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Home Group set to pilot new affordable housing model

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Home Group set to pilot new affordable housing model

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Published by Jon Land for 24dash.com in Housing

Home Group set to pilot new affordable housing model Home Group set to pilot new affordable housing model

One of the UK's largest housing groups is set to pilot a new funding model after its analysis showed the government's Affordable Rent programme was "patently unaffordable across vast swathes of the country".

Home Group is working with the New Economics Foundation on a new approach to affordable housebuilding where developers would attract a mix of private rental and general needs customers to a scheme to deliver an agreed total income.

It says through this flexible model, in times when the housing market is overheated, the greater income from private rents can be used to cross subsidise social tenancies at a range of rent levels, including a much lower percentage than the current 80% Affordable Rent.

Likewise, when the market is deflated, the affordability gap decreases requiring less cross-subsidy to support people in general needs. Rentals would only change at the start of new tenancies and the blend of private to social housing would flex according to the market.

Home Group, which has about 55,000 homes located across the UK, says the model would give people who need help in the housing market a genuine opportunity to afford their rental while also giving investors "much needed confidence to invest with developing registered providers".

Home Group chief executive Mark Henderson explained: "We need to take a new approach, one that will give investors the confidence to get behind new rental development. I think we all believe that mixed tenure is often the most desirable model.

"This is a bold departure from the current model. It is one that Home Group is in discussions with the New Economics Foundation (NEF) to progress. We are actively seeking opportunities in London and elsewhere in the country to pilot this new approach.

"Should it prove successful, it will make housing truly affordable to all in a way that the current model of Affordable Rent just does not hit the mark."

Mark Henderson said that while the Affordable Rent scheme may work for the government "it certainly doesn't work for every customer".

"All our customers are different and they are likely to move in and out of different groups throughout their lives," he said. "Given this diversity, it is baffling that we are tied to a ‘one size fits all’ approach to rent. Affordable Rent is a tool to manage a move from capital to revenue grant to build new social housing but it is one that we need to move beyond. While ‘one size fits all’ may work for the government, it definitely doesn’t work for every customer.

"The fact is that affordable rent is patently unaffordable across vast swathes of the country. Analysis of affordable rents versus average wages shows that over half the people in 128 local authorities in England alone cannot afford affordable rents if they shell out 35% of their income on their home. That’s before you add council tax, utilities and cost of living.

"Furthermore, hundreds of thousands of additional individuals are teetering on the brink of unaffordability as the number of local authorities with 50%+ residents below the affordability line jumps to 199 when it comes to investing 30% of their wage on rent."

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