Council rents for Council homes
August 6, 2013
Council rents for Council homes
So the Council wants to charge “affordable rent” for replacement Council homes in Sussex Square. Most people, when they hear the words affordable rent, would naturally assume that these were rents that were…affordable. Not so with the coalition government. With an Orwellian twist their version of “affordable rent” is up to 80% of the market rate for private sector rents, unaffordable for many people.
By way of explanation, under the government’s “affordable homes” programme, landlords bidding for Homes and Communities Agency funding for building ‘social housing’ (Council or Housing Association) have had to agree to charge “affordable rent” rather than the usual ‘social rent’. The reason for this is that the coalition made a massive cut in the subsidy compared to the previous government’s programme, reducing it from around £60,000 to £20,000 per home. Hence this means that tenants have to pay much higher rents and the landlords have to borrow more.
To take the example of London this policy has led to a cut in the number of ‘social rent’ homes. So far it has 3,104 “affordable rent” homes, though only 543 are new build homes. The rest are existing ‘social rent’ homes which have been converted to “affordable rent”. So for every new one built nearly 5 ‘social rent’ homes have been lost.
The second round of the government’s “affordable homes” programme, after 2015, will be even worse. The element of subsidy will be lower, reputedly £18,000 per home, and the Housing Minister has said that landlords given HCA grant will have to convert more ‘social rent’ homes to “affordable rent” and sell some homes when they become ‘void’ (when a tenant leaves or dies).
Ironically, for a government which talks about lowering the housing benefit bill, its policy will do the opposite. In the case of London’s “affordable rent” homes 87% of tenants qualify for housing benefit. This is despite the fact that London Councils have not been able to raise these rents to the 80% level because their tenants can’t afford the very high London rents.
Swindon Council’s leader, at the Cabinet meeting, insisted that the only reason for charging “affordable rent” at Sussex Square was that charging council rents would make the project “unviable”. No evidence whatsoever was provided. No financial projections were produced to show the difference in income between charging Council rent and “affordable rent”.
The officer in charge of the project told me that there would be no HCA money involved. Likewise, the documents for the Cabinet did not authorise the Council to apply for HCA money. However, the basis on which the Cabinet gave the go-ahead has now been called into question by the Deputy Leader who personally told me that the Council was going to apply for money from the HCA and that was why they would have to charge “affordable rent”.
The implications of this decision are important for housing policy in the town. In the case of Sussex Square we would lose 33 homes with Council rents for a replacement number of which we are not sure, at “affordable rent”. The Cabinet document gives officers virtual carte blanche to change the numbers. At any rate we will end up with less genuinely affordable homes. If the Council applies for HCA money we may lose even more Council homes with Council rents. For Swindon Council to apply for money from the HCA under such conditions would, instead of helping to tackle the housing crisis, make it worse. We need more ‘social rent’ homes, not less.
The proposal to charge “affordable rent” for Council homes sets a dangerous precedent. We want genuinely affordable homes for rent and not their replacement by the bogus “affordable rent model” which will only serve to drive up the housing benefit bill.
Finally, the way the Cabinet operates under the one party system reduces it to a rubber stamp. Hence they can accept what they are told without any discussion and without questioning the documentation placed before them. The contradiction between the basis on which the decision was taken and the words of the Deputy Leader raise serious questions about the conduct of the Council.
Secretary, Swindon Tenants Campaign Group