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Time to rethink rent-setting

We need to think about how we can ensure rents are really affordable in local markets, while giving us the capacity to build much-needed new homes, says Ann Santry

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Picture: Getty
Picture: Getty

With an unquestionable need for new affordable homes, a spotlight on standards as well as a growing need to invest in communities, housing associations are being seen as a big part of the solution to the housing crisis.

That’s no surprise; our sector is financially strong, with some exceptionally talented and passionate people working to make a difference, every day.

And we are here to support our residents and communities, not to create profit for shareholders.

Investing in homes and the future of our communities is the right thing to do, but how do you continue to do this when rents and government grant have fallen?

At Sovereign, we have really focused our investment where we can have the greatest impact – while creating a more efficient and effective organisation through a long-term strategy of stock rationalisation and merger.

“How do you continue to invest in homes when rents and government grant have fallen?”

The results of that strategic approach have benefited both current and future residents, despite the rent cut.

Recently the government announced that housing associations can increase rents post-2020. This is good news; we’ll have more capacity to invest in homes as well as our residents and communities.

But is a national rent policy actually the right approach? Can one size fit all?

I think it’s time we really talked about rent.


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Intermediate rent. Affordable rent. Social rent. Market rent…

Sometimes, the professional terminology can get in the way.

For our residents, it’s just rent. And they only care whether or not they can afford it, and whether they’ve enough disposable income to support themselves and their families.

We took the decision to protect our social rented homes and not to convert them to higher rents a few years ago.

We were concerned about the potential reduction in the number of homes that were truly affordable to local people, and we stand by that decision.

“Housing markets vary enormously across the country and we need to recognise that.”

Despite that, we’ve continued to build a range of homes, and more than 90% of our development programme is made up of social and affordable rented, as well as shared ownership, homes.

We believe, in our markets, people are able and prepared to pay a bit more for a quality new home. But we need to be there for those on lower incomes, too.

While the challenges are often similar, housing markets vary enormously across the country and we need to recognise that.

A report out today, titled Setting Social Rent, found that increasing rents post-2020 would potentially allow housing associations to invest in building more homes as well as deliver larger welfare savings for government.

There’s a sound financial, as well as social, case for government to invest more in affordable homes.

The research, commissioned by campaign group Social Housing Under Threat (SHOUT), also found in some regions, such as the South East, rents could be increased even higher.

We agree, but we believe increases have to be affordable and linked to building new homes or increased investment in the community.

So, should we take a more flexible, local approach to rent?

“We believe increases have to be affordable and linked to building new homes or increased investment in the community.”

We don’t have the solution, but at Sovereign, as we consider our new strategy we’re thinking a lot about rents and affordability.

Social rent is the only truly affordable product for people on low incomes in our area, but supply is falling as demand grows.

We’ve been asking ourselves how we can make sure our homes are really affordable in local markets, while giving us the capacity to build much-needed new ones, too.

And we want to go further, and have an even greater impact in our communities.

Does the traditional approach to rent-setting, especially the formula, free us up to make this difference? Or can we design a new, more flexible approach to rents?

One which aligns rents to local markets and incomes better?

Can we cast off some of the political and cultural baggage of ‘social’ and ‘affordable’ labels, which reinforce stigma for the people who live there?

“Can we design a new, more flexible approach to rents? One which aligns rents to local markets and incomes better?”

As government and others really think deeply about the future of social housing, it’s time to be brave and rethink rent and the impact on affordability.

The reward could be a flexible rent policy that helps people achieve their aspirations, while helping to make their communities even better places to live. We’ll have the capacity to build those new homes, while government can bring down the welfare bill.

We think that’s worth talking about because if we don’t provide a supply of truly affordable rented homes, who will?

Ann Santry, chief executive, Sovereign

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