Housing Core Strategy Review Issues and Options

Housing Issues and Options

22 Appendix 3: Affordable Rent

1.1         In order to support the development of new affordable housing units, a type of affordable housing tenure has been introduced called Affordable Rent.  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. 

1.2         Changes nationally to the way the development of affordable housing is funded mean that housing associations are able to keep the rental income from the higher rent levels to pay for future development.  Previously, grants were given to develop new homes.  However, now grants are given to housing associations dependent on meeting targets for the amount of Affordable Rent tenancies they have, and the amount of income generated. 

1.3         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 

1.4         The modelling below sets out the potential impact of conversions on the supply of current Housing Association stock, based on the known annual void property turnover (350 units on average a year).  It does not, however, take into account the new flexibilities regarding tenure length, and the trend to Affordable Rent may therefore be quicker than shown.  If the increase in new AR tenancies is provided at a rate of 50% of those units becoming void, then the graph below illustrates that by 2041 the number of social rented units and AR units will be similar.

 rent1

1.5         However, if the conversion between tenancies, in addition to new AR units built occurs faster, e.g. at a 75% conversion rate, then the number of AR units will exceed the supply of social rented units by 2036.

 

rent2

 

1.6         The Royal Borough has developed its own interim housing policy for dealing with the AR tenure.  This advises on acceptable levels of affordable rent. It restricts the rents which may be charged locally, secured through a s106 agreement. 

1.7         This locally developed approach is based on appropriate evidence, and underwent scrutiny through a Working Party during 2011, including 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. 

1.8         The Key Decision Report[1]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 planning policy.

1.9         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.  

1.10         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.  

1.11        The Council believe the interim approach to be in conformity with the adopted London Plan for the following reasons:

  • The approach accepts and recognises the new AR tenure;
  • It is based on an existing local evidence base (SHMA) and analysis of local circumstances (housing register, incomes and affordability ratios);
  • It has used the London Plan level of net income in calculations to determine the policy 

1.12      The NPPF confirms the 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. It is the Council’s belief that the interim policy also conforms to the NPPF.


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