Monday, 02 March 2015

Vote on affordable rent model branded 'historic opportunity'

The London Assembly will vote this afternoon on whether to accept Boris Johnson’s affordable rent model.

Mr Johnson’s plans are to prevent London boroughs from setting caps in their local development plans on rent that can be charged for new affordable rented housing – instead setting the rent at the 80 per cent market rate across the city.

He rejected two of the three changes to affordable housing policy that were recommended by the planning Inspector.

Labour group planning spokesperson, Nicky Gavron, said the vote is ‘an historic opportunity for the Assembly to reject a mayoral strategy if a two-thirds majority can be secured’


He said: ‘Boris Johnson’s changes to the London Plan will push affordable housing out of the reach of the many Londoners on low, and in some areas, modest incomes

 ‘This will also drive up rent, increase land prices and further distort London’s housing market. Boris must take on the recommendations of the Independent Inspector, listen to local authorities and revise his London Plan.

‘Combined with the welfare reforms, the Mayor’s changes will make huge swathes of inner London even more unaffordable. Unless the Assembly can prevent this, it will ghettoise the city and put intolerable strain on a range of already overburdened local services in outer London.

‘It makes a mockery of localism in London: this is a situation where all boroughs of all political control are calling for the ability to set local affordable rent caps to reflect local circumstances and local need.’

Boris announced last month that he would refuse to delete paragraphs in his London Plan which exclude London boroughs from setting their own caps for affordable rent and stop councils from setting rent targets in their planning frameworks.

As previously reported in Inside Housing, a coalition of borough councils are considering legal action if Johnson’s plans go through.

Readers' comments (13)

  • Boris will make a great PM - just so long as every one follows his orders and nobody fails to exercise their local democratic freedoms in a manner he disagrees with. Then, the more violent character lurking in the background would be deployed.

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  • Joe Halewood

    If I understand the above correctly Boris wishes to see all of the so called "affordable rent" properties in London to be set at 80% of the gross market rent (GMR) and if that is so here are some figures to make your eyes water!

    Westminster has a 3 bed social rent averaging £124.70 according to latest figures.

    Westminster has a median GMR for a 3 bed property of £830.72 per week according to 2012 VOA figures

    Therefore 80% of this would see the "affordable" rent set at £664.57 per week.

    Westminster pays a maximum LHA of £347 per week to private tenants yet because "affordable" (sic) rent is a social housing model all of the £664.57 per week would be paid in HB.

    The inner London average GMR is £502 per week (VOA 2011/12 figures) which means the "affordable" (sic) rent figure at 80% would be £401.60 per week and again ALL of this would be paid by HB yet the LHA figure would still be £347 per week.

    Has anyone thought to cost the MASSIVE increase this would have to the overall housing benefit bill? Or is this just Boris playing politics and cleansing the capital?

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  • In response to Joe's comment above, my understanding is that while affordable rents can be set up to 80% of market rents, family sized units (i.e. 3+ beds) will be at or near social rent levels and the overall average affordable rent will be at 65% of market rent across the capital.

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  • Joe Halewood

    Toshisaisei - It was reported that AR levels in the capital came out around 65% yet Boris appears to be saying that they will (ie definitively) be set at 80% which is taking away any discretion.

    In any case 65% of the Westminster figure for a 3 bed would still be £540 per week and so almost £200 per week more in HB than Westminster pay out in LHA!!

    A week or so ago the HCA released the 2012/13 data which showed HB for the 31000 or so new AR properties averaged nationally £114.89 per week while same week HB figures revealed latest LHA average nationally was £105 per week.

    As I said all along AR properties will cost more in housing benefit than private properties which apart from massively increasing the overall bill just shows how ridiculous a concept the affordable (sic) rent programme is!

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  • "Affordable rent" is a disaster in London and no mayor who has a shred of understanding of ordinary people desperate for a home would allow it.

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  • Are you suggesting the Mayor does not understand the lives of ordinary people in London Paul?

    He understands the affordability of each of his homes, and recognises the need to multi-task across his many jobs in order to pay for them - even if that means being paid for doing his 'private' work whilst sitting in his publically funded office. Of course he understands the position of ordinary people, after all they are the ones upon whom his income, lifestyle and career depends.

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  • The proposed paragraphs in the London Plan do not necessarily mean that all “affordable rents” would be set at 80% of GMR, but they do mean that boroughs would have no planning powers to prevent it.

    The upshot of this policy is likely to be:

    1. Developer puts in a planning application for a mixed tenure development. For the purposes of their viability modelling they will assume that they will be able to sell any affordable units to a Registered Provider at a price that reflects a future income of 80% GMR. The boroughs would not be able to challenge this assumption.

    2. Either:
    a) The units will be bought by an unscrupulous HA that is prepared to charge the high rents regardless of the consequences for occupants
    b) RPs that are working in partnership with the boroughs to set rent levels that are affordable under the LHA cap (the majority in my experience) will not be able to afford to pay the developer the asking price for the affordable units, because they will not in fact have an income of 80% GMR from the units once let.

    3. The developer will then go back to the borough and say that they cannot find a buyer for the affordable units and that the S106 affordable housing obligation is rendering their scheme unviable.

    4. Thanks to other recent changes to planning law under this government , the borough will have to agree to vary the S106 so as not to prevent the development from going ahead.

    Hey presto – no more affordable housing on the site.

    A neat trick if your ideological goal is to get rid of social housing. An impending disaster for the rest of us.

    Everything crossed the London Assembly will take a stand this afternoon ….

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  • Social landlords have been totally self serving over the
    past 20 years / allowing rents to rise by 6-7-8 % p.a
    under new labour , and have now spent the past 3 years agreeing
    to implement the devastating welfare reforms brought in
    by the tories , who did not win an overall majority in 2010.

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  • When are social landlords going to stand up for what is right - good quality, low-rent homes? Tenants are crying out for social rented homes.

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  • Affordable rent is the only way forward for affordable housing in London. The higher rent is used to fund more affordable homes.

    Social rent involves massive public subsidy for minimal rents, most of which is paid back in Housing Benefit.

    Where is this money going to come from?

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