Wednesday, 04 March 2015

Affordable rent model under threat

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 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.

Readers' comments (23)

  • Every time I see media reports on 'poverty' showing new satellite dishes on walls, smart phones all round and a shiny car my eyes glaze over.

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  • Colin Mcculloch

    Exasperated Me,

    Perhaps then you should go to the houses, as I do, where there are bare floorboards, dirty undecorated walls, nothing in the fridge, nothing in the cupboard and not enough cash to light and/or heat the house.

    There truly is poverty in this country - a country where Wayne Rooney earns £250,000 per week, 500,000 people were forced to use foodbanks in the past year. That's not Wayne's fault, but it is a fault of society that has allowed obscene wealth to spiral out of control.

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  • michael barratt

    Surprised? I dont think so

    Exasperated Me contribution above reflects an unpleasant "Blame the Victim' culture

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  • Leaving aside the tedious comment on poverty (not even sure a coeherent point was made) and not having yet been able to access the report, I would still like to highlight how very relevant and timely this is bearing in mind the forthcoming spending review on 26th June. Funding for affordable housing needs to reflect a possible three tier approach: 1) Social rent with a high level of capital subsidy to cater for those on benefits/very low income; 2) Affordable rent to cater for active households on incomes below the median with capital subsidy to reflect this and 3) minimum capital subisdies for low cost home ownership initiatives to aid middle income households. In this way new affordable housing can cater for the full range of excluded households up to and including those, in the capital, who might be on incomes close to the Mayor's income caps. Affordable rents, especially for households requiring family housing, is clearly not working in the capital and capital subsidies are desperately needed to ensure affordability. This has been recognised by both the CIH and NHF in their submissions to the government in advance of the Spending Review next week. Let's hope something sensible comes out.

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  • Beauty is in the eye ot the beholder, but poverty is in the flesh and bones of those who suffer it... There are millions of posts in this website alone saying that affordable rents are not affordable, so what is the surprise?... Affordable rents are generating poverty. If you really want to see social tenants to progress and get out of poverty go back to giving them social rents, secure tenancies, and give social tenants real rights (i.e. rights accompanied with the power to enforce them - like legal aid, etc)... Everything else is just spin, conning, and delusional.

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  • Alex Brown

    Thank you Colin for pointing out the reality of poverty, people need to look behind the media image portrayed, in most of the areas where I work up to 80% of social family housing has been sold so who owns the homes with the satelite dishes? Yes there are those on benefits where you wnder how they can afford the luxuries that you and I cannot but those are issues for elsewhere. Poverty is real and getting worse, benefit sanctions are one culprit forcing people to use foodbanks etc, 3 fold increase in claimants in a year in some areas. This is compounded by food inflation which bears no relation to the figures given by government, recently Morrisons budget mince has gone up 25% in 3 weeks as a typical example. Charges introduced by local authorities to make up budget deficits for items such as internet access make meeting Claimant Commitments impossible for those not online at home. Not to mention the educational damage to their children whose homework is so often internet based.

    Affordable homes are not affordable by those on minimum wage without support from HB, those on benefits might be helped by designation of Intermediate Rent taking them out of the capping regime but would they then fall foul of LHA? would need to look at the logic behind this idea.

    Basically though the doom mongers amongst us who said that Affordable Homes were a disaster waiting to happen are slowly being proved correct.

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  • Tenants that live in social housing are tired of being classed as a sub species by the government and the media.

    For too long the debate has been about the financial situation that bankers placed all of us in, what is the point of building 'affordable' houses that no one family living on low wages can afford thus placing them at risk of falling into debt?

    Tenantplus and Alex have cogent points, there needs to be a focus on the human element here and not just the financial side of the debate.

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  • Exasperated me...

    I have a satellite dish on my wall, but if you look not even real close you will see it is connected to nothing, if you look on the roof there is a TV aerial again not connected to anything, I do not have ANY TV let alone a 52" Flat screen, they peripherals may be there but very few are connected, you must stop listening to the drivel SCAMeron keeps churning out, nobody on Social Security can afford any luxuries unless they are at some point breaking the law, I know I can't, I end up after paying utility bills, etc with £15 a week to feed and clothe myself with as well as buy household products, you know luxuries like toilet paper?

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  • Joe Halewood

    I said the affordable (sic) rent model would create further dependency and would also see more tenants hit by the benefit cap in March...2012 and so this 'new' research some 15 months later is laughable. It was always going to be the case and no more than stating the bl**dy obvious.

    I also said in December 2011 it would increase the HB bill which Shapps strenuously denied only for the NAO to confirm it would do precisely that.

    Many others held the same view and again this wasn't rocket science just stating the obvious so why this 'new' research is even worthy of publication (other than as a bit of free advertising for the researchers) is beyond me!

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  • Chris

    Why is this being reported as if it were not predicted - it was, by commentators on this very portal, but not by any of the political elite who are now so far distant from any reality that they are more likely to believe their own spin than the chicken roosting on their shoulder.

    Nice touch IH - if memory serves me correctly your picture is of the only affordable home built as a direct result of the Shapps reforms whilst he was Housing Minister. Moaning about the poor show of the thousands of homes built by his predecessors the gabby demoniser could only produce one unit whilst in office - if anything measures the reality of spin versus action it is that duplicitous and multi-personality creature’s performance. Shame it's not as criminal as it is a social offence for politicians to behave such.

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