Assessing rental affordability in local housing markets
The new “Affordable Rent” (AR) regime has re-opened debates and concerns about the affordability of rents for affordable and social housing. A major concern of many local authorities is that rents based on 80% of private sector rents across the board will not be affordable for many households, and will cause problems of hardship, arrears, increased benefit dependence, and deter tenants from taking jobs. They fear that AR may also not actually increase the supply of affordable housing as the extra income is siphoned off through changes to S106 deals, and in the long passage through Registered Providers accounts and costs.
The key to challenging and preventing this is to have robust, fact based evidence about the impact and implications of AR in specific local circumstances. HCA guidance says “The maximum rent level for Affordable Rent should be assessed according to the individual characteristics of the property” - so understanding the implications means getting below local authority and Broad Rental Market Area levels to local housing market sub areas and neighbourhoods.
Relevant incomes data is required, and the effects of the whole benefits system needs to be taken into account to see what the full implications are – it is no good using a crude 25% or 30% or similar ratio, which will miss the key judgement households make in reality about what they have ‘left to live on’.
Using detailed, local data from many sources, analysed in a powerful Geographical Information System, and assessing the implications using an adapted DWP tax/benefit model spreadsheet can give you the evidence of the full impact and implications of AR for different locations, sizes of property, and household types and lifestages.
Armed with solid evidence, interpreted based on reality, not abstraction, can give you the ammunition to negotiate with RPs and the HCA, and then go on to help develop your Tenancy Strategy for the future by looking at income and lifestage profiles on your Housing Register and in the wider population.
Detailed work so far[1] shows that AR can work for some places and some types of property, but a one-size-fits-all approach and imposed blanket policy will not, and will also probably cause many adverse unintended consequences.
As well as providing the evidence, we can assist with negotiations and illustrate the effects.