Understanding the Policy, Legal, and Regulation Framework for Affordable Housing in the UK

Affordable housing is a critical issue worldwide and understanding different countries’ frameworks for governing it can provide valuable insights for housing professionals. The policy, legislative and regulatory environment sets the purpose for affordable housing, which is set by national governments. In the UK, the frameworks ensure affordable housing addresses affordability, tackles homelessness, and provides aspiring homeowners with opportunities to step onto the housing ladder.

What does affordable housing mean in the UK?

Firstly, housing in the UK is a devolved matter, meaning that the governments of devolved countries have powers to set housing policy and legislation. This means that the frameworks in England, Scotland, Wales, and Northern Ireland are different. In this article, we will focus on England, as this is the largest country within the United Kingdom, but there is a lot that England can learn from its neighbouring countries around affordable housing.

In England, while there is no agreed definition, the most commonly referred definition of affordable housing is set out in the National Planning Policy Framework (NPPF). This defines affordable housing as “housing for sale or rent, for those whose needs are not met by the market”. The main types are:

• Affordable housing for rent, with rent set at either social rent (around 50% of market rent) or affordable rent (which must not exceed 80% of gross market rent).
• First homes, available to first time buyers with minimum discount of 30% against the market value.
• Discounted market sales housing, sold at a discount of at least 20% below local market value.
• Other affordable routes to home ownership, including shared ownership (where an owner buys a share of a property and pays rent on the remaining equity), relevant equity loans, other low-cost homes for sale (at a price equivalent to at least 20% below local market value), and rent to buy (which includes a period of intermediate rent).

It also includes more specialist accommodation for people with specific needs, known as supported housing.

Affordable housing for rent and shared ownership (social housing) is delivered, owned and managed by registered providers of social housing. This includes local authority registered providers (local government) and private registered providers, split into not-for-profit companies and charities (generally housing associations) and for-profit companies.

Policy Framework 

In England, the NPPF definition is what local authorities use to plan delivery of affordable housing. The NPPF states that at least 10% of the number of homes provided on major housing developments should be available for affordable home ownership, subject to some exceptions. Planning law and national planning policy do not set a minimum level of provision of affordable housing – this is for local planning authorities to determine through local policies.

Local planning authorities can require developers to deliver affordable housing by attaching conditions to planning permissions or negotiating section 106 agreements (which set planning contributions to make a development acceptable).

The Affordable Homes Programme is the main source of public funding for new affordable housing delivery. The current programme, 2021-26, is worth £11.5bn and aims to deliver around 165,000 homes for discounted rent or affordable home ownership. Rent levels for affordable housing are set by the government, through policy statement on rents for social housing and directions on rent standards to the Regulator of Social Housing.

There is also a (controversial) policy within the UK that allows renters of affordable housing owned by local authorities to buy their property at a discounted rate, known as the right to buy. This has significantly reduced the supply of affordable housing in the UK and increased home ownership.

Legal Framework 

The legal framework for affordable housing is governed by several key pieces of legislation, a selection of which are below:

• The Housing, Town Planning, &c. Act 1919 introduced council (local government) housing to the UK for the first time.
• The Housing Act 1980 introduced shared ownership as a tenure, and the right to buy policy.
• The Housing Act 1988 allowed new build homes to be financed by private finance in combination with grant funding, leading to a growth in housing association stock.
• The Housing Act 1996 sets out the legislative framework for the allocation of affordable rented housing.
• The Housing Act 2004 introduced a new system of assessing the condition of residential premises, the housing health and safety rating system (HHSRS).
• The Housing and Regeneration Act 2008 established Homes England, which oversees housing and regeneration (including grant funding outside of London), and the Regulator of Social Housing, which oversees regulation and registration of social housing providers.
• The Social Housing (Regulation) Act 2023 gave new enforcement powers to the Regulator of Social Housing, new powers for the Housing Ombudsman (who investigates complaints from social tenants about landlords), new provisions to improve the relationship between the regulator and the Housing Ombudsman, and greater protections around hazards.

Regulatory Framework 

The regulatory framework for social housing is set by Regulator of Social Housing, who sets the standards, codes of practice and regulatory guidance, and registers providers. The standards and codes of practice set out required outcomes and specific expectations of registered providers of social housing, such as governance and financial viability, safety, and tenant satisfaction. There are currently three economic standards and five consumer standards.

The regulator operates a co-regulatory approach, meaning that it should be boards, residents and other stakeholders who monitor compliance with the regulatory standards. Many of the standards are designed to ensure this co-regulatory approach is possible. The regulator undertakes a number of monitoring activities to ensure compliance and has wide-ranging enforcement powers should a provider be found to be failing and not able/willing to self-improve.

Case Studies and Examples 

To provide a more practical understanding, here are some case studies and examples of affordable housing initiatives in the UK:

• Barking Riverside: This project, a joint venture between GLA Land and Property Limited (GLAP) and one of the largest housing associations in England, L&Q, in partnership with Bellway, aims to provide over 10,000 new homes, with a significant portion allocated to affordable housing. The project also includes community facilities, schools, amenities, new transport links and green spaces, creating a holistic living environment.
• East Wick & Sweetwater: Developed by Places for People, a place-making company and housing association who own and manage 240,000 properties, this project is part of the Olympic Park legacy in London. It aims to deliver 1,850 new homes, with a mix of affordable and market-rate housing. The development focuses on sustainability and community integration.

Learning from others

Understanding England’s policy, legal, and regulatory frameworks for affordable housing can provide valuable insights for housing professionals internationally, potentially serving as a model for developing similar frameworks in other regions.

The aim of affordable housing has always, and will always be, to work towards creating more effective and sustainable solutions to address housing need. This includes implementing policies that promote affordable housing, establishing clear legal frameworks, and ensuring robust regulatory oversight to protect the interests of residents.

Altair will be covering legal, policy and regulatory frameworks in our upcoming ‘Intensive Affordable Housing Programme’ in October. This programme offers practical learning on creating and expanding affordable housing supply, exploring policy frameworks, the roles of government and private sector institutions, capital markets funding options, and the regulatory and legal frameworks essential for implementing effective housing systems in emerging economies. To find out more, please click here.