The proposals for the new ‘Affordable Rent’ regime published today by Communities and Local Government department and the Homes and Communities Agency are in the classic style of this government.
Make huge cuts. Change a few rules. Devolve responsibility. Then wash your hands, it’s nothing to do with us.
Passing the buck developed as an art form. Pontius Pilate has nothing on these guys. Nothing could be clearer than the one underlined and emphasised sentence in Grant Shapps’ introduction:
“So Government is getting out of the way where it needs to, and is supporting you where it can. Ultimately, though, delivery depends on the initiative of providers, and the support of local authorities and local communities. It is now up to you to deliver the homes we need.”
The mis-named ‘Affordable Rent’ (AR) product will be the main form of provision in future. Providers will be able to get some grant from the Homes and Communities Agency, but the pot is about half what it used to be. They will have to show how they can generate resources by borrowing (I thought the government didn’t like borrowing?) against the increased rental stream from letting new homes and a proportion of re-let homes at AR levels (up to 80% of market rents), together with other resources such as existing surpluses, s106 planning gain, free or cheap public land, recycled grant from previous developments and so on.
But there are no numbers – no specific expectations, not even a regional distribution of the HCA’s funding (although London is expected to get the same share of outputs as now, around 27%), no expected or even hoped-for split between city town and country. The outcome will depend on the bids, what providers think they can do and where they think they can do it. From housing strategy to housing chaos in one easy step.
The HCA paper does include some detail about AR. The product (and therefore the rental income) will only be available to Registered Providers who achieve an HCA contract for delivery, so that will exclude virtually all councils and all non-developing housing associations and any existing developing HAs who do not win a contract. So that will keep the numbers of AR lettings down and ensure that most re-lets across the stock will be under a continuation of the existing ‘rent restructuring’ rules. Under AR or social rent, the terms of tenancy will be up to the landlord to decide within a policy framework set by local authorities – subject to a 2 year minimum term for AR tenancies. So all future tenancies could be short or long term at the landlords’ whim.
The relationship between AR and housing benefit is going to be crucial. The HCA paper implies that HB will be payable on an AR letting even if the 80% market rent takes it above the local LHA limit. That might offer some protection to tenants who will be on benefits for a long time. However the overall benefits cap of £26,000 will still apply, irrespective of the rent being covered: in high rent areas, that will be the worst of all the new rules in practice. If the aim of building 150,000 new affordable homes is achieved, and say 90% of them are AR and say 60% of those are let to HB tenants, then the cost to the government will run to several hundred millions of pounds, proving yet again that cuts in one place often pop up as extra costs somewhere else.
Providers have to submit their ‘offers’ by 3 May and initial contracts are expected to be sign in July.