Housing Associations, now known as Private Registered Providers, or Registered Providers, or RPs – you know, the old RSLs – that wish to develop new homes in the future have been required to include in their bids to the Homes and Communities Agency (HCA) their funding models, which include the adoption of ‘Affordable Rents’. These are rents that have been announced as ‘up to 80% of market rent’ and which will relate to tenancies for limited periods, no less than two years.
No doubt when properties offered on higher rents with less security stand empty the government will declare that they have solved the need for affordable/Affordable housing.
Having put in their bids the RPs are now faced with developing their policies to implement the new tenancy formats. The TSA says in its Decision Statement Number 5 ‘Revision to the Tenancy Standard: Affordable Rent’ (para 11) that RPs will want to discuss their approach with their local authority partners. These should prove to be interesting conversations for several reasons.
Local authorities are preparing themselves for the up-coming Localism Bill which, at para 131, includes an obligation on local authorities to develop a ‘Tenancy Strategy’ that shall set out the matters that RPs are to have regard to in formulating policies relating to:
(a) the kinds of tenancies they grant,
(b) the circumstances in which they will grant a tenancy of a particular kind,
(c) where they grant tenancies for a term certain, the lengths of the terms, and
(d) the circumstances in which they will grant a further tenancy on the coming to an end of an existing tenancy.
They’ll be required to have this in place within 12 months of the passsing of the Localism Bill. Given that RPs will have adopted their policies in readiness for the implementation of Affordable Rents, and given that their new development proposals are financially predicated upon the policies they adopt, local authorities will be in a very difficult position to influence the RPs’ policies if they don’t take their opportunities now.
A second point is that with even LSVT organisations now spreading their wings, and with the formation of group structures that take RP developers into the league of regional providers, there will be queues of RP representatives lining up to see their list of local authority contacts.
The RPs will have made their funding bids based on a model of Affordable Rents that underpin their development programmes and so it will be difficult, even now, to see how local authorities can be influential.
Many may have assumed that Affordable Rents will be applied to new build deveopments only, however the Affordable Rent model can be equally applied to relet properties and it is believed that a significant number of bidders may have included conversion of social rents to Affordable Rents. This could provide some interesting comparisons. For example two properties in the same street may be offered with property ‘A’ being lower rent and with long term security of tenure, and property ‘B’ being more expensive and with a limited tenancy period. Surely RPs won’t do that? From what I hear RPs are taking the view that their Affordable Rents policies are commercially sensitive prior to publication and so it seems quite possible that this very situation could arise if different RPs have properties in the same areas.
I think it is for RPs to sort this out for themselves.
Whilst we have long talked about the need for more affordable housing we should make it clear that we mean affordable housing not Affordable Rents. There seems to be a very real danger that existing properties converted to Affordable Rent properties will become the new ‘hard to let’ properties of the future. No doubt when properties offered on higher rents with less security stand empty the government will declare that they have solved the need for Affordable housing.
What should be done to avoid the potential problems? Well a common agreement about how Affordable Rents will be applied to existing properties would be a good start. This won’t be easy though, as most RPs now operate across a wide number of local authority areas which will have their own demands and their own policital view on how the needs should be met.
Of course, the HCA might come forward to assist: although Affordable Rents were put forward as being up to 80%, and although the TSA’s Decision Instrument (detailed earlier) says: “We do not intend to prescribe the tenancy which providers should offer..” (para 11), and goes on to confirm “PRPs are independent social landlords and it is for them to decide how to manage their stock within the constraints of the regulatory framework.” (also para 11) it was reported in Inside Housing (24.06.2011 page 4) that the HCA has told Cambridge Council that it must charge tenants of new homes 80% of market rents. So perhaps the HCA will direct RPs on their Affordable Rents policies for the common good – I don’t think so. I think it is for RPs to sort this out for themselves.
Posted by Peter Bird 
