The coalition’s overhaul of low-cost housing means that social landlords who receive government funding to build new homes must convert an individually negotiated proportion of their existing social rented homes into the government’s new “affordable rent” tenure.
Affordable rents are priced at up to 80 per cent of local average open market rents, putting them beyond the reach of many of the country’s poorest households. Nearly three-quarters of tenants who have moved into “affordable” rented homes receive housing benefit to help with the cost, UK Housing Review figures show.
Landlords have agreed to convert nearly 100,000 social homes to affordable rent since the policy was introduced in 2011, an analysis of official data for the FT by the Chartered Institute of Housing found.
Some of these conversions have been replaced by new social homes funded by the previous Labour administration but this will tail off sharply in the coming years as no new social rented homes have been funded under the coalition.
The government has also increased the discounts given to tenants who buy their home under the Right to Buy programme. Almost 27,000 homes have been sold under the Right to Buy since the coalition came to power.
As a result of all these measures, the number of social rented homes in Britain fell by almost 35,000 on a net basis in 2012-13 – the first time in a decade that the country had a net loss of social homes, according to John Perry, a policy adviser at the CIH.
At the same time, councils are putting people with the highest housing needs into affordable rented properties regardless of their ability to pay, with housing benefit being used to bridge the gap.
This is creating an unintended hit on the public finances.
Mr Perry said: “The Department for Work and Pensions is trying to curb the social sector’s housing benefit costs, yet the Department for Communities and Local Government is pushing housing benefit costs up through the use of affordable rent,”
Andrew Cowan, a partner at Devonshires solicitors who advises social landlords, said: “We have suddenly shifted from a [social housing] system based on high capital grant rates and low rent to a system with low grant rates and high rents, and people have really struggled with this.”
