House of Lords Library

Affordable Housing

Published Monday, October 22, 2018

This House of Lords Library Briefing has been prepared in advance of the debate due to take place in the House of Lords on the motion moved by Lord Shipley (Liberal Democrat), “that this House takes note on the case for building more affordable housing”. It describes why there is widely said to be a ‘housing crisis’ which affordable housing might help to solve. It then sets out what affordable housing is, and outlines the arguments for and against building more affordable homes. Finally, it looks at alternative policies for improving housing affordability.

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There are two main reasons why the housing market is said to be in crisis. These are: first, that there is a physical shortage of homes compared to the number of households, either at a national or regional level; and/or, second, issues of affordability, ie that people cannot afford to pay to rent or buy a property. The political consensus that there is a problem on both has been challenged by some observers. However, as one commentator stated, “the argument that there is nothing broken in Britain’s housing market remains unpersuasive”.

This briefing then looks in detail at affordable housing, discussing various definitions and types of affordable housing, including but not limited to social housing. The arguments in favour of more affordable housing include: that it is simply a necessity for many families; that it could reduce poverty; that it would significantly reduce the housing benefit bill; and that it is essential, at least in London, to retain key workers. However, concerns have been expressed about the tenure mix of new social housing, to ensure that renting, and social renting in particular, is given sufficient prominence. The arguments against more affordable housing include that it distorts the market in a way which increases demand and reduces supply, thereby making the situation worse. Those advocating this argument tend to argue instead for increasing supply by relaxing planning restrictions.

Finally, the briefing looks at alternative policies for improving housing affordability, other than building more affordable homes. On the demand side the Government has several policies in place, including ‘help to buy’ and reduced rates of stamp duty for first-time buyers. However, one concern is that, without additional supply, these could simply push up prices further. The briefing also therefore discusses policies to increase supply, including specific annual targets, detailed interventions and government financial support.

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House of Lords Library

The House of Lords Library delivers research and information services to Members and staff of the House in support of parliamentary business.