FOI - Social rent conversions and housing associations

Hi GLA

Could you provide information on the following subjects which doesn’t seem to be available in reports or on websites. If clarifications would help, you’re welcome to email me. I appreciate some information may not be held, and some may already exist somewhere that I haven’t been able to find. Anything you do have would be gratefully received, along with relevant comments.

 1. Tenure conditions of new grant funding

This week the government  announced an extra £1.7billion in funding for ‘affordable’ housing in London, including for some social rent homes.

a) Is the Mayor free to allocate this to any tenure of affordable housing, or are their conditions as with the previous AHP where 65% had to be allocated to intermediate tenures? 

b) Grant rates: Sadiq Khan’s grant rates per unit are £60k for London Affordable Rent, (LAR) and £28k for intermediate products. Press coverage of Philip Hammond’s announcement of an extra £1.7billion for London reported that this will deliver 26,000 new units. That makes an average grant rate per unit of £65,384/unit - £5k higher than the Mayor’s current rate for LAR. Why is that? Statistically it seems that 100% of this grant is to fund new social rent units but this directly contradicts the government’s previous preference for intermediate and recent policy changes where only ‘some’ new money can fund social rent homes in high need areas. My assumption is that there must be some government guidance or conditions but they have not been publicised. Perhaps £1.7bn could deliver more than 26,000 units.

c) Start by dates: will the aim be to allocate this new £1.7bn soon as part of the 2016-21 AHP and expect building starts by March 2021?

2. Conversions of social rent vacants to affordable rent

The GLA provide a useful compilation of statistics for London from Social Housing Regulator (SHR) UK wide surveys – covering 2012/13 – Q2 2017/18. Separately the GLA reported having approved 19,000 ‘affordable rent conversions’ under London’s 2011-15 AHP, which required building starts by March 2015. This is 7,000 more than the 12,002 reported for 2012-2015 in the SHR stats. Figures aren’t recorded for 2011/12. Affordable rent was introduced in 2011 but conversions many not have started until 2012/13.

In 2016 Sadiq Khan announced that he would ‘not approve any further conversions’ in his AHP 2016-21. But some conversions had already been contracted for under Boris Johnson’s superseded Mayor’s Housing Covenant 2015-18, so ‘AHP’ conversions will continue until March 2018.

a) Were any conversions approved/made in 2011/12? If so, how many?

b) How many were contracted for in the 2015-18 AHP that haven’t been recorded in the figures for 2012-2017? (The remaining units presumably due to be converted by March 2018)

c) My assumption is that housing associations were and are free to convert vacant social rent homes to affordable rent OUTSIDE of GLA funding programmes. Is that right?

d) If so, do GLAs statistics include these conversions outside of the AHP? If not, this could account for the gap between 19,000 (2011-15) and 12,002 (2012-15).

e) Are HA’s still free to convert rent levels in schemes that don’t take GLA grant – for 2016-21?

f) Are Strategic Partners (SPs) free to convert rents outside of GLA funded programmes? My assumption is that they aren’t, as SPs take GLA grant on flexible terms for their whole programmes. This may mean that no schemes are ‘nil-grant’ so therefore no scheme can ignore the GLA policy condition of ending rent conversions. Is that right?

g) Approved Providers: from 2016 agreed to deliver 50% affordable housing across their portfolio of sites. But perhaps some of their schemes are not GLA funded, in which case for nil-grant schemes they would still be free to convert social rent vacants to affordable rents? Is that right?

3. Affordable rent caps/ceilings

Affordable rents on converted social rent units in London averaged 67% of market rates. But market rates vary a lot. In practice providers don’t want to set rents at levels that would not be covered by benefits due to the overall benefit cap. Local Housing Allowance (LHA) doesn’t apply to the social sector, and won’t in future, but some association seem to have used it for a proxy to set a figure for maximum rents likely to be covered by housing benefit. Is that right?

‘Capped’ affordable rents in London from 2015 were around 50% of market rates and the aim was to set them at levels that would be covered by benefits, with the LHA as a guide. LHA is set at the 30^th percentile of private rents. Any general information on policies for setting maximum rents would help. Was the LHA usually a maximum? (This is important because some HA’s set all rents for converted social rent properties at 75-80% of market rates. That means none were ‘capped,’ so all would have been unaffordable to tenants on benefits, unless they were built in exceptionally cheap areas).

4. Strategic Partners

Eight were announced initially.

a) Have any more reached agreements since? Could any be added in future?

b) GLA funding is for SPs’ whole programmes London-wide for 2016-21, (not for some individual schemes as in the past). As all units delivered by SPs are effectively GLA funded, they will all have to meet GLA income eligibility ceilings for intermediate tenures on all units. (£90k per household and market values of less than £600k). Is that right? Or could there be exceptions for S106 units? Or could some schemes be categorised as not GLA funded, giving the PRP freedom not to adhere to GLA guidelines?

5. Approved providers

a) Can you provide a list of APs? (In summer 2017 the allocations of £1.7bn GLA funding was announced, including some councils. My assumption that not all providers on this list are APs).

b) Non approved providers that don’t sign Mayoral agreements to deliver 50% affordable across their portfolio of sites can still apply for GLA grant for individual schemes. Is that correct?

c) It seems that APs have agreements with the mayor to deliver 50% affordable across their whole programmes, but GLA funding is only for specific schemes – (firm and indicative). So some schemes are not GLA funded. If so, on schemes without GLA grant, HAs remain free to ignore income eligibility ceilings for intermediate products. Is that right?

d) Could the Mayor impose a requirement for APs that all schemes in their programme, whether GLA funded or not, must adhere to the GLA’s income eligibility ceilings for intermediate products?

6. Sell-offs of social rent flats

As with conversions of social rent flats, some sell-offs were encouraged as conditions for grant funding from 2011-15, and presumably for 2015-18.

a) Sadiq Khan has not ended sell-offs as a condition of receiving GLA grant. Is that correct? If so, why? Is there a regulatory reason preventing a requirement for providers to end sell-offs as a condition of grant funding, as opposed to rent conversions?

b) The HCA publishes figures of sell offs by provider per year but don’t publish separate figures for London. Does the GLA have any information on numbers sold off in London?

7. Proportion and numbers of social rent homes becoming vacant every year

Housing associations vary greatly in size, so although figures are available for the number of social rent homes that each HA has converted to affordable rent or sold off, it’s difficult to compare the proportion of vacant flats sold off relative to the number of homes becoming vacant each year. Does the GLA have figures for either, a) the number of social rent homes becoming vacant every year by provider, or b) an average proportion of total stock that becomes vacant each year for all providers?

8. Average London Affordable Rent by borough

HCLG tables show average council rents. Statistical Data Returns (SDRs) show average HA ‘net’ rents by borough. Can the GLA provide figures for average London Affordable rents by borough? These are based on social rents but are higher than average council rents as LAR is set at the social formula target and most councils rents did not increase or ‘converge’ to this level. I assume this information is held. The GLA provide detailed levels of London Living Rent by ward.