New Homes / Re- let homes and Affordable rents.

'Affordable rents' will increase costs to public purse

Housing association Family Mosaic has published groundbreaking research into the impact of reletting existing homes on new "affordable rents".

Family Mosaic welcomes the principle behind the government's plans, but commissioned the research because it was worried that rent levels of 80% of market rents would be too high for the people it wants to house in London. So the association asked independent researcher Mark Lupton to look at what would have been the impact had 50 new tenancies granted within its stock in November and December 2010 been relet at 80% or at 60% of market rent.

The research, published in 'Mirror, signal, manoeuvre: Our drive to provide more social housing' found that, had these 50 homes been let at 80% of market rents,  the housing benefit bill for these 50 tenants would have increased by 151%; at 60% of market rents the bill would have increased by 68%.

The research found that the impact on Family Mosaic's tenants will vary by location, with those living in inner London the hardest hit. At 80% of market rent, seven inner London properties in the study would have seen increases of over £200 a week. Outside London, however, these increases would have been less than £50 per week.

In contrast, most of the sample properties in Essex had social rents that are already at 60-80% market rates.

The report concludes that, for those tenants receiving benefits, the proposed new affordable housing model creates, or worsens, the poverty trap, acting as an additional disincentive to gain employment.

Family Mosaic CEO Brendan Sarsfield says, "We are determined to deliver more homes, but this look in the mirror tells us that the new model creates problems for our residents. Market rents per se are not the problem – we have used them in temporary housing for many years. The challenge now is can we make higher rents work as a long-term solution during welfare reform and public spending constraints."

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Comment: There have been many discussions on this, and the extra revenue to be gained by the Landlords to invest into more homes. But if the differential, in the North, Is low between Social Rent and Affordable rent  1)The poverty trap exists even at Social Rent Levels for a LOT of people, and 2) In the North (and many places) The additional revenue would be negligible and the critical mass needed to generate enough to build one extra home would be difficult nigh impossible. This is what affordable rent is supposed to be for. To Generate investment into more homes. It Works in Affluent areas. The poorer or deprived areas are left out again, as the modelling of it requires a base product that frankly doesnt exist in most of the North of England.  - Jules