Housing affordability - short life working group: final report 2022 to 2024
As part of the Housing to 2040 strategy we committed to work with stakeholders to develop a shared understanding of affordability. The working group brought together experts from across Scotland’s housing sector. The final report of the group makes nine key recommendations to Ministers.
Footnotes
1 As chair, I would like to thank the Scottish Government secretariat who have supported this process throughout (Janine Kellett, Andrew Weild and Nicole Pettigrew). I also acknowledge the time and effort put in by the members of the working group (full list in annex 1). I would like to thank specific individuals who have been helpful in different ways in bringing this work together: Gillian Young, Madhu Satsangi, Edward Pybus, Craig Sanderson, Tony Cain, Eli Harji, David Bookbinder and Aoife Deery. I am also grateful to Adam Krawczyk from the Scottish Government who commented helpfully on the work at different stages of its development. We are also grateful to The Lines Between who undertook the qualitative research and thank CAS who allowed us to piggyback questions in the 2024 YouGov Scotland Omnibus survey. I also thank my academic colleagues with whom I have discussed affordability over many years: Duncan Maclennan, Alison More, Glen Bramley, Tony O’Sullivan, Steve Wilcox, Geoff Meen, Christine Whitehead, Joe Frey, Chris Leishman and Craig Watkins. All views and opinions remain my responsibility.
2 The UK Collaborative Centre for Housing Evidence (CaCHE) has recently worked with the Church of England and Nationwide Foundation to deliver a long term housing strategy for England (Homes for All: A Vision for England’s Housing System.) This includes (pp.24-26) an 18-point summary of what a well-functioning housing system might look like. A follow up report to the Nationwide Foundation on the wider value of housing to other social and economic domains, can be found here.
3 December 2024
4 Apart from rising rents in adverts for new tenancies in the PRS, members of the working group also pointed to a growing incidence of homelessness applications arising explicitly from the non-affordability of current renting.
5 Noting some specific high-cost provision impact on certain kinds of households e.g. homeless households in temporary accommodation
6 The recent 2024 Homes for All report for the Church of England noted (p.16) that between 1992 and 2022, English median household disposable incomes rose by just over 51% while house prices increased by 377% (ONS).
7 OECD analysis distinguishes between different models of equivalence scales seeking good practice. See the methods and concepts section.
8 LHA has of course been capped at the 30th percentile (prior to which it was at the median of the rent distribution), frozen, un-frozen and changed many times since 2010. There have also been criticisms of both the size of Scottish Broad Rental Market Areas (BRMA) and the rent data used – largely new advertised rents. There is also the generally overlooked statistical point that one distribution’s 30th percentile relative to the median can in practice look very different to that found in another BRMA – it depends on the degree of bunching and concentration of the rent distribution, which can vary significantly between markets.
9 MMR is an affordable rent product in Scotland that uses grant to housing associations so that they can provide housing to key workers, normally, a starting rent at or close to the local housing allowance level for the relevant property size. Subsequent rent increases should typically not exceed the median rent in the relevant BRMA rent distribution. Further detail on MMR rent rules can be found within Scottish Government guidance on the grant-funded element of the Affordable Housing Supply Programme. It has also been demonstrated that this can be done without grant in certain market contexts by using Financial Transactions Capital as a cheap long term repayable loan instead.
10 Housing affordability study: Findings report
11 Percentages may not add up to 100 due to rounding
12 Aberdeen City (2) Aberdeenshire, City of Edinburgh (5), East Ayrshire, Falkirk, Glasgow City (5), Highland, Midlothian, North Lanarkshire, Orkney Islands, Renfrewshire, Scottish Borders, Shetland Islands (2) and South Lanarkshire
13 Which does in fact require the use of a ratio or residual income measure
14 According to OECD the two good practice options for the deployment of income equivalisation scales to take account of differing household sizes and compositions, are: (1) OECD modified scale (adopted by ONS), which weights a household as 1.0 for the first adult and 0.5 for each additional adult and 0.3 for each child under 14 and 0.5 if 14 or over; (2) the square root scale, recently (2024) used by the Resolution Foundation in their housing and incomes analysis, multiplies household income by the square root of the number of household members i.e. a household of four requires twice the income of a single person household.
15 The UK (and Scottish) relative poverty standard says that to be out of relative poverty, After Housing Cost equivalised net disposable household income should exceed 60% of the UK median household income. Housing costs include the following: rent (gross of housing benefit); water rates; mortgage interest See further details at: https://data.gov.scot/poverty/#Poverty_measurement
16 These service charges, on grounds of simplicity, should be those that are clearly property-related or eligible for housing benefit.