Peabody boss suggests ‘municipal rent’ model as alternative to affordable rent tenure

Mr McDermott told attendees that the average Peabody rent in London – at £160 per week – “has to do some pretty heavy lifting in terms of reinvestment in the stock, in terms of all the new layers of legislation”.

He warned that without a review of the rent system, the goal to create truly mixed communities will fail.

“I do think there is a bit of a danger that we talk about mixed communities and actually we end up with bipolar communities, in the sense that those that really afford housing get housed, those that are in the most desperate need get housed, and that there’s a gap in the middle, and only really shared ownership addresses that,” the Peabody chief executive said.

He added: “I think if there is a way, be that municipal rent, be that flexi-rent, be that any of the other things that are out there, then I think that that’s to be encouraged, so I do think we need to look at the issue of rents fundamentally.”

A recent report by the Housing, Communities and Local Government Committee called for a new statutory definition of ‘affordable housing’, as the current description fails to reflect the situation across the country.

During the same panel session, Antonia Jennings, chief executive of the Centre for London, said the thinktank sees municipal build-to-rent (BTR) models – whereby local authorities provide private housing at capped, affordable rents – as “very much needed”.

“The idea came from the fact that… many people in London are stuck in this position where they don’t meet the threshold for social housing, but they’re really unable to clear market prices, so to that end it is creating somewhat of a new class of resident, I suppose, or of tenure mix,” Ms Jennings said.

Municipal BTR would therefore “go some way to alleviate that, as well as expand the balance sheet of local authorities”, she added.

Similarly, Joanne Drew, executive director of housing and regeneration at Enfield Council, said she is “really interested” in the municipal BTR model.

She said: “The reason that the municipal build-to-rent product would work is a way of targeting new housing supply and linking what would cost the welfare bill more money to raise [Local Housing Allowance], but linking that raise directly to new housing supply – that will be a provision that would go some way to making the [private rented sector] more accessible, whilst we also build out social housing.”

Ms Drew also said Enfield Council is seeing a trend of developers wanting to build 100% affordable housing schemes and wanting housing associations and councils to procure the homes from them.

She said this is “actually very positive” for a period while the housing supply mix rebalances and while “the sales market isn’t there”.

But, she said, the council is looking at how it might flip these homes to private down the line in order to create more mixed communities.

“We will be looking at how we retrofit those schemes. Hopefully, in three years’ time, the housing market will have picked up, and we can then flip some of what would have been affordable to private sale as the market allows,” Ms Drew told attendees.