A Housing Affordability Standard for the UK

Abstract

Since 1990 there has been extensive exploration of the meaning of housing affordability by members of the academic, professional and advocacy communities in Britain. These debates have revealed weaknesses in the traditional ratio standard of affordability and led to arguments in support of an alternative, residual income concept of affordability. However, so far there has been only limited success in operationalising and applying the residual income approach in the UK. In the US, by contrast, arguments in support of a residual income approach to housing affordability emerged in the late 1960s and early 1970s, culminating in the formulation of operational standards utilising normative family budgets. This paper draws upon the US experience to formulate a residual income housing affordability standard for the UK that utilises the non-shelter components of the Family Budget Unit (FBU) ‘Low Cost but Acceptable’ budgets as the normative standard for minimum adequate residual income. The paper concludes by suggesting how use of such a ‘shelter’ poverty standard to assess housing affordability problems and needs in the UK might yield results that differ from those based on the ratio standard.