Greater flexibility for social landlords should be at the heart of the Autumn Statement

One of the UK’s largest housing providers has called on Chancellor George Osborne to give social landlords the flexibility they need to tackle the housing crisis.

Home Group, the 5th largest affordable homes developer in the UK, says the government should give social landlords greater control over setting their rents. This will empower social landlords to respond to customers’ needs and drive forward the delivery of new homes across all tenures.

Home Group’s Autumn Statement submission contains a number of striking policy ideas that will help address the issues affecting the UK housing market.

One of the central policy ideas in the submission calls on the Government to endorse an innovative new rent model that Home Group is working on with the New Economics Foundation (NEF). The NEF Flex Model is an innovative new form of section 106 agreement that works by specifying a maximum income from the units in a scheme, rather than the number of subsidised units. Under this ground breaking approach, income is derived from a mix of market and subsidised rent units.

The practical upshot of this model is that in times when the housing market is overheated, the greater income from private rents can be used to cross subsidise social tenancies at a range of rent levels, including a much lower percentage than the current 80% Affordable Rent.

On the other hand, when the market is deflated, the affordability gap decreases requiring less cross-subsidy to support people in general needs homes.

However the Flex Rent model isn’t the whole story, Home Group believes the Government will need to lay the ground work for a more flexible approach to setting rents. One of the ways they argue the Government could do this is by removing restrictions on how housing associations have their rents set.

At present the Government centrally controls rent levels. This skews the market by limiting the ability of housing associations to provide rents that are genuinely affordable for local people in local areas. If housing associations had the ability to set individual rents within an overall agreed limit, they would have sufficient flexibility to set sub market rents that reflect the needs of local people.  Home Group believes this will create the conditions for housing associations to drive forward the delivery of new homes across all tenures by giving them enhanced financial security.

Commenting on the Autumn Statement submission Mark Henderson, Home Group chief executive, said:

"The UK is in the grip of the worst housing crisis in a generation which requires a concerted response from central government. The time has come for social landlords to be given the flexibility they need to introduce rents that are genuinely affordable for local people in local areas. For this reason greater flexibility for social landlords to set their rent should be at the heart of George Osborne’s Autumn Statement.

"This will give housing associations the financial security and confidence they need to tackle the housing crisis by increasing the provision of affordable homes across the board. The coalition has a golden opportunity to tackle the housing crisis in this year’s Autumn Statement and should seize it with both hands."

Home Group’s full Autumn Statement submission, including a detailed outline of their policy ideas, can be found here.

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