More “affordable” homes but the rents prove unaffordable for many

High Rise-2More affordable housing was delivered in London in the last financial year than for any period dating back to 1991. 17,913 homes were built or acquired and made available in the affordable rental sector, according to data from the Department for Communities and Local Government, and the GLA.

This will be welcome news to many Londoners who struggle to find a suitable place to live against a backdrop of rising private rents and ever climbing property prices. But the increase in delivery is being driven by a particular part of the affordable housing sector and for many it is not really affordable at all.

Affordable rents were previously available through what was termed social housing. This is rented property provided by a council or a housing association with long, secure tenancies and rents at around 50% of the market rates.

Housing associations also provided Intermediate rental. This gives a tenant a subsidised rent, usually around 60% of the market rate, while they save for a deposit to buy the property.

In 2010 the government introduced a new category, which it confusingly called Affordable Rent. This aimed to give social landlords a route to maintaining or increasing the amount of lower cost rental while relying less on public funding. It allows them to charge more and have less restrictive tenancies. Affordable Rent properties can charge up to 80% of the market rate.

As the chart below shows, it is this sector that has taken off in the past year, increasing the amount of affordable housing, but the amount of Social Rent housing has declined sharply since AR was introduced. And this is not due to the building of new stock alone. Some Social Rent property is re-classified as Affordable Rent when it becomes vacant.

Affordable rent

The last time the delivery of affordable housing was at this level was in 2011-12. In that year a comparable number of Intermediate Rent properties was made available. But in 2011-12 there were 11,374 Social Rent homes. Last year there were 3,053.

To examine the impact on monthly rents Urbs looked at the data on market rates for various property types, previously reported here, and applied the Affordable Rent and Social Rent rules. We have used the median London price for each size of property determined by the Valuation Office Agency, which advises the government on property pricing.

Market Rate Affordable Rent (80%) Social Rent (50%)
1 Bedroom £1,155 £924 £577.50
2 Bedroom £1,400 £1,120 £700
3 Bedroom £1,695 £1,356 £847.50
4 Bedroom + £2,500 £2,000 £1,250

A family needing a 3 or 4 bedroom house would require a substantial income to afford an Affordable Rent and in many areas of central London the cost will be much higher.

Some families may be able to claim Housing Benefit to bridge the gap but the Benefit Cap introduced in 2013 means that the total claim for all benefits for a family is £500 a week – the amount needed just for rent of a 4 bedroom house in these calculations.

In its own impact assessment of the policy in 2011 the government acknowledged that the difference between the Social Rent and Affordable Rent would be hard for some to meet and reduce their housing security, or as it put it:

“Although some households are not likely to realise the same degree of benefits as would have been the case had they been allocated a social rented property (e.g. in terms of the introduction of time-limited tenure and potential for higher rents) the policy will also bring substantial advantages to the same type of households by increasing supply”

It says that without the policy there would be far less affordable housing and these people would have to wait for the limited amount of social housing while remaining in private rental properties at higher prices.

It can be argued that the introduction of the Affordable Rent category has addressed a decline in social housing. But the increase in affordable housing may be of little comfort to the least well off for whom an affordable rent of up to 80% of market rate in London is, well, just unaffordable.

Source data

See also

Families face the biggest premiums for renting homes in the capital

Under 40s locked out of housing market destined to be “generation rent”

Renting in London: 2 bedroom homes

 

Renting in London: A Studio

A studio flat is typically a single room for living/sleeping with a separate kitchen and bathroom. It’s the smallest type of self-contained home and renting one will set you back around £850 in London. That’s £350 more than the median price across England as a whole.

Rental studio

Data from the Valuation Office Agency, the body that advises the government on property values, shows the capital itself has an enormous range in prices from £1,387 in the City to £525 in Bexley.

The price differences are more marked than for room rentals as you travel out from central London with options going from around £1,000 in central boroughs to £750-£850 in inner London and £650-£700 in most outer boroughs.

Rental studio map

As with room rentals, the cheaper options are in the east of the city in Havering, Barking and Dagenham and Bexley. Bromley, Sutton and Hillingdon are also cheaper locations.

Source data

Renting in London: A Room

More on Renting in London

 

 

 

 

Renting in London: A Room

For many people coming to London, particularly younger people, their first experience of setting up home in the capital is renting a room in a shared house.

As with all levels of property, that’s considerably more expensive than in the rest of the England; £525 per month compared to £341, according to the Valuation Office Agency, the body that advises the government on property values.

Rental room

But across the capital, are there any bargains to be had in the communal living lifestyle? The closest you will get to the England average is in Havering where a room costs £417. Prices are generally cheapest in the east of city where there are 6 boroughs with monthly prices below £500.

Rental room map

Across the capital Croydon, Sutton, Hillingdon, Harrow and Enfield also duck under the £500-a-month bar.

At the other end of the scale, you can pay double that in the City and not much less in Westminster and Kensington and Chelsea.

Source data

Renting in London: A Studio

More on Renting in London

The Marmite response to living in the capital

flatsLondon divides opinion among people in the UK.  The Britain Uncovered survey done by Opinium Research for The Guardian shows the love/hate relationship that people have with the capital. Asked where else in the UK they would like to live London was the second favourite destination, just behind the South West, with 15%.  But it was the top answer by some considerable margin to the question of where would you least like to live,  named by 30%.  Northern Ireland and the East Midland were second with 14%.

London is considered the wealthiest place in Britain, identified by 65% of people taking part in the survey.  But being the wealthiest place did not give it the best quality of life.  Only 14% said that was best in the capital.  Although those who live here had a more favourable view.  30% of Londoners said it offered the best quality of life in the UK.

The South West topped the list for quality of life. 29% thought it had most to offer, and perhaps proving that the best things in life are free, only 5% had identified it as the wealthiest region.

Optinium Research interviewed 1,019 people ealier this year.  The survey was weighted to reflect the demographic profile of Britain’s adult population.

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