Policy paper

Geographical targeting across 5 housing programme funds

Published 30 October 2018

Applies to England

© Crown copyright 2018

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This government is committed to make the housing market work for everyone and to tackle the barriers to buying a home.

We recognise that the pressures faced in buying a home do not affect the whole of the country in equal measure. Some local authorities in this country see house prices at 3 or 4 times the average earnings, whilst others see prices at 40 times earnings, some regions see this at 4 times income, others at more than 11 – so it is right that government funding is directed to address affordability where it poses the greatest problem for the country so homes can be built where they are most needed.

To define these areas we have looked at the key figures that matter when buying a home – house prices and wages. The way in which this is calculated is set out below.

Where decisions are taken on funding through these programmes, and where scheme proposals have not already been assessed, this will supplement other fund-specific criteria, and value for money stipulations, to guide the decisions taken on 5 funds. These are:

  • the Housing Infrastructure Fund (Forward Fund)
  • Estates Regeneration Fund
  • the short term Home Building Fund
  • the Small Sites Fund
  • the Land Assembly Fund

Areas of the highest affordability pressure will receive a minimum of 80% of the total funding from these programmes on average over the next 5 years. This will be managed across the applicable parts of the Ministry of Housing, Communities and Local Government’s CDEL budget, delegated to both the Greater London Authority and Homes England.

‘Highest Affordability Pressure’ has been defined by the following method:

  • the affordability ratio calculated by the ONS: median house price to median workplace based incomes, ranked from least to most affordable

  • we use each affordability ratio for 326 local authorities to derive a median affordability ratio and define authorities who are greater than or equal to this median as the high affordability pressure group, so as to split local authorities into two groups roughly of equal size

Organisations seeking funding for schemes in local authorities areas that are below the median will not be excluded from the above funding programmes and are still encouraged to apply for the 20% of available funding over the next 5 years.

The areas of highest affordability pressure have been calculated on a lower tier local authority basis. Where funding applications have been received from an upper tier authority, the department will consider where homes are coming forward and determine the weighting accordingly.

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