• Documents on the early development and design of the Affordable Homes Programme (AHP) show that the motivations for the change to funding for social housing was primarily about maximising the number of units produced rather than focusing on the tenures needed for those households that were adversely affected by the high cost of housing in England. Prior to the AHP almost all grant funding was spent on delivering Social Rent (SR) housing, but ever-increasing delivery costs were making it harder to deliver at the scale without substantial increases in expenditure.
o Shelter could not find documents that clearly identified the target groups for the policy, meaning there are no objective measures of performance outside of total units delivered. o Impact Assessments and other government documents make clear that over the long-term social rent offered better value for money, and the change was focused on maximising units.
• There is no clarity on what sorts of poor housing outcomes the AHP is trying to alleviate, as the definition of those it is trying to help is open to interpretation. o Shelter has assumed that Affordable Home Ownership (AHO) is targeted at those who might not otherwise be able to buy in the open market, however, a simple analysis of Shared Ownership (SO) prices suggest that the cohort of SO buyers could well be of a similar income level as those buying in the open market. o One might assume that rental units produced via the AHP would be targeted at those least able to afford the PRS, however the shift to Affordable Rent (AR) over SR means that rents are more likely to follow trends in the private sector – the sector that is not delivering affordable outcomes for households in the first place.
• The most affordable tenure, Social Rent, is the poorest funded. Only 3% of all AH units produced recently are as a result of direct government grant for Social Rent. Most units produced now are linked to market prices, such as Affordable Rent and Shared Ownership. o Only 5.4% of the recent Homes England grant has been used to deliver Social Rent. In London the GLA prioritise greater budget for Social Rent, with 71% of the next programme spent on this most affordable tenure.
o The ratio of rental to ownership units via the AHP has deteriorated over time. Prior to its introduction, most social housing units were for rental and almost all were Social Rent. In 2001 for example the ratio was 4:1 in favour of Social Rent over ownership. Now the ratio is 1:3 in favour of ownership over Social Rent; only if more expensive rental tenures (Affordable and Intermediate) offers are included does the ratio approach historical levels (3:1).
• While the delivery of SR housing is significantly more expensive than other market orientated AHP tenures (Shared Ownership and Affordable Rent) it would be possible to substantially increase its supply if more grant was specifically allocated towards Social Rent. o Based on Homes England data, a shift away from Affordable Home Ownership and Affordable Rent, would result in a 37% reduction in units overall but a 12fold increase in social rent supply from 2,972 to 37,792. o For the GLA AHP budget within London, and based on estimated future supply in the next AHP programme, a shift away from affordable home ownership would result in a more modest 40% increase in social rent supply, and a 20% reduction in units. This would move Social Rent supply from 16,739 to 23,480.
1. What is the stated policy objective of the AHP
The AHP was introduced in 2011 by the then coalition government looking to maximise public housing subsidy. The ministry in charge of subsidised housing (CLG at the time) under the Labour government prior to the coalition, published a paper setting out the policy objectives for affordable housing policy (CLG; Delivering Affordable Housing; November 2006) which stated that;
“The Government believes everyone should have the opportunity of a decent home, which they can afford, within a sustainable mixed community. This means providing a wide choice of housing to meet the needs of the whole community in terms of tenures and price ranges. This should include affordable housing, both social rented and intermediate. Affordable housing policy is based around three themes: – providing high quality homes in mixed sustainable communities for those in need; – widening the opportunities for home ownership; – offering greater quality, flexibility and choice to those who rent.”
The ministry identified the high cost of housing as a key issue to address but identified difficulties for first time buyers as another important consideration too. However, the report also noted that a recommendation of the Barker Review of Housing Supply (2004) was also to increase the supply of Social Rent housing to address the growth in need and because much of the stock had been lost via Right to Buy.
By the time the 2011 AHP framework came out, the need for more social rent stock had been subordinated and the coalition government agreed it was important to adjust the level of affordability for new entrants to the social sector, making affordable rent the priority. For new lettings in 2020/21 Social Rents averaged 44% of market rent whilst Affordable Rents averaged 65% of market rent. This change was justified as being a way to produce more choice in the housing sector.
It appears the central motivation for a new approach to social housing was to reduce subsidy in housing provisions; this was despite the escalating need for social housing, as well as the need for more grant due to the rising costs in delivering affordable homes. The 2012 National Audit
Office (NAO) report underlines our conclusion as it noted that better value for money would be achieved from the previous funding model for subsidised housing, but that funding was not available. As a result of the funding model changes, government had been able to reduce the average grant per home from £60,000 to £20,000 – a substantial reduction, particularly in the context of rising house prices.
