 2: Secure, long-term tenancies for people who want them

Benefits Trade offs
  • Security for tenants
  • Sense of fairness for people most in need
  • Stability for households, for children and adults
  • Supports wellbeing
  • Fewer homes available for people who become in urgent need of housing over time
  • Fewer homes for people who are homeless or destitute in the future

Option 3: Co-ownership of housing

Benefits Trade offs
  • Potential for rents to relate to incomes, eg maximum 40% of income to be spent on housing costs
  • Could be self-financing if mix of incomes/rent is right, and borrowing can be extended for 50-60 years
  • Potential for self-build and self-procurement


  • Need to set out rules for being offered a home, and make sure they are fair and inclusive
  • Not everyone wants to live cooperatively, this could exclude some people in housing need
  • Decision making could become complicated if there’s also a local management organisation

Option 4: A mix of housing types and tenures

Benefits Trade offs
  • A mix of housing types and tenures means a more diverse community – different backgrounds, life stages, income levels
  • Private home for sale can generate income to subsidise social housing for rent, public realm and local facilitie
  • Overall, less social or affordable housing to rent

Option 5: A mix of housing for families and people without children

Benefits Trade offs
  • Creating a mixed and balanced community – different ages, different circumstances, different incomes levels
  • Mix of housing types than can allow people to stay in the community through different stages in their life
  • Financial disincentive to build bigger social homes
  • Smaller social housing properties generate more income than larger family homes
  • Larger private homes generate more income than smaller private homes