Research shows that housing associations in London have responded to shortfalls in government funding by recategorising tenancies so rents can be set at the highest possible level.
To make up a shortfall in government funding housing associations in London have quietly switched thousands of tenancies to higher rates seeing households hit by a £70m rent rise, reports the Guardian.
Figures from the Greater London authority have shown that 25,000 homes in London have been converted from “social” housing to “affordable” housing since 2012. Social rents are typically half market rate, while so-called “affordable” tariffs are up to 80% of private rents, leading to complaints the definition of affordable is “Orwellian”.
By changing the housing category, new tenants moving into a property could end up paying a vastly different rent to their neighbour in an identical flat.
“These figures reveal what is happening across London: homes that should be genuinely affordable are not, when Londoners are desperate for rents to be lower,” said James Murray, executive director of housing at Islington council. “This change has been somewhat under the radar but it is profound and very damaging for the future of the capital.”
Kathleen Kelly, assistant director of policy and research at the National Housing Federation has said that “Our members are frustrated that they can’t build genuinely affordable homes as part of the government’s programme. “Housing associations are now having to fund up to 85% of the cost of developing new homes from their own resources. They are not driving up rents because they want to, but are being forced to respond to the pressure on public spending.”
But a spokesman for the London mayor, Boris Johnson, said the policy of using the additional rents to build new houses had been a success. “In 2011 the government identified the conversion of re-lets of existing social housing to ‘affordable rent’ as an important source of capacity in delivering the affordable homes that London needs. The mayor is on track to deliver his target of 100,000 low-cost homes over two terms, with 85,000 already completed.”
Robert Kerse, finance director of Circle Housing, which has already converted 11% of its stock to “affordable”, said: “We would much rather the government continued to subsidise new affordable homes rather than raising rents, which is a future burden on the public purse through increased housing benefit costs which could potentially outweigh the savings they are currently trying to make.”
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