More recently the AHP has been adapted in response to calls for more Social Rent housing by some in the sector – including Shelter. In 2017, government published an addendum to the original funding prospectus and in the most recent 2021-26 the inclusion of Social Rent has been retained. However, the prospectus again prioritises units over affordability.
“Value for Money” is the most highly weighted criteria used to assess Homes England strategic partnership bids; as shown in the table below.6 While a benefit-cost analysis might feature housing affordability for tenants, it’s clear one of its purposes is to drive down subsidy. For Continuous Market Engagement bids (scheme specific bids, as oppose to strategic partnership bids) the goal of reducing subsidy is most evident. For these bids, the “primary assessment metric is grant per home”, meaning the programme prioritises schemes with the most homes delivered for the least amount of money.
Affordable Homes Programme 2021-26; Strategic partnerships assessment criteria
1 Value for
Scoring uses a benefit-cost ratio (BCR), compliant with MHCLG Appraisal Guide 2016 and HMT Green Book 2018. The ratio weighs the economic benefit of grant funding against the economic cost. The higher the benefits relative to costs, with focus on early delivery, the higher the BCR score.
Use of Modern Methods of Construction (MMC), use of the National Design Guide, working with local SME contractors, and provision of rural housing, and supported housing.
Applications will be scored against how well they contribute to the Government’s ambition to increase home ownership.
An assessment of how deliverable the proposal is will identify whether the overall proposal has passed or failed.
Yet further measures in the AHP seek to limit the grant awarded per home, further prioritising unit delivery over delivery low rents. Whilst Social Rent has been retained as an eligible tenure for grant funding in the programme, the AHP places geographical limitations on securing sufficient grant levels to deliver it. Unless private rents in a local authority area are, on average, £50 per week more expensive than local Social Rents, local social housing providers will not be awarded any higher grant per home than would be required for to deliver Affordable Rent. This cap stops many areas from getting sufficient grant rates to deliver homes for Social Rent, forcing them to deliver Affordable Rent homes in their place.
2. How is ‘those not served by the private housing market’ defined?
Identifying who the AHP is there to serve is difficult from the policy documentation available. The documentation refers to areas of high affordability pressures and market rents in relation to social rents, but nothing about the economic circumstances for households or families that might be struggling with their housing. Moreover, the equalities assessment of the shift to Affordable Rent has very little clear evidence on the expected impacts for the households the policy might target.
External to the AHP, local authorities plan for housing using Housing Need Assessments (HNAs). These are conducted by local authorities, to understand future demand based on household growth projections, with some consideration of affordability pressures. To avoid unworkably large housing targets being generated from the simplistic approach – and some very unaffordable housing markets across the country, local authorities can cap the resulting target at 40% of previous years targets. This makes future housing supply and affordability subordinate to the practical challenges of delivering a high number of units. These caps also mean that targets are contestable by those opposed to development. Importantly HNAs tell us nothing about the components of supply that should form the target.
In the AHP funding framework itself, the 2011 document places the responsibility of assessing what homes are needed to assist those not served by the market firmly in the laps of Housing Associations or housing suppliers in general who must bid for funding with the general aim of maximising funding. So, while the first AHP framework stated that HAs should look at temporary accommodation, housing benefit recipient levels, lower quartile house prices and the Index of Multiple Deprivation, again there is little direction on which, or whom should be prioritised or targeted with new supply. The only easily identifiable documents that gives an indication of how the AHP might work to meet an objective of serving those not served by the housing market are Impact Assessments (IA) on the different tenures proposed; for example there is an IA related specifically to Affordable Rent this states in one section;
“Other key non-monetised benefits by ‘main affected groups’
Reductions in housing need, including overcrowding, sharing, concealed households, unsuitability and unaffordability problems, for households in England.”  We will discuss some of these measures later in this paper.
3. Who the policy appears to be addressing
Having failed to find clarity from government on a definition for those not being served means the AHP cannot be judged against the policies stated objective(s); and the policy has not been evaluated since its creation.
From Shelter’s understanding of the housing crisis, the two groups that policy appears to be addressing;
• Households looking to access owner occupation but struggling with the barriers of large deposit requirements and high house prices in their local area.
• Households struggling to find suitable rental accommodation for their needs; meaning they end up in unaffordable, unsuitable, overcrowded or dangerous homes.
While lifestage and housing aspiration plays a part, these two groups are primarily differentiated by their economic circumstances; those that could reasonably expect to be in a position to buy a home in the near future and who cannot.
