FOI - Estate Redevelopment, Social Rent Units and Affordable Homes

Can you clarify issues not fully explained in the Mayor’s Good Practice Guide to Estate Regeneration or the accompanying funding guidance on ballots, or the general Capital Funding Guide that was first published in 2015, some of which has been superseded and some of which hasn’t.

Rent levels for re-provided units in estate redevelopments

The Homes for Londoners Affordable Housing Programme 2016-21 explains that generally London Affordable Rent is expected to be the ‘primary’ low cost rent product but states that ‘providers have the flexibility to charge less than benchmarks.’ The Mayor of London’s Good Practice Guide to Estate Regeneration encourages providers to re-provide social rent units at the ‘same or similar rents,’ with ‘similar’ undefined.

Question 1

Can you confirm that providers can still qualify for GLA grant for ‘low cost’ rent in estate redevelopments if rent levels are below London Affordable Rent benchmarks?

a) For re-provided ‘low cost’ rent units – to enable existing social tenants to return with limited rises in their housing costs.

b) For net additional ‘low cost’ rent units – for new tenants who don’t already live on an estate to be re-developed.

Perhaps re-provided homes are eligible for grant at below LAR but net additions aren’t. London Affordable Rent benchmarks are maximum target rents, excluding service charges, so costs are significantly higher than existing social rent units demolished in estate redevelopments.

Question 2: GLA funding for re-provided social rent units at less than London Affordable Rent

a) Assuming that GLA grant can be allocated for re-provided social rent units at less than London Affordable Rent levels, can you provide all examples where the GLA has funded such rent levels: name of scheme, provider, local authority, number of units, and rent cost benchmarks, base rents in cash terms, eg, for a 2 bed flat. (From 2015/16 until the present if possible. Some examples of service charges would also help).

Assuming it is possible for schemes to get GLA grant for rent levels below London Affordable Rent, (LAR) the next issue is - how much below LAR? Can GLA grant be provided for re-provided units with rent levels set at:

b) Same housing costs in cash terms: existing base social rents and service charges remain the same. (This is the only level where returning tenants would be ‘no worse off.’)

c) Existing base social rents in cash terms - excluding service charges, so only service charges could rise. (Depending on service charge costs, increases in housing costs could be relatively limited or substantial)

d) Social rent formula from existing base rents (rather than maximum target rents) (in such cases rents would rise significantly as 30% of social rent formula is based on property values and values of new flats are always more than old ones demolished).

d) If the GLA has or intends to allocate grant for re-provided social rent units at any of the above ‘sub-LAR’ rent levels, can you provide details: name of scheme, provider, local authority, number of units, and rent cost benchmarks, base rents in cash terms, eg, for a 2 bed flat. (From 2015/16 until the present if possible. Some examples of service charges would also help).

Question 3: Funding for re-provided social rent units –vs- net additional

Under the GLA’s Capital Funding Guidance 2015, (most of which is still applicable), providers were allowed to bid for grant for re-provided social rents homes, if justified by a business case that would ‘speed up delivery.’ This implies that GLA grant was only available for these units as exceptions to the general rule which meant that GLA funding for ‘low cost’ rent was and is only available for net additional units.

a) Is that right?

b) Does that 2015 guidance still apply now?

c) If so, what is the reason?

Presumably the reason was to encourage landlords to re-provide social rent units from cross-subsidy, then GLA grant became available for net additions to maximise supply. If so, estate redevelopments were and (probably still are) treated as a separate category from other (non-Section 106) schemes where grant for low cost rent can be available for all affordable rent units. This would reduce the supply of low cost rent in estate redevelopments compared to other schemes, so an explanation would help.

Question 4: Funding for re-provided social rent units –vs- net additional

a) In Poplar Harca’s redevelopment of Chrisp Street Market GLA grant funding was made available for all 136 ‘low cost’ rent units, 124 re-provided and 12 net additional. I assume grant was allocated for re-provided units as an exception due to the scheme’s viability issues, because without GLA grant for all units it wouldn’t have been possible to re-provide existing social rent units. If so this scheme will be an exception to the rule. Is that correct?

b) Can you confirm that all re-provided units were at London Affordable Rent benchmarks?

c) If not what benchmark was used?

d) Can a figure be provided for base rents in cash terms, (excluding service charges)

Question 5: Comparison with previous guidance under the Mayor’s Housing Covenant 2015-18

Under the MHC 2015-18, (funding guidance, some of which is still current), the GLA would consider allowing providers to set rents at ‘target’ rent levels (the same as London Affordable Rent), when existing social tenants were decanted to new housing,  if providers and councils demonstrated that ‘capped rates’ (at 50% of market rates) were ‘not a viable alternative.’

Can you list schemes grant funded from 2015-18 where:

a) Rents were provided at target rents

b) Rents were set at ‘capped’ rates

c) Whether any provider or councils supported target rents for particular schemes?

d) Can you confirm that these rates were also available for re-provided permanent social rent homes, rather than just when tenants were decanted to new housing off the redeveloped estate?

My assumption has to be that most schemes set rents at capped rates. If so, under the current London Mayor, if rents are usually set at London Affordable Rent instead, then most rent increases from 2016-21 will be less than most from 2015-2018.