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Affordability assessments: Data, automation and social purpose
A recent Nuffield Foundation-funded study, Code Encounters, examined how digital risk profiling tools are influencing access to housing.
INNOVATION & IMPROVEMENT
Professor Emeritus Alison Wallace
School of Business and Society, University of York
Emeritus Professor Alison Wallace
School of Business and Society, University of York
Issue 76 | February 2025
In social housing, the Code Encounters study found that automated or manual affordability assessments for incoming tenants have a confused purpose and unclear outcomes. While landlords try to limit exclusions based on these assessments and are recasting them as a triage point for support services, some still refuse tenancies to some tenants.
Many landlords are looking to digital platforms to smooth administration and provide greater information about tenants’ circumstances during the letting process. However, adopting automated affordability practices requires striking a delicate balance between leveraging digital tools for efficiency, respecting tenants’ privacy and autonomy and overcoming exclusion from housing safety nets.
With a renewed government focus on social housing standards and supply, providers have an opportunity to reassess how affordability assessments align with core sector values of support and inclusion.
Exploring the current landscape of affordability assessments
Over the past decade, reforms in welfare, higher ‘affordable’ rents and the marketisation of social housing have led landlords to adopt stringent affordability assessments during pre-tenancy checks to manage business risks.
Social landlords described diverse practices in terms of data usage, affordability thresholds and expenditure calculations - variations critical to rehousing at the margins. While some landlords viewed affordability assessments as tools for tenant support, others acknowledged their exclusionary impact, particularly on young people and others for whom the benefit system is inadequate, without viable housing alternatives. Few landlords could demonstrate enhanced tenancy sustainability by using the assessments.
Some applicants benefited from interventions like debt advice and income maximisation, often claiming significant sums in unclaimed benefits. However, discrepancies in affordability thresholds and expenditure estimates led to inconsistent outcomes, raising questions about the utility of these assessments in letting decisions. There was little focus on who passed or failed these assessments.
The pandemic and the cost-of-living crisis have intensified these concerns, challenging providers to reconcile their social mission with financial risks.
The push for digitisation and its implications
Many providers are adopting digital platforms, pulling down credit information data and leveraging tools like Open Banking to access detailed financial data for affordability assessments. While this promises administrative efficiency and enhanced insights, it also introduces ethical dilemmas. Tenants often liked the convenience of automation but expressed discomfort with intrusive data collection, which often goes beyond assessing payment histories and rent affordability.
Landlords must address these concerns by ensuring that data collection is proportionate, transparent, and aligned with tenants’ needs. Before fully embracing automation, providers should distinguish mandatory data required for letting decisions from data that tenants can volunteer to access additional services.
Maintaining values in a digital landlord
Algorithmic assessment can be configured to give tenants control and support but could also reinforce opaque and exclusionary practices. As social landlords navigate these complexities of affordability assessments and automation, the sector must ensure it provides inclusive housing.
Providers must consider the specifications of affordability assessments and the practices that surround their use to ensure both efficiency and access to the social housing safety net. To limit the imperative to use affordability assessments in social housing, policymakers and providers need to work collaboratively to address systemic challenges, such as affordable rents and welfare reform.
The study was a collaboration between the University of York and the University of Bristol and funded by the Nuffield Foundation. The full report and policy briefing on data, automation and access to social housing can be obtained from the Code Encounters website along with other outputs of the project.
