So what is Affordable?
Affordable homes come in many different packages and can be tailored to meet community’s needs. Generally affordable homes can be described as homes available for rent or sale below open market values. However different developers have their own variations on these models which will depend on financial situation such as the availability of Social Housing Grant (SHG) which is used to subsidise the development of affordable homes for rent in Wales. (SHG - is only available to register social landlords)
Glossary of Affordable products:
- Social rent (affordable)
Social rent is housing provided by a Registered Social Landlord (RSL) such as a Housing Association or Local Authority. This is specifically aimed at lower income households.
- Intermediate rent (affordable)
Intermediate rent is usually provided by a Registered Social Landlord, but can be provided by the private sector as well. The rent is higher than social rent but below full market rental level. The maximum intermediate market rent is usually no more than 80% of open market private rent prices for the relevant property type. Another used definition is that the rent shall not exceed the Local Housing Allowance which is set by the Local Authority.
- Shared ownership (affordable)
This is where the occupant owns a % of the property and the remainder is owned by a RSL or private developer. The occupant would normally pay a rent to the RSL for the proportion of the property that is not owned.
- Shared equity and Homebuy (affordable)
Shared equity housing or Homebuy is where someone purchases the property at a discounted rate and the amount of discount is treated as an interest free loan secured as a second charge on the property. Increase or decrease of the value of the property is shared.
- Affordable housing for sale (affordable)
Affordable housing for sale is delivered through a planning obligation via a restriction on the sale price. The maximum sale price is decided at a local authority level and can be influenced by local income levels or other factors. Affordability level and % discount are generally reviewed annually.
- Tenure neutral (affordable)
Tenure neutral is a term used to describe affordable housing schemes that facilitate flexibility between tenures of owner occupation and renting. Tenure neutral housing can take the form of social or intermediate rent or shared equity / ownership at any given point in time.
- Open market sale and rent
Open market for sale is unrestricted ownership of a home at full market value and open market rent is housing usually provided by the private sector.