What Shelter does know is that more than one in four (28%) households at or below the average household income in the PRS said they had to make an unacceptable compromise to find a home with a mortgage or rent that they could afford; while this was only one in five (19%) for higher income renters.12 This insight shows just how unsuitable the PRS is for many households, but whether this is justification to produce more subsidised housing options for higher earners in the PRS remains to be demonstrated.
I had to make unacceptable compromises, to find a home with a rent/mortgage I can afford – PRS household responses by household income income13
less than £20,000
£50,000 and above
I did not have to compromise to find a home I could afford
I had to make unacceptable compromises to find a home I could afford.
4. Private renters struggling to find suitable rental accommodation
The latter of the two groups Shelter assumes the AHP is targeting is easier to describe with data; with overcrowding and rental affordability collected in the English Housing Survey (EHS), these being two of the measures noted in the impact assessment. We also focus on these two measures as it is lower income households that are more likely to be overcrowded or in unaffordable housing. Poorer households are also more likely to be in poor quality housing;
12 20% of households with a gross income of less than £35,000 agreed they o make unacceptable compromises, to find a home with a rent/mortgage I can afford (e.g. living far away from work or family support, accepting poor conditions, overcrowding, etc.) YouGov Plc. Total sample size was 13268 adults. Fieldwork was undertaken between 6th - 14th April 2021. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).
however this is not explicitly mentioned in the impact assessment we have identified, despite being a critical point in Shelter’s view of the housing crisis.
The long-term trend for overcrowding shows ever higher numbers of households with insufficient space. The most recent EHS survey data suggests that overcrowding rates are the same as a decade ago when the AHP began, however the survey was disrupted because of Covid-19 so the table below shows the previous survey results also (when a larger sample was collected). It shows a percentage point increase in overcrowding for both social and private renters.
That equates to an increase of between 102,00 and 182,000 more households overcrowded in the PRS than a decade ago.
Proportion of overcrowded households by tenure
The EHS also tells us what level of rent or mortgage (mean) households are paying. Below we show the percentage increases, using the same years as above.
Weekly average rent/mortgage cost and percentage increase by tenure; London and England
Mortgage/rent increases from 2010-11 up until the present day show the largest increases have occurred for renters rather than for owners. Finally, to illustrate the plight of low-income
renters, below is a table generated from the latest EHS data currently available to analysts which shows that lower income households are put under extreme pressure in the PRS.
Proportion of income spent on rent by relative poverty measure (households below 60% of median income before housing costs) 
Relative poverty BHC
Households not in relative poverty
Households in relative poverty
% income spent on rent
% income spent on rent (inclusive of Housing Benefit)
The table above shows two measures of rent affordability – the amount of household income spent on rent; using a relative poverty measure to define low income households. Low income households spend the majority of their income on rent, whether they claim housing benefit or not. This level of expenditure on housing costs makes it highly unlikely that these households will be able to save for a deposit. And at these levels, their health and wellbeing will suffer as a result of financial distress. And indeed, Shelter’s recent Fight for Home19 report showed that low income households were far more likely to say their current housing situation harmed their physical and or mental health.
5. Households looking to access owner occupation but struggling with the barriers of large deposit requirements and high house prices
The other group that the AHP attempt to support are households looking to buy a home. These are primarily renters but it may also include people who are not currently living as a separate household (for example those living with family to help save for a deposit). Some of this group may be social renters but they will inevitably be the households least able to save for a deposit, and more likely to be on lower incomes.
The EHS estimates that 45% of private renters, and 69% of social renters have no savings at all – the survey also indicates that 91% of first-time buyers got on the property ladder by using their savings (up from 76% in 2017-18). Buying with the use of gifted money from others has reduced over the same period down 16 p.p. from 39% to 23%. These statistics combine to indicate that AHP low-cost ownership products are likely to be inaccessible to the majority of renters.
Further attempts to describe this target group for AHP ownership products is challenging, simply because there is no data on the demographic characteristics of Shared Ownership purchasers to analyse apart from high level transaction data published by DLUHC. The data estimates average market value of SO homes in 2019-20 to be £268,000, with purchasers normally acquiring a 41% share.
There are several Shared Ownership calculators that give prospective buyers information on the deposit, mortgage and rent costs required, based on the eligibility criteria set out by government for shared owners. The criteria identify the range in which a loan to income should fall - between 2.5 – 4.5 gross household income. Purchasers’ monthly outgoings are also considered so that the monthly outgoings of a Shared Ownership property are sustainable. Rent charges on the equity share retained by the housing provider varies but the value of 2.75% annually appears to be a common value used.
