1. Affordable Rent Product SELHP Strategy & Development Group

2. This presentation ‘Refresher’ – what is “Affordable Rent” Homes and Communities Agency funded programme 2011-15 Housing implications and context Planning implications?

3. Refresher – what is “Affordable Rent”? Offered by developing housing associations (“Registered Providers”) following finalisation of contracts with the Homes & Communities Agency (HCA) - any time now Rents of up to 80% of market rents Intended to provide an alternative to social rent – they are not ‘intermediate housing’ Therefore subject to borough nominations and Choice Based Lettings. Eligible for housing benefit Will be added to definition of affordable housing (PPS3)

4. Refresher – what is “Affordable Rent”? : Principles - Less Grant goes further Increased rents (inc. from re-lets) = 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)

5. Refresher – what is “Affordable Rent”? - How do rents compare? Service Charge Extra income to service borrowing

6. Refresher – what is “Affordable Rent”? How Do Rents Compare? Current charge New Charge

7. Refresher – what is “Affordable Rent”? Are they affordable?

8. HCA Programme 2011-15: the national picture 2008-11 £8.5bn 2011-15 £4.5bn of which £2.3bn committed i.e. ‘new’ funding in 2011-15 is £2.2bn

9. HCA Programme 2011-15: the national picture Registered Providers were invited to put forward ‘offers - based on framework published in Feb 2011. “It is now up to you to deliver the homes we need” - The Rt Hon Grant Shapps MP, Minister for Housing and Local Government “Our expectation is that s106 schemes can be delivered at nil grant input for both affordable home ownership and for Affordable Rent”.

10. HCA Programme 2011-15: the national picture Deadline for ‘submitting offers” was May 3 rd. Negotiation with Registered Providers in May and June. Collation of national programme by HCA in July – RPs informed of indicative programme. No local authority input or consultation about indicative offers. Contracts between HCA and RPs due to be signed in September.

11. HCA Programme 2011-15: the London picture London programme based on advice of HCA London Board chaired by the Mayor and including borough representation. HCA London transfers to GLA in 2012. £1.8bn of £4.5bn thought to be allocated to London GLA/HCA London has confirmed that rents for 3 and 4 beds will be a lot less than 80% of market

12. HCA Programme 2011-15: the local picture Not entirely clear since HCA now has a ‘South Operating Area’ rather than a SE Area’. Local housing associations have been asked to indicate extent of expected programme. Many are reticent. 3 elements to any programme: 1. Commitments made in 2010-11 and before 2. Scheme specific allocations 3. Indicative programme

13. HCA Programme 2011-15: the local picture 1. Commitments made in 2010-11 and before HCA forecast: Bexley£13.2m Bromley£10.4m Greenwich£36.3m Lewisham£32.5m Southwark£42.9m TOTAL£135.3m

14. HCA Programme 2011-15: the local picture 2. Scheme specific allocations Bexley 640 homes Bromley 198 Greenwich 432 Lewisham 399 Southwark 927 TOTAL 2626 IF each home represents £30,000 grant – total = £79m

15. HCA Programme 2011-15: the local picture 3. Indicative programme Maybe c.£100m in SE London?? Registered Providers will agree indicative programmes with HCA. These will not be based on particular sites – or particular boroughs. “Cash programme” approach? Will RPs be looking for suitable sites to utilise their £s? Or will owners of sites be seeking out the RPs with £s?

16. Housing implications and context  The Localism Bill will give boroughs duty to produce Strategic Policies on Tenancies. But in the meantime lettings to “Affordable Rent” will take place. We are drafting interim advice about these lettings/nominations.  Government is also introducing power for social landlords to introduce fixed term tenancies e.g. 5 years.

17. Housing implications and context There’s scope for confusion about “exemptions” Exemptions will normally be households with existing (secure) tenancies at ‘social’ rents. It may not be fair or realistic to expect them to move to fixed term tenancies at higher rents – e.g. decants, under occupiers, domestic violence cases. We calculate about 1500 cases each year in SE London. To expect a landlord to grant such a household a ‘lifetime’ tenancy not a fixed term one may be straightforward. GLA expects RPs to provide some new homes at ‘social’ rents for exemptions – but which ones?

18. Housing implications and context Welfare Reform Bill “Making work pay”. Flagship is Universal Credit. Most benefits including what is now Housing Benefit or Local Housing Allowance will be included in this. It will be capped at level reflecting average household incomes e.g. for families £26,000 p.a. In London 80% market rents tip larger households over this cap:

19. Housing implications and context Use and role of the Private Rented Sector Government will allow councils to ‘discharge duty’ to homelessness households in the private rented sector. Use of PRS has increased significantly – but may have peaked??

20. Planning implications and context? Is “Affordable Rent” affordable housing? If so, on what basis? Does housing become ‘affordable’ simply if it is possible to rent it with housing costs being covered by benefits? Is housing unaffordable if rent cannot be covered by benefits?

21. Planning implications and context? NB. Local Housing Allowance (LHA) – the maximum that can be paid as Housing Benefit for private tenants is based on the 30 th percentile of the market and will increase by Consumer Price Index (i.e. probably decrease in real terms) Is LHA the basis for ‘affordability’?

22. Planning implications and context Intermediate housing Shared ownership will still exist. Local planning definitions of affordability have been based on knowledge of income levels at which households are excluded from the market. Incomes of households in “Affordable Rent” may need to be higher than this if they wish to not be benefit dependent.

23. Intermediate housing: postscript An update on the presentation in April… Shared ownership was usually known as “New Build HomeBuy” In London the Mayor has introduced the brand “First Steps” The HomeBuy Agent responsible for Headline marketing etc is now the “First Steps Agent”

24. Intermediate housing: postscript Introduction of ‘First Buy’ – new properties offered to first time buyers - 20% interest free equity loan for 5 years Government now requires that members of the Armed Forces be top priority along with existing social housing tenants

25. Summary of NBHB sales (SE London) 05/0606/0707/0808/0909/1010/11 Sales to existing tenants 11%9%6%8.7%5.5%3% Sales to BME 34% 32%43%27.5%18% Ave. household income £27,411£28,959£26,859£29,857£30,897 £32,143 Ave. share purchased 39%41.5%40%38%36%35%