Presentation on theme: "Affordable Rent Product Tim Bostridge Stephen Heatley."— Presentation transcript:
Affordable Rent Product Tim Bostridge Stephen Heatley
Affordable Rent Offered by developing housing associations from agreement of delivery contract, initially on a proportion of empty properties and then new homes in due course Rents of up to 80% of market rents - linked to the delivery of new supply Affordable Rent tenancies are intended to provide an alternative to social rent Tenancies for at least two years, although HAs have option of offering longer or lifetime tenancies Eligible for housing benefit (as long as it lasts!) Will be added to definition of affordable housing (PPS3)
Principles - Less Grant goes further Increased rents = more money to service loan = more development for the low level of grant (150,000 homes over 4 years) (Grant was £100k/unit, now £20-30k) 2008-11 NAHP £8.5bn 2011-15 £4.5bn of which £2.3bn committed
How do rents compare? Service Charge Extra income to service borrowing
What are HAs doing? Assessing what rents to charge Assuming higher turnover Increasing voids and bad debts Increasing void maintenance costs Increasing discount rate to allow for increased risk Allowing for level of internal subsidy Assuming 20-30k per unit grant Assessing level of void conversion to deliver development programme Disposals
The package Costs of package (years 1-2 detailed) (years 3-4 indicative) £xxx Less Borrowing- new rents on dev’t programme£xxx Borrowing - voids at new rents£xxx Income from Sales and disposals£xxx Recycled Grant £xxx Other reserves£xxx LA contribution£xxx £xxx GAP = HCA Grant Required£ xx
Implications – Housing Policy SPoT – Strategic Policy on Tenancies broad objectives to be taken into consideration by individual social landlords in the area regarding their own policies on the grant and reissue of tenancies government prescribe who local authorities should consult in preparing the policy regular reviewed and consistent with the local allocation scheme and homelessness strategy Rents in larger dwellings – affordability for working households and challenge of Universal Credit What about people who we want to downsize? Unattractive to move unless protected rents are in place. How to incentivise moves. Rent is determined by the tenant not the property ? Working households – build in a quota in allocations plans? Need information on households income = difficult to evidence mix of products required and affordability.
Implications - Planning Affordable Rent to be added to PPS3 Definition of Affordable Housing Revisit affordable housing requirements and viability assumptions in their local planning documents? Change Affordable Housing SPD and tenure breakdown for S106 Agreements Vary existing S106 if scheme becomes affordable rent? Larger homes far less viable under the new model = likely increase in small-size properties?
Implications – AH Delivery Strong partnership working crucial to ensure we coordinate with housing providers Estate renewal - difficult to achieve without substantial grant funding New focus on asset management - Providers to make informed decisions about the proportion of stock they decide to convert to affordable rent and financial implications A new level of risk from linking affordable rent to market rents. Rental income could fall because local private rent levels Have housing associations the financial capacity and will banks fund developments as greater financial risk in the model?. Accept that schemes with existing allocations for social rent remain or move to affordable rent basis on initial letting? Assumed borough contribution on sale of LA land Expectation of no grant on S106? Standards - London