Housing Core Strategy Review Issues and Options

Housing Issues and Options

12 Issue: The Affordable Rented Tenure

Issues

12.1         In order to support the development of new affordable housing units, a type of affordable housing tenure has been introduced called Affordable Rent (AR). This new type of affordable housing is a type of social housing which is available to those in housing need and on the Council’s Common Housing Register. However, the rents charged are much higher and can be up to 80 per cent market rent.

12.2          Due to this change, it is important that sufficient new Affordable Rent properties are built.  Additionally, the existing supply of social rented housing will reduce with the introduction of Affordable Rent because Housing Associations can convert properties to Affordable Rent.  The effects of this decrease in the availability of social rented stock, and an increase, over time, of the new type of Affordable Rent tenure is shown in the graphs below (figures 2 and 3).  Assuming 50% of all housing association lettings are at Affordable Rent the number of socially rented homes will almost halve in 30 years. Assuming a figure of 75% of all housing association lettings are at affordable rent the number of socially rented homes available will almost halve in 20 years. A further explanation of Affordable Rent is provided in Appendix 3.

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  Figure 2: New Units and Conversions to Affordable Rents (assuming 50% conversion) 

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Figure 3: New Units and Conversions to Affordable Rents (assuming 75% conversion)

Issues

12.3         The Royal Borough has developed its own interim housing policy for dealing with this, which advises on acceptable levels of Affordable Rent. It restricts the rents which may be charged locally, secured through a s106 legal agreement. 

12.4         This locally developed approach involves close liaison with local social housing providers who are supportive of the rent levels that have been set.  It appears to work well within the Royal Borough’s housing market context. The Key Decision Report[8]which introduced the interim policy acts as standing advice to the Planning and Development Department.  In reviewing the Core Strategy, there is an opportunity to more closely align this approach with planning policy.

12.5         The local approach devised to rent levels appears to be conflicting with emerging London Plan policy which seeks to remove any constraints on the Affordable Rent levels, and to ensure that these are set centrally by the Mayor of London.  Whilst the London Plan approach might help to maximise “affordable” housing delivery, it is considered that the delivery will be unaffordable in the local context. 

12.6         The NPPF confirms the Affordable Rent (AR) tenure as an affordable housing tenure, and one which should appropriately be delivered when securing affordable housing through local plans. Statutory guidance on housing allocations and housing regulation regarding Affordable Rent state that Affordable Rent tenancies must be let in the same way as socially rented tenancies, and therefore must be suitable for those in housing need.


[8] http://www.rbkc.gov.uk/howwegovern/keydecisions/Reports/Cabinet%20Member%20Housing%20and%20Property/KD03613R.pdf

Options 

Option 1: Limit the amount that can be charged through the Affordable Rent tenure, in line with the Council’s Key Decision (November 2011).

 Pros

    •  The rent levels set out in the Council’s Key Decision have been determined using average incomes across the Royal Borough and with consideration to the benefit cap which will be introduced. This means they should be affordable to all households and in particular those in need.
    • The rent levels set out in the Key Decision are linked to existing social housing rent formulas and not to the market. This means they will increase in line with socially rented housing and not be subject to market increases. 

Cons

    • Using lower rent levels could reduce the number of affordable housing units delivered in the Royal Borough.
    • Housing Associations locally are converting properties to Affordable Rent and charging higher rent levels than those set out in the Key Decision.
    • May not assist Housing Associations in generating sufficient revenue to spend on new affordable housing schemes.

Option 2: Allow provision of Affordable Rented tenure in line with the definition contained within the NPPF (up to 80% of market rents).

 Pros

    •  Delivery of Affordable Rent at the highest rent level should lead to the maximum amount of affordable housing being secured (because it will impact on the viability of a scheme).
    • Housing Associations are converting their existing homes to Affordable Rent from social rent when they become empty. Some of the rent levels are at the Local Housing Allowance cap level and therefore this option would bring the policy for newly built housing closer in line with this practice.

 Cons

    •  Higher rent levels might not be affordable to those in housing need (either working or on benefits).
    • The private rented market within the Royal Borough is strong and the weekly rents are some of the highest in the country. Linking affordable housing rent levels to the market in this way would mean that the rents might be unaffordable to the vast majority of individuals and not just those in need.