London’s largest housing associations are reviewing their rents amid concerns that the government’s affordable rent policy is leaving some households unable to feed themselves according to Inside Housing
L&Q has commissioned a rent review by the Chartered Institute of Housing. It could reduce the number of homes it builds in future funding rounds using government grant as a result.
Similarly, 57,000-home Affinity Sutton has commissioned the University of Cambridge to carry out a review due to fears affordable rent doesn’t work for people on the lowest incomes.
Under the current funding programme, landlords charge up to 80 per cent of market rent on new homes and some re-lets in order to receive grant.
Under the next £2.8 billion programme, from 2015/18, landlords will be pressured by the government to convert all re-lets to the higher rents.
L&Q is charging an average rent of around 65 per cent of market rate – rather than the full 80 per cent it is able to charge – based on up to 35 per cent of a household’s net income.
But David Montague, chief executive of 70,100-home L&Q, said: ‘We are not convinced that after all costs have been met there is enough left over to feed the person living in the home.’
He added that demand for food banks and mutual exchanges and an increase in arrears have made it question the rent policy. The landlord is particularly concerned about four and five-bedroom properties across the capital, and three-bedroom properties in high-value boroughs.
The review, which will report later this year, could lead to L&Q not funding four and five-bedroom homes through the affordable homes programme. The association’s £100 million surplus means it can use £2 billion of private finance to fund homes grant-free. Another option is to use larger, grant-funded properties for families on intermediate incomes instead of the neediest.
Keith Exford, chief executive of Affinity Sutton, said: ‘Affordable rent is not suitable for traditional housing clients.’