Shelter has attempted to describe the financial circumstance of new shared owners based on this information. The typical Shared Ownership buyer would need a deposit of £17,558 and can expect to pay £823 a month in mortgage and rent charges (excluding service charges). For this to be in line with accepted affordability measures (normally 30% of gross household income) then the household should have a gross income of £32,920; although, the SO criteria allows for a slightly higher loan to income ratios.
The average home in England bought by a first time buyer (FTB) is currently £236,000, meaning that the typical FTB needs a deposit of around £38,000 and a household income of £44,000 a year, a value far higher than the median household income in the UK. The EHS supports this analysis as 62% of first time buyers are in the top 40% of earners; paying around £25 - £44,000 as a deposit (median and mean respectively) and the average household income is £30,000.
Using the most recent wave of the Wealth and Asset Survey, Shelter estimates that only 5% of all renters (the survey doesn’t differentiate between social and private) have this level of savings.
Percentage of renters (private and social combined) with savings
It is difficult to make clear conclusions with this analysis, particularly because the distribution of Shared Ownership home sales is likely to be quite different from those in the open market, but the numbers indicate similar economic circumstances for both types of FTB’ers.
6. Components of groups in need of affordable housing
Based on the analysis presented above, it would be reasonable to surmise at least 4.7 million renting households cannot access home ownership at all regardless of any support that the AHP might offer through accessible ownership provisions. This leaves 2.4 million private renters that may at least have savings to buy; 1.2 million social renters have savings.
Households looking to access owner occupation but struggling with the barriers of large deposit requirements and high house prices in their local area.
This group appear to be higher earning Private Renters, or younger adults still living at home. Their incomes may be comparable with those FTB’ers buying in the open market. The obvious differentiation is that these households are likely to have smaller reserves of savings making a private market purchase less achievable.
A small proportion will live in overcrowded rental homes, and/or poor conditions, but are less likely to do so than lower income households.
• Households struggling to find suitable rental accommodation for their needs; meaning they end up in unaffordable, unsuitable, overcrowded or dangerous homes.
This group is likely to contain many of the 45% of renters that are unable to save; given this suggests poor affordability. These household are likely to be, therefore, at the lower end of the income scale, are more likely to be living in crowded accommodation, and homes that are in poor condition also. Additional groups to be included too are those who are currently homeless. There are many definitions we might use, including an official measure published by government; however, here we will use the Herriot-Watt estimate of Core Homelessness (reported in Crisis‘ Homelessness Monitor) which covers;
• Rough sleepers
• Those sleeping in places not intended as residential accommodation (e.g. cars)
• People in homelessness hostels, refuges and shelters
• Households in unsuitable temporary accommodation
• Sofa surfers (living with non-family, short term/precarious agreements and those in overcrowded homes).
In 2020/21, during the pandemic Crisis’ Homelessness Monitor estimated that 200,000 households were experiencing some form of homelessness. With the vast majority of these being sofa surfers.28 The Crisis monitor report restricts its analysis to a sub-set of households living in temporary accommodation: including all households in TA adds a further 76,000 households in need of a secure home.
7. Affordable home ownership
We have already discussed the relative affordability of Shared Ownership, the main product within the AHP for potential FTB’ers, however the most recent AHP also includes funding for a pilot of First Homes, a discounted market sale home ownership product. First Homes will take precedence over Shared Ownership in national planning policy framework rules for section 106 contributions and, if the piloting is a success, First Homes may become part of the grant funded AHP.
Focusing on what is available, however, for Shared Ownership we can only surmise the typical financial position of a beneficiary from the sales specific data. In the first year of data collection, the typical Shared Ownership home value was £172,139 (£160,000 median) - this has risen by 53% to £245,000 in 2019-20 (£267,649 median – equal to 55% increase).
While prices have risen, the equity stake that buyers have taken on has increased by more 59% in fact (or 60% for median purchasers); at the same time however, deposits have shrunk. At the beginning, the typical deposit was 15% (20% median) but apart from a slight increase in deposit proportion between 2014 and 2016, deposits have shrunk by 4 percentage points to 11% (and 16% for median purchases).
These trends tell us very little about the buyers, apart from a suggestion that the ability to save has not kept up with price rises. The typical equity stake bought by prospective Shared Owners has remained broadly unchanged at 40% (40% - 41% for median purchases). The higher mean value compared with the median estimates also suggest a skewed distribution of prices too with a concentration of cheaper properties, but lots of far more expensive properties too (most likely in London).
