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The new Affordable Homes Programme is welcome – but it has worrying elements
Funding for developing affordable homes in England is welcome, says David Montague, but L&Q is concerned about the conditions
The government has made a welcome commitment to all affordable housing tenures, including social rent, but there are concerns in the detail of the new Affordable Homes Programme that we will need to work through together.
Ministers fully understand that substantial investment in infrastructure and housing will be key to rebuilding our economy. The £12bn programme should give housing associations extra confidence to make long-term investment decisions that will increase supply – in L&Q’s case, 100,000 quality new homes over the coming years.
“Just hearing the government talking about social rent as a crucial tenure is a far cry from where we were a couple of years ago”
It should come as no surprise that this government has tipped the scales more in favour of affordable homeownership with this programme, but half of the grant will still fund homes for discounted rent, including 10% for supported housing. That funding for supported housing in particular will enable us to help more people affected by homelessness or domestic abuse, as well as older people – the groups hit hardest by the pandemic.
The split between social and affordable rent will be decided at a local level, but just hearing the government talking about social rent as a crucial tenure is a far cry from where we were a couple of years ago.
As a member of the G15, however, we do have concerns about the lower proportion of funding for London, given the acute housing need in the capital. Of course we recognise the need the quality affordable homes nationally and the government’s desire to ‘level up’ Britain – this is why L&Q is investing in the North West through the acquisition of Trafford Housing Trust – but we firmly hope that negotiations with the Greater London Authority are successful.
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The area of most concern in today’s announcement is shared ownership. We completely appreciate people’s desire to get onto the housing ladder, and L&Q has helped thousands of people to own a home through this route over the years, primarily in London. As a leasehold tenure, it also gives people the security they don’t get in private rent.
Yes, leasehold is currently in the firing line, with some of the major house builders facing enforcement action from the Competition and Markets Authority over mis-selling, but it remains a vital tenure, particularly in London.
However, the introduction of Right to Shared Ownership and the proposed new model of shared ownership – especially the 10-year obligation for landlords to carry out repairs and maintenance – looks deeply problematic.
“The introduction of Right to Shared Ownership and the proposed new model of shared ownership – especially the 10-year obligation for landlords to carry out repairs and maintenance – looks deeply problematic”
Simply put, the rent we charge on shared ownership averages at just 60% of market rates, and so we feel it is fair and reasonable for leaseholders to pay for repairs. We have no desire to increase rents, so unless there are higher grant rates, this new repairs obligation could make the tenure financially unviable. Worse still, Section 106 shared ownership is not grant funded at all – a significant percentage of housing association output here could be wiped out altogether.
The difficulty with fixed allocations is that higher grant rates for shared ownership would mean less money for discounted rent, so we need to understand the modelling and have important conversations with government.
There are clearly issues to be resolved and crucial details to be ironed out, but we are aligned in our determination and shared ambition to build the quality homes that Britain urgently needs.
David Montague, chief executive, L&Q
