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An October 3rd Statistical Release by the Department for Communities and Local Government on ‘social lettings’ gives us a glimpse of the growth of the government’s “affordable rent model” (See What is the Affordable Rent Model? )[1]. When it decided to cut the previous government’s ‘social housing’ budget by 60% the coalition introduced “Affordable Rent” (AR) as a means of cutting subsidy; making new tenants pay for new building via higher rents (up to 80% of the private rental market) and housing associations via higher borrowing. Even worse the cost of the new building is in part paid for by converting ‘social rent’ homes to “affordable rent”, thus cutting the number of ‘social rent’ homes available.

According to the DCLG (Live Table 1012) there were 928 “affordable rent” homes completed in 2011/12. The number of social lettings by Private Registered Providers (Housing Associations) in the same year at AR were 4,679, suggesting 4 conversions for every new home built.

As more schemes were started completions increased. In 2012-13 were 6,856 AR homes completed. The Statistical Release shows that during that year PRPs let 27,715 properties at AR, suggesting roughly the same proportion of conversions. Last year’s social lets of AR comprised 18% of their general needs lettings (i.e. excluding sheltered and supported housing).

This level is likely to rise significantly since “affordable rent” starts have increased considerably. There were 20,727 starts between October of 2012 and March 2013, which suggests that there will be a steep increase of completions and associated conversions in 2013-14. So the number of ‘social rent’ homes will decline even further.

The average net weekly social rent of properties let in 2012/13 was £80, whereas “affordable rents” were £114. That’s a significant difference as you can see from the table below which compares AR with PRP and Local Authority rents.

Comparison of new general needs   lettings, 2012/13

England

London
Bedrooms

PRP

LA

AR

PRP

LA

AR
1

£74.14

£66.46

£108.58

£101.56

£84.18

£147.67
2

£85.86

£74.59

£112.78

£116.33

£97.96

£171.04
3

£96.08

£82.76

£116.50

£128.79

£112.42

£168.51
4 or more

£118.06

£99.90

£138.95

£142.35

£132.00

£204.51
All

£84.63

£73.59

£113.68

£115.77

£95.37

£159.95

Extracted from DCLG Statistical Release October 3rd 2013

As you can see from these figures AR rent is on average more than 50% higher than local authority rents, ranging from 39% higher for 4 or more bed properties to 63% for one bed properties.

According to the Statistical Bulletin at the end of March 2013 there were 284 PRPs that had 39,594 properties which were AR, most of which were general needs. However, they are also introducing AR for supported housing/older people comprising 1,839.  The average rents for these are £117.55 to which must be added an average service charge of £30.66 (£142.96 for London plus £42.51 service charge).

The number of “Affordable Rent” homes in Council stock was only 193 in 2012/13. This reflects the fact that they were not able to ‘offer’ these rents until April 2012. The numbers also reflect the high level of opposition to these higher rents which are unaffordable for many people. However, the next round of funding from the Homes & Communities Agency will be subject to bidding next year, and Councils will have to decide whether or not to bid for it. Winning grant from this source will be subject to Councils agreeing to build only “affordable rent” homes, converting ‘social rent’ homes to “affordable rent” and, according to the Housing Minister when speaking to the CIH conference, selling some voids (empty homes) on the open market. Hence the consequence of taking the Kings shilling will be to cut the number of ‘social rent’ homes available.

Any Council interested in tackling the housing crisis, rather than supporting the government’s disastrous housing policy, should refuse to bid for grants in the next round of the coalition’s “affordable homes” programme. It’s ironic that government support for new home building, instead of helping to increase the available number of genuinely affordable homes, should actually cut them. The other irony is that the coalition government which has said much about cutting the Housing Benefit bill, will continue to drive it up as the increase in the number of homes paying the higher “affordable rent” will mean a higher level of HB.

At the recent Labour conference there were mixed messages in relation to “affordable rent”. We need to press them for an unequivocal commitment that they will end “affordable rent” if elected.

Martin Wicks