And finally, as we have seen from the comparison of incomes and wages for Shared Ownership buyers and FTB’ers earlier in this section, that apart from the different deposit requirements, the wage demands on both groups appear similar.
There are several sources for household income in the UK to assess how many households might have access to Shared Ownership. The Household Finances Survey estimates median gross disposable income for all households in the UK to be £29,900 but this includes benefits and is equivalised (to account for different household sizes). We have used the English Housing Survey which breaks down income by household tenure.29
These incomes, for each household, from the lowest earners to the highest, for all renters, private renters, and all households are presented below.
Household income distributions, based on EHS 2018-19 data by Private Renters, All Renters and All Households
We can use this to estimate how many households could afford the mortgage of a Shared Ownership home and estimate the affordability of the repayments.
Using the income distribution data above, Shelter estimates that only the top third (36%), by disposable income, of private renters could afford Shared Ownership. If we include social renters this figure drops further to the top quarter (27%). But these estimates are unsurprising, given the English Housing Survey also estimates that the majority (62%) of first-time buyers are in the top 40% of households by income.
8. Social Rent
One of the primary benefits that social housing affords to low-income renters is in the form of reduced cost of rent, which then frees up disposable income for individuals to spend on other essentials, such as heating and food. Lower income households regularly report cutting down
29 The EHS 2018-19 estimate of median household income is £25,668 suggesting that to incomes have risen by 16% in the past 3 years, or approximately 5% annually. While this seems too high in comparison with CPI inflation, for the purposes of this analysis we will inflate all figures by this amount.
on essentials just to pay the rent, and of course some will risk eviction rather than go hungry; in Shelter’s 2021 survey, we found that 20% of English private renters agreed that they had to cut back on essentials to pay the rent.31 In additions to higher rents in the PRS, the shortcoming of welfare support exacerbate the problem of unaffordability: DWP data on LHA shortfalls in the PRS suggest that 658,000 households have to make up rent that is not covered by their housing benefits, with half of these households being families with children.32
What can be said with relative accuracy, is that regardless of benefit status and household income, private renting is generally significantly more costly than social renting.
Median (l) and Mean (r) weekly rents for London, England (ex-London) and England as a whole 2020-2021
all social renters
all social renters
% of PRS
% of PRS
% of PRS
% of PRS
% of PRS
% of PRS
And again, while there are various sources available to consider the difference, the English Housing Survey (table of data above) shows us that rents in social housing are, on average, across England are between £64 to £104 a week cheaper. This rises to around £200 a week for London renters. Returning to the DWP data on rent shortfalls because of restricted Local Housing Allowance, we see, across England, the typical shortfall (median) is around £105. It should also be noted that the EHS rents will include households paying Affordable Rent in the social housing sector, meaning the difference between average PRS rents and social rents will be slightly understated.
9. Comparing the benefits of supporting low income renters vs aspiring home owners
Because of the lack of data on the outcomes for those taking advantage of Shared Ownership (or other Affordable Ownership products) it isn’t possible to assess and compare the individual or collective benefits of these two forms of support provided by the AHP. Undoubtably, because of the unit cost vs equity benefits of ownership, it is probably that the benefits of ownership products outweigh those for Social Rent, however were DLUHC to include the costs associated with poorer health and educational outcomes, and the cost implications of homelessness and/or temporary accommodation would this still be the case?
10. Declining delivery of Social Rent
Moving onto the present state of affordable housing supply, the introduction of the AHP, has shifted the focus of housing policy from providing subsidised units that offer an alternative to the market – as social rents do – to ever more market focused output. The data below shows this shift well.
Affordable housing supply - all sources of funding
Prior to the introduction of the AHP the majority of homes were for social rent (blue), with a smaller but significant proportion being provided for ownership. In 2000/01 the ratio of social rent to low cost ownership was 4:1. As of last financial year, that ratio has been flipped 1:3 in favour of ownership. If the more costly – and market linked – rental tenures are included
(London Affordable Rent, Affordable Rent and Intermediate Rent) the ratio has still deteriorated; 3:1. So, while the cost of housing has continued to go up after the turn of the century, the action of successive governments has been to look towards market linked products.
The above chart includes all sources of Affordable Housing, not only those from the AHP itself. Affordable Homes are also funded via developer contributions, private investment, delivered by housing associations, and by local authorities using borrowing, and Right to Buy receipts. The chart below shows how the role of grant funding has diminished and is no longer the primary source of Affordable Housing.
