Conservatives' social rent plans: 10 unanswered questions

1.     What do they mean by social rent?

The phrase ‘social rent’ was dropped by the Tories in favour of ‘affordable rent’ in the very early days of the coalition. The idea was less government money with the additional costs covered by higher rents – up to 80% of the market level.

But with the return to social rent in language, will the return in rent levels be the same?

Will they be set according to the guideline target rents for social rented homes – which vary across the country but can be as low as 30% to 40% of market rates – or will the murky definitions of affordable housing be repurposed again with the phrase ‘social rent’ redefined? If not, can this work with just £1.4bn of grant?

Borrowing rates for associations are cheaper than ever, but most experts would agree social rent levels require a chunk of subsidy (of some kind) to make the sums add up.

2.     What does “the most ambitious” mean? How will this be ranked?

Are the Conservatives planning to favour the housing associations and councils with the biggest overall plans, or those with ambitions to build the highest proportion of affordable?

How do you compare London – and the subsidy provided by the sales market – to other areas of the country where this is not available? And how do you measure small housing associations and councils against the Sanctuary, L&Q and Clarion sized developers?

3.     When the tenant is offered the “first right to buy” after 10 or 15 years, is this at the usual discount? And does it replace the existing Right to Buy which kicks in after three?

The current Right to Buy for council tenants is available after three years, at a maximum discount of £78,600 nationally and £104,900 in London.

So does the new Right to Buy after 15 years mean this existing one is no longer available to council tenants in these new homes? And if there is to be a discount, how will that be funded?

4.     Is the whole of the £1.4bn of grant being given to this programme, or just a portion of it?

The government previously said it expects to get 40,000 homes from its £1.4bn of cash announced at the Autumn Statement. If it is upping grant rates to support lower social rents, this number must come down.

A £60,000 grant rate would yield a maximum of 23,000 homes. So will some of the money go to other, less grant-reliant products?

5.     Does “extra borrowing” mean Housing Revenue Account caps will be lifted for ambitious councils? And what rent deals can associations expect?

The Tory press release promises “extra borrowing capacity for councils and housing associations”. A housing association doesn’t have government-imposed limits on borrowing, so it is safe to assume this is mostly a promise aimed at the local authority sector.

The obvious implication therefore would be HRA cap changes – something the sector has long called for.

Meanwhile, housing associations want rent freedom, or at least the freedom to increase rents over time.

Could this talk about deals and the “most ambitious” include a deal on the association’s rent envelope across the rest of their stock? It’s certainly what the sector has been calling for.

6.     How will compulsory purchase be reformed?

The Conservative press release made some big promises about compulsory purchase orders for “derelict buildings” in town centres, suggesting councils would be allowed to buy them at below market value.

But this sort of land grab will leave a property owner somewhere very unhappy. Does the party have a plan to avoid getting itself tied up in litigation with angry landowners?

7.     How much, if any, of this funding will be given to devolved mayors and authorities?

Sadiq Khan’s team in London, at least, have made it clear they are hopeful of a chunk of the £1.4bn. And in media interviews, Conservative spokespeople suggested devolved assemblies would be involved in the plans.

With seven regional mayors (including London) to keep happy, that isn’t much cash to go round.

8.     What are the timescales?

There was a remarkable lack of targets – how many homes are planned and how long is it going to take to build them?

Compulsory purchase doesn’t happen quickly, so this could be a long process.

9.     When the homes are sold to a “private owner, landlord or institutional investor” is there any restriction on the rent which can be charged on them?

Is the expectation that tenants are kicked out after 10 or 15 years if they can’t buy? And will these institutions and private investors be free to crank rents up to private rates?

If so, there is an argument to be had about the use of public money to fund what will ultimately be a profit-making asset for private gain.

10.  What checks on the quality of homes will be included? Does this suggest an existing concern about the quality of social housing?

There were several references to checks on quality. Does this imply a worry among ministers about the quality of social and affordable housing following some high-profile media bashing for housing associations’ developments which haven’t gone to plan?