For the first time, a local government authority has redefined ‘affordable housing’, based on local people paying no more than 35% of their salary on mortgages or rent.

The West Midlands Combined Authority’s (WMCA) redefinition of ‘affordable housing’ links to the real world incomes of people within the West Midlands, rather than to local house prices.

In November it was reported that the delivery of affordable housing has stagnated over the last 10 years, and the government is under pressure to provide more affordable homes.

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The new definition, which has been approved by the WMCA’s Housing and Land Board, has been introduced to encourage the delivery of affordable homes for local people, as well as encourage new types of homes to enter the market.

Explaining the Local Government Authority’s Decision

The current definition of ‘affordable housing’ in the UK is 80% of market value, but mayor of the West Midlands Andy Street, who is also chair of the WMCA, says this definition leaves many “frustratingly out of reach’ of buying their own home.

“In recent years, would-be homeowners have been forced to stand by and watch as house prices outstrip wages,” said Street. The new WMCA definition sets this at around 35% or less of the average gross earnings of the lowest quarter of wage earners within the West Midlands. 

Moreover, the new definition means that any development schemes receiving investment from the WMCA (from its devolved housing and land funds) must make a minimum of at least 20% of the homes in the scheme affordable. 

“By linking the definition of affordability to local people’s earnings rather than property, and using this alongside our minimum 20% requirement, we can help make the prospect of homeownership a very real one for many more hard-working individuals and families,” Street added.

“It also sets out a very clear ambition to developers and partners who want to work with us to deliver homes. This is the kind of inclusive growth that is key to building the future of the West Midlands.”

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