At the start of this century 96% of all affordable homes were delivered using grant, this is now down to just a third (32%) for the last 6 financial years. And last year, only 3% of the total supply of Affordable Housing was grant funded Social Rent. This means more and more supply is reliant in some way on the private market rather than delivered via a source that is insulated from challenging market forces.
Affordable Housing Units completed by funding source
We will in this section we will focus on those units directly funded by government as government, arguably has more control over this source of supply.
11. Homes England grant rates
Homes England, the body responsible for administrating the AHP outside of London (where the GLA administer and manage the London allocation), produces a regular report on grant allocation. It helpfully sets out the total number of units funded, and the average grant rate per home type. The most recent update (September 2019), gives the most up to date estimates.
Headline Grant Expenditure by Homes England Region
Funding by area (£)
Affordable Home Ownership (units)
Affordable Rent (units)
Social Rent (units)
The ‘nil-grant’ homes are presented in the tables because Homes England funding oftentimes helps to support higher levels of supply on particular schemes (the LA or PRP funded units presented in the charts above). As with the DLUHC data presented above, grant funded social rent accounts for only 3% of all units produced.
Homes England average grant rates
Average grant by
North East Y&H
This table show that social rent grant is approximately 46% higher than affordable rent grant, and 67% higher than Affordable Home Ownership grant. Grant levels are not consistent, they depend on the bids put forward and accepted. If an area would like to build social rent but is restricted by the regional allocation and £50 rule, then they will not get approved.
Equally, in low cost areas In the North East and Yorkshire & the Humber region, for example, grant rates across tenures are similar allowing for more flexibility without limiting unit delivery. 12. Greater London Authority grant rates
The GLA do not report expenditure on grants per home in the same level of detail unfortunately. Instead they publish the overall grant allocation by provider (either PRP or LA), and the provisional number of units to be delivered.
In the last funding programme (2016-21) the GLA distributed £1.7 bn to 44 separate providers, to deliver 49,398 homes in total. For the next round (2021-26) the GLA have published slightly more detail despite the grant rate being reported as a combined figure.
GLA published grant awards for London AHP 2016-21
Registered Private Providers (PRP)
Local Authorities (LA)
These numbers give us an idea of how much grant was spent per unit but as the rest of England data shows us, grant rates vary from tenure to tenure, and location to location. As an example of the variability, if we look at the average grant per unit from the table above, LAs have spent over £53,000 per unit, while PRP’s have spent closer to £34,000. This difference could be related to the relative scale of particular schemes – on average each LA bid to build 334 units compared to 1295 for a PRP – achieving some economies of scale, or it could be as a result of different tenure mix.
For the next wave of social housing, the GLA have provided more details on the tenure spilt, but not the grant rates for each.
GLA units and overall grant rate by housing provider 2021-26
Total grant awarded
Total units committed
The newer release is a little more informative, however as with the earlier data, these numbers relate to planned delivery and not the actual results of grant investment. We can see that local authorities here have chosen to deliver more social housing, so the grant level discrepancy in the previous programme may be due to this reason (the number of homes delivered by each provider type is closer in this programme also, 485 for LAs and 629 for PRPs).
Because we do not have grant estimates by tenure, we will assume that the grant allocation is proportional to what is seen in the South East data from Homes England; i.e. the grant required for a social rent home is almost twice (188%) of the affordable home ownership grant.
13. Spending on ownership vs. rental tenures
Using the detailed Homes England data we can see that as a result of the shift in priorities, social rent expenditure is dwarfed by ownership options. Rental tenures remain the largest proportion for expenditure, however.
Homes England grant expenditure (millions) by tenure, 2016-21(end of September 2019)
All regions exc. London
For London, this is an estimate, rather than reporting administrative data (as above) because grants have not been published. The data is also a forecast of supply, not delivery. We have used the grant ratio (SR to AHR) as seen in the South East data produced by Homes England, assuming it to be the best approximate for what is happening in London. GLA estimated grant expenditure (millions) by tenure, 2021-26
SR grant - total
AHO grant - total
SR grant -per unit
AHO grant per unit
Private Registered Provider
Because of a higher number of Social Rent homes planned for in London, grant for Social Rent is the largest expenditure (71%) in the GLA’s total AHP plans for 2021-26. For clarity, we have included our estimated grant rates in the above table too.
