Higher affordable rents not enough on their own

It argues that higher affordable rents are part of a broader overall funding package needed to deliver the Government’s housing plans.*

Other crucial elements of the package include:

– allowing housing associations more operational and financial flexibilities in managing their assets to generate extra income and borrowing capacity;
– close partnership working between housing associations and local authorities, using the additional freedoms presented by localism;
– continued judicious use of government housing grants to ensure the right homes are provided in all housing markets across the country;
– maintaining the confidence of financial investors in housing associations by getting regulation and welfare benefit reform right;
– swift planning reform to ensure local authorities can build local consensus for housing development and ‘in kind’ planning gains from private developers can help support new affordable home building.

The report says getting the design and management of the system right could “breathe life into localism” and “produce vibrant, economically strong communities with a healthy degree of social mobility and social engagement.” Getting it wrong runs the risk of “increased poverty, and immobile communities isolated by income, alienated from the mainstream of society and lacking important supports.”

The Government’s housing minister, Grant Shapps, said “I am pleased the report views the changes the Government is making to the funding of affordable housing positively, as an opportunity to create more homes and dynamic communities. I welcome the initiative and creativity of affordable housing providers and I’m pleased they are getting on with making the new Affordable Rent delivery model work.” 

Richard Parker, a partner at PwC, said “The Government has proposed some radical reforms and with that radicalism comes an opportunity to do something bigger than simply build homes. There is a chance to regenerate and reinvigorate communities in a way that is self-sustaining for the future. But it is dependent on the final decisions the government takes on housing, planning, local government and welfare reform. These will all impact on the ability to finance, create and sustain high quality housing and communities.”

David Montague, chief executive of L&Q, said “We will only get the homes on the ground with the right operational framework in place and if housing associations feel confident they have the flexibility to manage the additional financial risks inherent in the new system. The Government’s proposals have opened a door, but ministers now need to ensure housing associations feel able to walk through it.”

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