Housing does not become affordable on cost alone, says a new report; income, jobs, economic growth and productivity are factored in the mix.
Equalities policies and benefits levels are a further part of the cocktail that contribute to the affordability of housing, according to the short life working group 2022-24 called by the Scottish government as part of its Housing to 2040 strategy.
The group, chaired by Professor Kenneth Gibb, from the UK Collaborative Centre for Housing Evidence (CaCHE), makes nine recommendations in its report.
There are multiple definitions of ‘housing affordability’, and widespread disagreement on what affordability means, so Housing to 2040 has argued for the need to develop a shared understanding of a “single commonly held definition” that is fit for the future, and consistently adopted across Scotland.
The group’s report recommends that a shared understanding of housing affordability should have three components for renter households in Scotland, all of which need to be met, at least, by 2040:
- A maximum of 30% of net income should be accounted for by rent and service charges
- A minimum residual income should be achieved based on 100% of the After Housing Costs Minimum Income Standard set by the Joseph Rowntree Foundation
- Progress should be made towards reducing the numbers exceeding the UK after housing costs relative poverty threshold
Beyond this, the report argues that to achieve affordability objectives for Scotland, stakeholders must recognise that “affordability is shaped not just by housing costs but by income levels, economic growth, jobs and productivity, as well as equalities policies and benefit levels. It can only be understood as the combination of these factors and not in isolation”.
Gibb, who is CaCHE director and professor of housing economics at the University of Glasgow, said: “The working group always recognised that there is no pure or perfect answer to the question set – affordability is fundamentally normative, subjective and judgemental.
“We have tried to use a combination of evidence, argument and new research to help us build a sufficient consensus around our multi-part definition. It is now for the Scottish Government to respond to our shared understanding recommendations.”
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