14. How many more Social Rent homes could be produced if marginal ownership were removed from the AHP funding stream
The initiation of the AHP focused on the maximisation of units over the longer-term value that social housing provides. However, as discussed in earlier sections, Shelter has suggested that this strategy may be heaping greater negative impacts on those at the lower end of the income
scale with marginal benefits to those who do have the income to service a mortgage under Shared Ownership or similar.
As a result, Shelter is keen to understand what level of social a rent supply could be achieved with the budget as is.
Using the grant figures published by Homes England, and the estimated grant and future expenditure by the GLA, we can estimate the number of additional social rent homes that could be achieved if other tenures were de-prioritised.
Funding and grant summary and estimate of unit boost with grant reallocation
Rest of England (HE)
Total area budget
Additional SR units possible with budget
Additional SR units possible with budget
AHO funded units
AR funded units
SR funded units
For the Homes England funding, a shift away from affordable home ownership, would result in a 37% reduction in units overall but a 12-fold increase in social rent supply from 2,972 to 37,792.
For the GLA budget, and again based on estimated future numbers, a shift away from affordable home ownership would result in a more modest 40% increase in social rent supply, and only a 20% reduction in units, overall, from 16,739 to 23,480.
This paper has shown that given the size and relative importance of the Affordable Homes Programme as a central policy for combating housing affordability issues, there has been too little thought on defining the intended beneficiaries of the programme or assessing whether objectives of the funding have been met.
The only objective that has been set out clearly in the documentation is one of unit maximisation. As a result, the programme has delivered (and is delivering) a large proportion of
homes that are unaffordable or inaccessible to many of those who face barriers to accessing safe, secure, affordable housing from the market.
While it is clear that the AHP doesn’t only aim to maximise units, without a clear understanding of what ‘needs not being met by the market’ means, it is impossible to assess how the balance of tenures delivered within the programme fits with its intended objectives.
Government may claim that unit maximisation is a sound approach, because supporting higher levels of development should eventually impact on affordability across all tenures, but if this is the case it is not made clear.
In summary, the AHP has directed tens of billions of pounds of funding towards an ill-defined objective, with no clarity on how well that activity has performed. Equally, until recently there has been no attempt to evaluate the impact of the programme in 11 years of activity.
Recommendation 1: In the next Affordable Homes Programme, government should set out a clear policy objective and framework for evaluation so that future expenditure can be assessed robustly.
Furthermore, when inferring what might be the intended objectives of the programme, as this analysis has done, the balance of homes currently delivered in the programme seems unjustified.
When Shelter challenges government on its record regarding homelessness, the government points towards the Affordable Homes Programme as its remedy. However, the implied aim and the messaging simply does not match up; if someone is at risk of losing a roof over their head, access to low-cost home ownership really isn’t a viable solution.
Government housing policy, of which the AHP is a key part, is not successfully tackling the housing emergency. Homelessness has increased in the last decade, nearly 100,000 households are living often poor quality, unsuitable temporary accommodation, and the private rented sector is not delivering quality, security or affordability that those now forced rely on it should be able to expect. This will only be exacerbated by the growing cost of living crisis.
While the government has committed to delivering an “increase the amount of social housing available over time”, allocations in the 2021-26 are likely to be insufficient to ensure more social rent homes are built than are lost through sales and demolitions.
As the analysis in this paper has shown, there is scope to significantly increase social housing delivery simply be re-prioritising Social Rent homes within the existing funding envelope. As such, government must justify why the benefits of delivering other mixes of tenures outweigh the benefits of prioritising Social Rent homes – or why the costs to individuals and wider society of not doing so are justified.
Shelter believes that a robust assessment of the programme’s costs and benefits would show that the current balance of homes delivered in the AHP cannot be justified.
Such an assessment of the AHP might look at the direct benefits that accrue to an individual household, such as from rent saved – as will happen when someone enters social housing from the private rented sector.
However, the impact of poor housing is not only on household budgets. Research shows that the poorest households and households experiencing homelessness often live in the extremely poor conditions, with impacts on their physical and mental health, be this as a result of stress due to insecurity or unaffordability, or because their housing is dangerous, unsanitary or not suitable for their needs. Moreover, the hardship that homeless children face is likely to have huge ramifications for their life chances. These sorts of impacts have a direct effect on people’s ability to live and work; they may miss more work days due to sickness, or make use of health services.
These are costs to the government that should be avoidable, and would be addressed by a significant programme of social housebuilding. Social rent homes are the most affordable tenure on average across the country, and the social sector has some of the highest housing standards in England.
