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Enough is enough, we need to call time on affordable rent
A regeneration scheme in Swindon, which will reduce the number of homes available at social rent levels in favour of higher affordable rents, highlights the folly of the current national approach to housing. The current pandemic highlights more than ever why the nation should rediscover its love of social rent, writes Martin Wicks
When the government introduced the second round of its Affordable Homes Programme there was no funding for social rented housing, save for 8,000 supported housing units.
Then-prime minister Theresa May subsequently announced that there would be funding for social rent homes. Yet by the end of last September, of the 57,543 homes funded by Homes England grant, only 2,972 were for social rent compared with 24,967 affordable rent and 29,604 affordable homeownership.
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The problems this funding system creates are exemplified by Swindon Council’s Queens Drive regeneration scheme.
This involves demolition of 86 old social rent units. Those homes will be replaced by 108 council properties, of which 76 will be affordable rent and only 32 social rent.
The project includes 17 shared ownership and 24 market rent flats. The latter would be sold to the council’s private company to provide revenue stream to its general fund.
So instead of all the council land being used for council housing, some of it will be used to bolster the general fund – effectively circumventing the ringfence of the Housing Revenue Account (HRA).
Of the 149 properties that will be built on council land, 41 will not be owned by the HRA. The increase in the number of council homes, for both affordable and social rent, will be only 22.
The benefit of building social rent homes is negated by the fact low level of grant means that in order to finance the scheme 50 existing social rent homes will be converted to affordable rent when they become void – further reducing the number of homes available at social rent levels.
The cost of the scheme is estimated at £34m, of which £28m is construction costs. Because the Homes England grant is less than £10m, the scheme involves £15.5m extra borrowing by the HRA. So the balance sheet of this regeneration is an extra 22 council properties, with the loss of 18 social rent properties, despite 32 new ones being built.
When you add an extra £8.2m of borrowing for a new build project at Windmill Hill, which will provide 64 affordable rent properties, the HRA will be saddled with an extra £23.7m debt, not far short of a 25% increase. Windmill Hill will be part funded by 40 conversions of existing stock from social rent to affordable rent.
What is the difference between social rent and affordable rent in Swindon? The data for 2019/20 shows that the average affordable rent is £31 higher than social rent.
The more bedrooms, the greater the difference. The rent for a three-bedroom affordable rent home is an average of £37 a week more than social rent. These are big differences for low-paid workers and those in precarious work. Certainly, the impact of the coronavirus pandemic will have destabilised many council tenants’ financial circumstances.
The slow conversion of social rent to affordable rent properties will make council rents unaffordable to more people. There are currently roughly 426 affordable rent properties in Swindon (9,898 social rent).
Regeneration with the government’s funding regime produces more homes which are unaffordable to many. Swindon Council introduced a ‘green light for housing’ policy whereby even the people on the housing list who come top in the bidding for a tenancy are means-tested.
Some are rejected because the council considers they cannot afford the rent. If they can’t afford a council rent home, what can they afford when private sector rents are so much higher?
“Whatever the efforts of councils, like Swindon, to build new homes, the absence of significant grant from central government means they have been unable to stop the fall in stock numbers resulting from the Right to Buy”
Even a lower quartile one-bedroom property in the private sector in Swindon is £126.92 a week compared with an average of £72 for a social rent council property. For a lower quartile three-bedroom property in the private sector, the rent is £174.23 a week compared with an average social rent for a three-bedroom council house of £85.92.
Under the current funding regime every new build or regeneration project will involve rent conversions because of the low level of grant available.
Whatever the efforts of councils, like Swindon, to build new homes, the absence of significant grant from central government means they have been unable to stop the fall in stock numbers resulting from the Right to Buy. As the town continues to grow, Swindon has around 200 less council homes than in 2011.
Swindon exemplifies the failure of government housing policy. The situation underlines the need for a concerted effort to fundamentally change government policy.
Ending the Right to Buy scheme is critical to stop the haemorrhaging of stock. Affordable rent, which irrationally increases the housing benefit bill, should be abandoned.
There should be a return to funding only social rent homes. Grant on a scale that Labour was prepared to support (£10bn a year for 100,000 council homes) is necessary. A large-scale council housebuilding programme, which even the Conservatives in the Local Government Association say is necessary to tackle the housing crisis, would make a significant contribution to overcoming the economic impact of the coronavirus crisis and boosting socially useful economic activity.
Martin Wicks, secretary, Swindon Tenants Campaign Group
