The West Midlands has become the first region to re-define ‘affordable housing’.
The West Midlands Combined Authority (WMCA) has introduced 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 affordable homes for local people but will also encourage new types of affordable housing to come onto the market.
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.
‘In recent years would-be homeowners have been forced to stand by and watch as house prices outstrip wages,’ said the mayor of the West Midlands Andy Street, who chairs the WMCA.
‘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 West Midlands needs to build 215,000 new homes by 2031 to meet future housing and economic demand.
Cllr Mike Bird, WMCA portfolio holder for housing and land and leader of Walsall Council, commented: ‘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.’