Providers dropped affordable rent levels
More than a quarter of London providers of the Homes and Communities Agency’s affordable homes programme planned to charge at least 75 per cent of market rent when bids were submitted in 2011.
The £1.8 billion programme allows landlords to charge up to 80 per cent of market rent, but the average likely to be charged in London is around 65 per cent because of the higher levels of private rent in the capital.
Swan Housing Association’s London allocation of 1,286 homes is the fourth largest in the programme. It submitted an offer to charge an average of 11,804 a year, which is just over 75 per cent of market rent.
Swan said that the bid ‘represented a financially viable means of continuing to meet housing need in the area Swan operates’.
A spokesperson added: ‘The submission was made within the context of a tight public spending round with less public money available for investment in affordable housing and the continuing need to build new affordable housing.’
Other landlords whose offers were to develop homes to be let at 75 to 80 per cent of market levels included Estuary Housing Association, Paradigm Housing, Paragon Community Housing and Town & Country Housing.
The levels of rent that will ultimately be charged under the programme are dependent on agreements with local authorities, many of which are likely to force prices down.
Chris Whelan, housing development director at Paragon, confirmed that his organisation was likely to charge less than 60 per cent of market rent for homes with more than two bedrooms.
An HCA spokesperson said: ‘AHP offers were assessed according to fit with local priorities, value for money and deliverability, with the anticipation that providers would charge affordable rents in the region of 80 per cent of local market rents.
‘The AHP framework sets out quite clearly that providers could set lower rents and outlines some of the potential reasons for doing so, including where 80 per cent of market rents would be close to or above the Local Housing Allowance, or areas of significant regeneration.’
A spokesperson for the Greater London Authority, which took over responsibility for delivering the programme in London, added that all the rents in London were within LHA caps and that average rents across the capital were 65 per cent ‘in recognition of London’s market’.
Figures for Guildhouse UK in an earlier version of this story were inaccurate. The figures were obtained thorough a Freedom of Information Act request and supplied to Inside Housing.