Affordable Homes Programme - England

Latest news

• there were 4,612 affordable rent lettings in 2011/12, compared to 262,527 new social lettings
• the average rent for an affordable rent letting was £110 per week, compared to an average of £81 for a social let with a private registered provider

Background

The Affordable Homes Programme is the main programme for the development of new affordable housing in England. It is intended to provide 170,000 new homes during the period 2011-15.

Under the programme, which is administered by the Homes and Communities Agency, successful bidders have received a total of £1.8bn of government grant. They will also relet a proportion of their stock at an ‘affordable rent’, set at up to 80% of local market rent, with the additional revenue from this higher rent used to supplement the grant they have received. The majority of new homes built under the programme will also be let at affordable rent.

Our view

CIH accepts that the decision to introduce affordable rent has the potential to help finance new, much-needed homes but we do not believe it is the right approach to funding those homes. We continue to raise concerns about an investment system which uses increased rents charged to the least well off in society to compensate for a significant reduction in capital funding.

The CIH report Appreciating assets shows how additional flexibility around asset management could deliver social benefits as well as income for new investment. We consider that if providers had the flexibility to manage their assets in a way that catered for a wider range of needs they could raise revenue in a fairer and more effective way than is currently offered by affordable rent.

CIH also has concerns that:

• In higher value areas 80% of market rent will be unaffordable to many tenants. Providers should consider the ability of tenants to pay, otherwise there is a risk that they will be forced to claim benefits to make up the difference
• In lower value areas where rent differentials between the social and private rented sector are not so marked, charging affordable rents at up to 80% of market is unlikely to generate sufficient revenues to compensate for the significant reduction in capital funding
• Providers may not be able to develop sufficient supported housing
• Providers may not be able to develop enough larger homes, especially in London where the £26,000 per year benefit cap hits hardest and larger homes are a priority
• There are some practical concerns regarding how affordable rent is calculated. For example because affordable rent is capped at 80% of market rent including service charges, some property types where there are likely to be substantial service charges may be impractical for conversion.

Helpful links

CIH response to the TSA on revisions to the tenancy standard to enable affordable rent March 2011

CIH briefing on the Affordable Homes Programme Framework - February 2011

TSA consultation document on revisions to the tenancy standard December 2010