82,000 social rented homes hijacked to pay for ‘affordable rent’

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.

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15 Responses to 82,000 social rented homes hijacked to pay for ‘affordable rent’

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  9. grahamangus says:

    Dear Steve,              There are so many issues with this programme:                           1 ) Before the Government claimed that they were affordable, they should have defined affordability, we might have disagreed but at least there would have been a benchmark.                           2 ) Market Rent is a flexible friend, different valuers will reach different values using the guidelines. I would maintain that market rents should be established for every scheme so that proper account can be taken of location and surroundings. In Cornwall Market Rents are being assessed on a Parish or Town basis similar to LHA, so that Market Rents are too low in best locations and too high in less desirable locations, ‘affordable rents’ are being charged relating to LHA so that HB will cover them but I am aware of 3 b/r dwellings at £150 per week  £ 7800 / year rather higher than your regional average ! ( But still called affordable in a low wage area  )                           3 ) I am aware of former social rented houses being let at higher rents, similar to your 82000 but in the cases that I am aware of rather lower than new properties.                          4 ) If we want more houses when public expenditure is so constrained, there is at least an argument that social rents generally are too low and moving them up to say 50 % or 55 % of market rent might be a fairer way to raise more resources.                          5 ) The next question is who they are being let to, the Government indicated that they should be let on the same basis as previously for social renting but that appears very unlikely to happen. Some Housing Associations have publicly stated that they they are seeking to let dwellings to people in need but who they believe are more likely to be able to pay higher rents. I believe that others will follow the same route. In combination with giving Local Authorities greater freedom to manage their waiting lists, homelessness can be expected to rise together with a rise in B & B and Temp. Accomodation there is some indication that that is already happening but probably not as a result of the AHP.                                       It is very sad if we have come to the end of social housing, we may have. However I believe that there will be a backlash when all the reforms actually impact on tenants, the combination of ‘affordable rent’, welfare reform particularly the penalties for under occupation and the forthcoming Council Tax impost, frozen for most but not for the poorest !                        Graham Facks-Martin

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  11. Reblogged this on Socially Housed and commented:
    Just because you have the Word “Affordable” it doesn’t make it so! – We need “Social Housing” in this country – a Home available to everyone who needs it, NOT just those enforced “needy” or the wealthy – What about the Working class/Low to middle income earners… This is a shambolic travesty! Excellent Post!

  12. joehalewood says:

    Please ignore the £313k gross salary figure in the above comment (my mistake) – the correct gross salary figure to afford the dearest affordable rent would be £206k pa not £313k. Still more than 5 times the amount LB of Hammersmith & Fulham are saying bans you from social housing

  13. joehalewood says:

    Steve, major hat tip for this. I hope you dont mind but I have used the FOI data (I hope you got it by MasterCard as its priceless!!) to show that when you look at dearest “affordable (sic) rent” proposed in London and you factor in pay more to stay that you need a salary of £313k to afford it!

    Also it means that this property will attract more in HB at circa £495pw than the LHA maximum cap of £400pw allows as affordable (sic) rent is a social housing model and the programme framework document at 1.2 confirms this would receive full HB!

    A damning indictment of Tory policy that clearly shows it is bag of a fag packet policy as even if Osborne and Cameron were to pool their salaries they couldnt afford their flagship affordable rent!

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  15. So will there be any social rented homes at all?

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