West Midlands becomes first region to re-define ‘affordable housing’

The new definition is based on paying no more than 35% of a salary on mortgages or rent.

Homeownership could be put within the reach of thousands of more people in the West Midlands thanks to a new regional approach to affordable housing.

The West Midlands Combined Authority (WMCA) has become the first region in the UK to introduce its own localised definition of affordable housing, linking the definition to the real world incomes of people in the area rather than to local house prices.

The new definition, which has been approved by the WMCA’s Housing and Land Board, is based on local people paying no more than 35% of their salary on mortgages or rent.

The WMCA believes the change will not only provide genuinely affordable homes for local people but also encourage new types of affordable housing to come onto the market, benefitting key workers including nurses, police and teachers.

The introduction of a more localised approach to investing in affordable housing comes as the authority continues to make hundreds of millions of pounds available to help developers build high-quality new homes on brownfield land across the region.

The new definition is significant because any development schemes receiving WMCA investment from its devolved housing and land funds must make a minimum of at least 20% of the homes in their scheme affordable.

Mayor of the West Midlands Andy Street, who chairs the WMCA, said: “In recent years would-be homeowners have been forced to stand by and watch as house prices outstrip wages.

“The current ‘affordability’ definition is 80% of market value, which for many people in the West Midlands still leaves homes frustratingly out of reach. 

“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.

“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.”

The new WMCA definition sets it at around 35% or less of the average gross earnings of the lowest quarter of wage earners in the local area.

This will be applied alongside a more flexible approach to the types of housing products classed as affordable in new developments.

The guidelines will be reviewed regularly to make sure prices reflect real incomes of local residents and the scheme is delivering its intention and purpose.

Cllr Mike Bird, WMCA portfolio holder for housing, said: “This is another example of how the WMCA and its partners are changing the housing market, using our funding to deliver the homes we need in the places where we need them.

“By building on brownfield land, regenerating local areas, supporting living in town centres and linking affordability to local incomes, we are leading the housing revolution.”

The West Midlands needs to build 215,000 new homes by 2031 to meet future housing and economic demand.

To help reach the target the WMCA has introduced a ‘brownfield first’ policy where new homes and commercial developments are built on former industrial land wherever possible and has secured new funding from the national government to help make it happen.

With such sites being notoriously difficult to build on because of the high clean-up costs for developers, and other constraints, the WMCA has committed substantial funding for land purchases and for brownfield remediation so sites can be made viable for development.

The policy and other investment to unlock new urban sites has helped see the number of new homes built in the West Midlands more than double over the last eight years.

A total of 16,938 properties were built in 2018/19 – a 15% rise on the previous year and twice the UK average increase. That compares to just 7,500 homes built in 2011.