It’s not just social rented housing that’s at risk – so is new housing at Affordable Rents

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Affordable housing is growing ‘at its fastest rate since 1993’, claims the government, with this week’s publication of a fresh set of statistics. But the same figures offer even more evidence of the inexorable decline of social renting. Yes, it’s true that last year’s output of more than 66,000 affordable homes is a significant achievement, but it came about principally because of the rigid cut-off date for the outgoing Affordable Homes Programme (AHP) at the end of March. Less than 10,000 of the new homes built last year were for social rent, and a fifth of those were funded from the remaining stages of the last Labour government’s programme. Overall, looking back to the start of the coalition, nearly four times as many new homes for social rent were built in 2010/11 than were built last year. And if we look ahead to the output from the current AHP that began this April, we can expect few if any new social rented homes to be built from now on.

And new construction is in any case only part of the story of the last four years. It just so happens that the total new build for social rent from all programmes – at 75,810 – was almost exactly matched by the numbers lost through lettings being converted from social rents to higher, Affordable Rents, as they fell vacant. There were 76,259 such conversions. In other words, for every social rented home built, an existing one had its rent put up to anything approaching 80% of market rents to help pay for the overall investment programme. And this is before we consider the effects of losses from right to buy and other causes: right to by alone disposed of over 44,000 social rented homes in those four years. So the outcome is that, while the coalition government built over 75,000 new social rented homes, mainly from programmes bequeathed by Labour, there was a likely net loss from the stock of at least 50,000 social rented lettings in the four years up to April 2015.

Yet even with the reinvigorated right to buy it is too soon to write the social rented sector’s obituary. The stock is still sizeable. But now there will be far fewer new homes being built, and more still will be converted under the government’s current AHP. Shortly, of course, right to buy for housing association tenants will begin to run alongside council right to buy. If and when replacements are built, they’ll no longer be at social rents. As if this were not enough, we also have to contend with the sale of high-value council houses, with details yet to be revealed as part of the Housing Bill.

But with the publication of the Spending Review and of its assessment by the Office for Budget Responsibility, it’s clear that the brief flowering of the government’s alternative rented product, Affordable Rent, will be just that. Originally, the AHP that began in April was to have run for five years, delivering 55,000 units annually to 2019/20, most of them for Affordable Rent. This will no longer happen, despite government claims to have ‘doubled’ housing investment. First, the OBR makes clear that changes like the government-imposed cuts in social landlord rents mean that output from housing associations has already peaked. By 2017/18 it will be down to around 23,000 units annually. Although OBR hasn’t assessed local authority capacity, we already know that many councils have reassessed or even abandoned their building plans because of the rent cuts and other factors. Nevertheless, for the next three years most of the building that does take place will be for letting at Affordable Rents.

But when the government’s investment plans take off, in 2018/19, a huge switch takes place. As Red Brick said last week, practically all the new investment is destined to support home ownership, whether through starter homes or shared ownership schemes. OBR says that associations’ spending on ‘social sector’ new build will fall to only £130 million annually for those three years. This compares to almost £1 billion annually under the current AHP.

By the end of April this year associations had just over 123,000 Affordable Rent dwellings in their stock, from new build and conversions under the previous AHP. By April 2018, this might have grown to perhaps something under 400,000 dwellings, or a bit more than ten per cent of social landlords’ rented stock. After that, under current plans there’ll be little further growth in what was until recently the Tory Party’s favoured form of ‘affordable’ housing. And right to buy will, of course, still be eroding the social rented stock held both by councils and housing associations. It’s not a happy prospect for the provision of housing at below market rents, or for those who can’t jump on the home ownership bandwagon.

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One Response to It’s not just social rented housing that’s at risk – so is new housing at Affordable Rents

  1. Pingback: Moment in the sun | Jules Birch

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