An end to ‘Affordable’ rents

So-called 'affordable' rents are, at 80% of market rates, anything but affordable to people on low incomes. Policy Director Marc Francis highlights the welcome news that Peabody is abandoning these overpriced rates

Marc Francis, Policy Director

Buried amidst the media furore around the local elections, was the very welcome news that Peabody Housing Group plans to get rid of Affordable Rents on its homes.  Perhaps even more surprisingly, it isn’t just doing this for future tenancies, it is also doing it for tenants who signed up for its Affordable Rent homes over the past five years.  Peabody’s new Chief Executive, Brendan Sarsfield acknowledges this will hit the association’s income stream, but told Inside Housing magazine this was “the start of a journey towards rent fairness”.

At Z2K, we really welcome this move.  We argued strongly against the Coalition Government’s move to the Affordable Rent model of up to 80 per cent of local market rents and the former Mayor of London’s adoption of a version of this model.  In some London Boroughs that has seen rents approaching £300 a week.  Those aren’t really affordable to anyone on low income.  And the Benefit Cap means families often can’t get the Housing Benefit they need to cover the costs either.  Worse still, the policy required existing social homes to be “flipped” to higher Affordable Rents when they came up for re-letting too.

We were encouraged that Sadiq Khan’s draft London Housing Strategy published last year moved away from the Affordable Rent model, introducing what he calls London Affordable Rents more in-line with traditional social rents at 30-40 per cent of local average incomes.  Housing associations and the boroughs themselves are able to bid for funding from City Hall on that basis, which is a big boost to those homeless and overcrowded families and single people who stopped bidding for rehousing because of the higher rents.

Mr Sarsfield has a reputation as one of the more progressive-minded Chief Executives of London’s big housing associations, and so this decision probably reflects his own views.  However, it certainly reflects those of Peabody’s Chair, Lord Kerslake, the former Chief Executive of the Homes & Communities Agency and Sheffield City Council.  Lord Kerslake has frequently worried in public about London becoming unaffordable for the workers it relies on as a world city, and led an IPPR commission into housing in London a couple of years ago.

Peabody was one of the first philanthropic housing trusts set up in Victorian times.  And while for its first hundred years, it always focused a bit more on housing the working poor than the very poorest, it has made a real contribution to meeting London’s housing needs.  However in recent years, its drift towards mediocre housing management services while focussing on new development has led to some stiff criticism from tenants as well as their political representatives.

With this announcement, it seems Peabody’s merger with Family Mosaic is a real positive for the 4,000 households who will benefit directly from lower rents, as well as future tenants too.  Z2K’s hope that where Peabody leads, London’s other big housing associations, like A2 Dominion, Clarion, One Housing Group, London & Quadrant will follow and, to paraphrase Shelter’s Polly Neate, “get back to their core business” as well.

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