Affordable rent model under threat

‘Inside Housing’ reports;

“Tenants living in homes built under the affordable rent scheme are in greater poverty than those living in already existing social homes, according to a report released today.

That is one of a raft of issues identified with the model in a report from independent policy network Future of London which warns of the scheme’s future viability for the capital.

It makes a number of recommendations for changing the affordable rent model beyond 2015, including treating it as a more explicit ‘intermediate’ tenure for people on low incomes so it is not subject to welfare caps. Benefit-dependent households should pay a more traditionally subsidised social rent, the report suggests.

Author Andrew Heywood concluded welfare reform, including caps on housing benefit, was of serious concern to housing providers and despite higher rents, the affordable rent new-build homes were mainly being allocated to tenants on benefits.

The government announced the affordable rent programme in the 2010 comprehensive spending review for homes to be built with lower grant subsidies by allowing landlords to charge up to 80 per cent of market rent.

Future of London’s report found although most rents were being charged at less than 80 per cent, affordable rents were still typically 40 per cent higher than social rents. As most tenants were dependent on housing benefit the national housing benefit bill would inevitably rise because of the system, the report concluded.

The new-build ‘affordable rent’ homes were also leading to concerns about social and geographic segregation and impacts on local services with most being built mainly in outer London, particularly the east. There was also a wide range of rents being charged across London, even within local areas, the report found.

David Lunts, Greater London Authority executive director for housing and land, and Future of London chair, said: ‘As one might expect, affordable rent presents many challenges for London with its high development and housing costs, and this report makes a set of cogent recommendations for future policy that take account of the capital’s very particular circumstances.’

The report also found the 2011/15 affordable rent build programme was heavily ‘back-loaded’, with 6,686 new homes beginning construction as of 31 March 31 2013 and the balance of the programme due to be on site by October 2013, for completion by 31 March 2015. The target is for the model to provide 16,000 new homes for London by April 2015.

As of quarter three of 2012/13, there were just over 3,100 affordable rent model homes let in London, including 543 new-build homes and 2,571 conversions from traditional social rent.

Research for the report was carried out over six months and based on current housing data, interviews with local authorities and housing associations, a series of research seminars and detailed literature.”

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