Landlords split over power to set higher rents
Landlords are divided over plans to allow rents of up to 80 per cent market value for new social housing tenants.
The scheme, unveiled by chancellor George Osborne on Wednesday, would see new intermediate tenancies offered for all new build social homes. Tenants would face paying substantially higher rents than their existing counterparts.
The government is counting on enough landlords using the new freedoms to set higher rents in order to fund its plans to build 155,000 new homes. The National Housing Federation estimated that one in four landlords would need to put rents up to 80 per cent of the market value in order to fund that commitment, due to the almost halving of the overall budget for new social homes.
The Homes and Communities Agency will spend £1.6 billion on existing commitments in 2011/12.
The impact on tenants will be greatest in London, where an average social rent for a two-bedroom house is just £95, compared with £310 for a private rented home. A rent of 80 per cent of the market rate would equate to £248 per week.
Abigail Davies, head of policy for the Chartered Institute of Housing, said its workings suggested that the new rent policy would fund a maximum of just 80,000 new homes.
London & Quadrant, which manages 66,000 homes, welcomed the new freedoms, as did 50,000-property Home Group.
David Montague, chief executive of L&Q, said: ‘We now have the clarity and flexibility that we have been looking for, and need to focus on the practical steps that will help us deal with the harsh realities of today’s market.’
But David Harris, a housing officer working in rent recovery at 5,700-home association Trent & Dove, said: ‘This will present a challenge for landlords to maintain their rent recovery levels.’
Under new rules announced earlier this month, no family will be able to claim more than £26,000 a year in benefits.
James Murray, housing cabinet member for Islington Council, said: ‘The vast majority of families on low income won’t be able to live in affordable homes.’
Number 11’s plans for housing
£4.5 billion
HCA budget for 2011/14
£8.4 billion
HCA budget 2008/11
155,000
new homes to be delivered 20011/14
£2 billion
Investment in decent homes
Sector reaction
‘Financially, the ability to raise rents to 80 per cent is good, but we’d have to look at the impact on the consumer. In our area, the average household income is £13,000, and the reliance on public sector jobs means that people won’t be able to afford the rent.
Sinead Butters, chief executive, Aspire Housing
‘The government states it is committed to a new build programme for social housing and to decent homes but it is difficult to see how this is to be achieved or sustained in the light of this settlement.
Adrian Waite is a member of Inside Housing’s Ask the Experts panel and a specialist in public sector finance
‘Does anyone know what constitutes a ‘new’ tenant? I am on a year’s starter tenancy after which, if I behave myself, I was told I would be offered a ‘lifetime’ tenancy.’
Anonymous
