Affordable Rent: Councils 'insisting on social rents for larger homes'

Published by 24publishing for 24dash.com in Housing and also in Central Government, Communities, Local Government

The chief executive of one of the largest housing associations in London says many councils are using section 106 agreements to insist on social rents for larger homes under the new Affordable Rent regime.

Writing in next month's 24housing magazine, Stephen Howlett, chief executive of 18,000-home Peabody said the Affordable Rent programme - which sees providers fund development projects through higher rents - was causing tensions across the capital.

He said there is always "tension" between lower rents and fewer affordable homes, as opposed to higher rents and more affordable homes.

"The new Affordable Rent regime introduced by the Coalition means that capital grants have been cut dramatically," he said. "We must now fund development projects through higher rents. Some authorities are choosing to see their own land developed at social rents, accepting that they will get fewer homes for rent by doing this.

"To further complicate things, when Universal Credit is introduced, it may mean that housing benefit does not cover the new Affordable Rent. Peabody only wants to charge rents within benefit ceilings because many of our households may need access to housing benefit as a safety net to job changes. This is a particular risk for larger families.

"Many local authorities are insisting on social rents for larger homes, even under the new Affordable Rent regime. They are doing this under tenancy policies that they are able to impose on housing associations in their section 106 agreements."

He said the replacement of section 106 with the Community Infrastructure Levy could present yet another challenge. 

"This change will mean that developers (whether private sector or housing association) will be paying, effectively, a new tax on development," he said. "The only parameter which can ‘give’ in this situation is affordable housing so fewer homes will emerge from any given development."

He said as demand grows for new homes, costs rise and land prices become inflated. He said Peabody was able to work with the Royal Borough of Kensington and Chelsea to provide lower cost social rent homes at one site as the borough was prepared to give the land to Peabody and subsidise the new homes.

He said: "London must cope with a rapidly expanding population coupled with an infrastructure that is already strained. This means that Peabody must work harder than ever before to provide homes for people on low incomes."