Summary:
Following FoI requests, the price of the ‘Affordable Rent’ programme is becoming clear.
- The average ‘affordable rent’ per unit will be £6,909 a year, ranging from £5,195 in the North East and Yorkshire to £9,487 in London (over £182 a week).
- More than 82,000 social rented homes will be hijacked – ie ‘converted’ to ‘affordable rent’ in England – to inject an estimated £90 million a year into the scheme to help pay for it.
The Government’s ‘Affordable Rent’ programme has been a mysterious affair. Never has a programme been invented, promoted, negotiated and implemented with such little information being available to anyone wanting to scrutinise whether it might meet housing objectives and achieve reasonable value for money.
‘Affordable Rent’ is hugely controversial, for several reasons. First it means the virtual abandonment of the social rented programme as we have known it for decades. Secondly, it moves rent levels towards market rents – officially, ‘up to 80% of market rent’ – levels that are by common consent not ‘affordable’ in high rent areas by people on low or modest incomes. Thirdly, it is linked to the ending of security of tenure and the introduction of insecure fixed term tenancies. And fourthly, the programme is part funded by taking a large number of existing social rented homes that become available to let and ‘converting’ them into ‘affordable rent’ lettings at much higher rents.
The Government has boasted about the number of new AR homes that will be provided as evidence of their commitment to ’affordable homes’. But simple questions about the programme, like the range of rents to be charged, the average rents in each local authority area, the bedroom size of the accommodation being built, and the number of existing social homes to be ‘converted’ have not been answered.
Freedom of Information requests that I have put in to the Mayor of London (see here) and to the Communities department have begun to elicit some of the missing information about the planned programme as a whole. The recent ‘CORE’ statistics also revealed some information about lettings to the first homes produced, but that is inevitably an early and small sample (around 4,600 lets).
The response from CLG – rather less tardy and grudging with the information than the Mayor, I have to say in passing – is based on the original bids made by providers last year, which may have changed before the final contract was signed and may change again as the programme is implemented. It is extraordinary that more up to date and detailed monitoring is not taking place. However, the FoI reveals:
- The average ‘affordable rent’ per unit will be £6,909 a year (£133 a week) across England. This is 72.6% of the assessed market rent for these properties (which averages £9,513 a year).
The average figures for each of the operational regions are as follows:
Region Affordable Rent Market Rent % of market rent
East/South East 7,050 9,099 77.5%
London 9,487 14,584 65.1%
Midlands 5,684 7,208 78.9%
North East/Yorks & H 5,195 6,684 77.7%
North West 5,411 6,810 79.5%
South/South West 6,511 8,345 78.0%
ENGLAND 6,909 9,513 72.6%
- More than 82,000 social rented homes will be hijacked – ie ‘converted’ to ‘affordable rent’ in England – to help pay for the programme.
In terms of operational regions, this means that the number of social rented homes that will now not be available for letting at social rents will be:
16,504 – East/South East;
14,632 – London;
11,801 – Midlands;
11,810 – North East/Yorkshire/Humber;
17,092 – North West;
10,542 – South/South West.
Total 82,381 – England.
On conversion, the average rent for these homes will increase from £4,625 to £5,724, an uplift of £1,099 on average across the country. The uplift will range from £625 in NE/Y/H to £2,142 in London. These conversions will therefore subsidise the Affordable Rent programme by around £90m a year.
Information was NOT COLLECTED on bedroom size categories and the rents that would be charged for each, despite the fact that this was one of the controversial areas of the policy – and maximising the number of family units was an explicit objective of the policy, at least in London. It was also widely reported that some housing associations were so worried about the high rents they would have to charge for family accommodation that they were raising rents on small units to cross-subsidise larger ones. It is surely right that information should be in the public arena to determine whether the outcome was fair and reasonable.
CLG point to the guidance that has been published previously about the programme notably the Affordable Homes Framework and the procedure for assessing market rents.
The AR programme causes different problems in different parts of the country. In high value areas the relationship with market rents leads to rents that are way above what is normally regarded as ‘affordable’. Yet in low value areas a rent of 80% of market might be lower than the local ‘target rent’ for social rented homes, which is then used as a floor in the calculation of an AR rent. That helps explain why rents are closer to market levels in the cheaper parts of the country.
In London the average rent in some providers’ contracts is as high as £305 a week. We do not know how this varies according to the bedroom size of the property, but it is a large sum of money in anyone’s terms. In their desperation to make the scheme work the Government is letting housing benefit take the strain in the first instance, but no-one believes that this will be sustained in the medium term and when the new Universal Credit system is introduced.
The loss of more than 82,000 socially rented homes is a huge blow to the supply of genuinely affordable homes. The programme itself is back-loaded, so most homes will be produced in the third year, but it is not known when the impact of ‘conversions’ will be felt. But it will be soon and it will be severe.
These homes were built on the basis that they would be let to tenants at social rents and they have been hijacked to support the new programme financially.