Yet social housing providers face many insurmountable barriers to delivering homes for Social Rent in the AHP. The operation of “cost minimisation” and “value for money” in the AHP, along with other geographical restrictions such as ‘the £50 rule’ discussed in this paper, drive down grant rates making the delivery of social rent homes virtually impossible in many locations. As a
result, the AHP is unable to deliver for those it is purportedly intended to serve, nor can it deliver decent quantities of the type of housing that can best address the individual and social costs of the housing emergency.
Recommendation 2: the AHP must be refocused to deliver Social Rent homes as the priority tenure within the programme. The assessment criteria in the programme should be overhauled and geographical restrictions on grant rates should be scrapped entirely, to enable the delivery of social rent homes everywhere they are needed.
 K Barker, Review of Housing Supply, 2004
 MHCLG, Affordable Homes Programme Framework 2011-15, 2011
 DLUHC, Social Housing Lettings in England, April 2020 to March 2021, Table 2c and Table 2d
 National Audit Office, Financial viability of the social housing sector: introducing the Affordable Homes Programme, 2012
 MHCLG, Shared Ownership and Affordable Homes Programme: addendum – Social Rent, 2018 6 DLUHC, Apply for Affordable Housing funding, 2020
 MHCLG, Full Equalities Impact Assessment for Affordable Rent, 2011
 House of Commons Library, Housing: how is need assessed?, 2020 and DLUHC, Guidance: Housing and economic needs assessment, 2020
 DLUHC, Apply for Affordable Housing funding, 2020
 MHCLG, Full Equalities Impact Assessment for Affordable Rent, 2011
 Please see annex for specific analysis on housing quality, affordability and overcrowding. Shelter used the latest available datasets to show that poorer households are more likely to be in worse housing within the PRS.
 The two estimates are based on the number of overcrowded households in 2010-11. Using the 2019-20 and 2020-21 estimates, respectively, we arrive at the two estimated increases above. Calculated using the results in AT1.7 from the ‘household annex table’ from the EHS headline report.
 DLUHC, EHS 2020-21 Headline Report AT 1.7
 DLUHC; EHS 2020-21 Headline Report – AT 1.10 and AT 1.11
 This analysis uses the 2018-19 EHS dataset, which is made available by DLUHC via the UK Data Archive. However, there is a significant lag between the survey completing and that years data being made available. 19 Shelter, Fight for Home, 2021
 Full data is published via DLUHC table 697 ‘Shared Ownership standard output’
 Homes England, Shared Ownership initial eligibility and affordability calculator – guidance note.
 This is the default value used by Legal and General in their SO affordability calculator.
 Based on a 25 year mortgage, 3.5% interest rate and a 41% equity share; equivalent to £109,736 on the £267,649 mean sale value reported for 2019-20
 Based on the October 2021 HMLR HPI release for first time buyers
 The average deposit is around 16% of the purchase price, and lenders tend to offer 4.5 times an applicants salary for a purchase. The current estimate of median household income from all sources is £29,900, adjusting this for the loss of income tax suggests that median gross income is around £35,000 a year.
 Based on the 2019-20 financial year, as estimated from the ONS Household Finance Survey for the UK.
 Shelter analysis of the Wealth and Asset Survey wave 7
 Shelter analysis of EHS 2018-19 Joint Household Income data, to plot estimates of income distributions for different household types. This analysis allows estimates, using the income function shown on the chart, of the % that earn any income value.
 Rents taken from 2020-21 headline tables, and Shelter analysis of
 DWP UC admin data August 2021. To estimate this we have taken a weighted average of the shortfall by number of children, however it is mathematically incorrect to use the median for this purpose but is instructive nonetheless.
 DLUHC, table 1000
 DLUHC, table 1000C and Shelter analysis
 Homes England, 2016 to 2021 Shared Ownership and Affordable Homes Programme summary: end of March 2021v, 2021
 Ibid. and Shelter analysis
 GLA, Mayor strikes deal for 50,000 new affordable homes, July 2017, available at https://www.london.gov.uk/pressreleases/mayoral/record-17bn-deal-for-new-homes
 NHF, What do the Affordable Homes Programme 21-26 strategic partnership grant allocations tell us?, December 2021, available at https://www.housing.org.uk/news-and-blogs/blogs/nathan-pickles/what-do-the-ahp-strategicpartnerships-tell-us
 Shelter analysis of Homes England AHP 2016-21 allocations, end of September 2019
 GLA Affordable Homes Programme 2021-26 allocations and Shelter analysis
 GLA and HE grant data and Shelter analysis; we have used the ratio of grant to SO and SR in the South East of England (HE data)
 Shelter, Unlocking social housing, 2022