Implications of the Affordable Rent Model in London

8 July 2011

This report sets out a number of issues relating to implementing the Affordable Rent Model in London. The new model gives housing associations the flexibility to raise rents for new tenants to provide funding for new affordable homes now that government grant has been reduced.

Our Planning and Housing Committee found that raising enough income through higher rents to build new affordable homes and setting rents at levels people can actually afford will be particularly difficult in London, where rents and need are already so high.

The report is based on in-depth meetings with the G15, individual housing associations and industry experts. Housing associations welcomed the new opportunities the Affordable Rent Model will give them to better manage their assets and tailor rent levels and tenancy arrangements.

However, they highlighted that the new arrangements could dramatically reduce the number of affordable homes that can be delivered, with the potential to halve the numbers built in previous years. Numbers of desperately needed family-sized homes may also fall as they are more expensive to build and will be less affordable for families when benefits are capped.

The report also sets out issues relating to housing associations’ funding streams, the need for more private sector investment and potential disparities in rent levels for different-sized properties.

The following people appeared before the Committee at public hearings: Rod Cahill, Chief Executive, Catalyst Housing Group; Richard Donnell, Director of Research, Hometrack; David Montague, Chief Executive, London and Quadrant; and Professor Steve Wilcox, University of York appeared on 29 March 2011.  View the transcript of the meeting.  Steve Howlett, Chief Executive, Peabody and Chair of the G15 group and Alan Benson, Head of Housing, GLA appeared on 5 April 2011.  View the transcript of the meeting.

Read the report in full: