Research Seminar
The Affordable Rent Model in London: Affordability, Deliverability 9 April 2013
Research Seminar
The Affordable Rent Model in London: Affordability, Deliverability
Jo Wilson
Director, Future of London
Agenda Agenda • The Affordable Rent Model in London: Affordability, Deliverability • 9 April 2013
1.30
Arrivals and refreshments
1.45
Welcome – Jo Wilson
1.55
Emerging findings – Andrew Hewyood
2.10
Responses: • Mairéad Carroll • Kevin Williamson • Ken Jones
2.30
Questions
2.45
Discussion
3.15
Chair’s summing up
3.30
Close
Our research project The Affordable Rent Model in London: Affordability, Deliverability • 9 April 2013
• Supported by the Oak Foundation • Research project from January to June 2013
Our research project The Affordable Rent Model in London: Affordability, Deliverability • 9 April 2013
Project focus: • Who is building ARM in London and why • How much ARM is being built and where • The extent to which ARM is viable in the short term and after 2015/16 • Whether ARM is consistent with housing strategy and housing need in London • What part ARM should play after 2015/16
Our research project The Affordable Rent Model in London: Affordability, Deliverability • 9 April 2013
What we are doing: • Review of existing literature; completed, • Interviews with HAs, LAs, and other stakeholders,
completed
• Analysis of the data on ARM in London, in
progress,
• Case studies highlighting aspects or effects of ARM development, in progress, and; • A final report.
The Affordable Rent Model in London
Emerging Questions
Andrew Heywood Research Lead
Andrew Heywood Emerging Questions • The Affordable Rent Model in London: Affordability, Deliverability • 9 April 2013
Housing, Mortgage markets, Regulation, Governance, Europe • • • • •
Housing: finance, policy, low-cost homeownership. Mortgage markets: trends, opportunities, threats. Regulation: policy, practice, lenders, housing providers. Governance: effective decision making, strategy, audit. Europe: housing and mortgage markets, regulation. Andrew Heywood is an independent consultant specialising in the above areas and an associate of leading consultants Campbell Tickell. A visiting fellow of the Land Economy Unit of Cambridge University and of the Smith Institute, Andrew has written and spoken extensively on housing and lending issues. He is Editor of the journal Housing Finance International (www.housingfinance.org). Andrew was formerly Deputy Head of Policy at the Council of Mortgage Lenders. He has been at the centre of housing, housing finance and mortgage market developments for many years and has unrivalled contacts amongst policy makers, housing providers and lenders.
Andrew Heywood Consulting: a.heywood53@btinternet.com 01440 730218/07929512057
Who is building ARM in London?
Emerging Questions • The Affordable Rent Model in London: Affordability, Deliverability • 9 April 2013 Emerging Questions • The Affordable Rent Model in London: Affordability, Deliverability • 9 April 201
– Currently 58 organisations contracted to the AHP programme in London (GLA) – In addition, two organisations have dropped out of the programme. – This is roughly the 60 expected by the HCA/GLA. In the RLHS. – They are contracted for 22,268 homes including affordable rent and affordable home ownership. – Overall average affordable rent as percentage of market rent is 64.7% but average varies between providers from 36%-81% (GLA)
Who are being housed in ARM homes? Emerging Questions • The Affordable Rent Model in London: Affordability, Deliverability • 9 April 2013
Region/Tenancy London ARM London General Needs (LA/HA) England ARM England General Needs
Weekly income (net) 228 202/224 254 198/219
Region/Tenancy London ARM London General Needs (LA/HA) England ARM England General Needs (LA/HA)
Average Age person 1 in household 35 38/38 35 38/37
Region/Tenancy London ARM England ARM London General Needs (LA/HA)
Male 40% 36% 43%/42%
Female 60% 64% 57%/58%
Who are being housed in ARM homes? Emerging Questions • The Affordable Rent Model in London: Affordability, Deliverability • 9 April 2013
Region/Tenancy London ARM England ARM England General Needs
Region/Tenancy London ARM England ARM London HA general needs England HA general needs
Working FT % 21.5% 22.8% 21%
Eligible (No) 442 3073 11837 97483
Working PT 14.4% 14.6% 13%
Eligible (%) 72.0% 66.6% 67.0% 63.7%
Who are being housed in ARM homes? Emerging Questions • The Affordable Rent Model in London: Affordability, Deliverability • 9 April 2013
• It appears not to be working households- though is this product more suitable for them? • Will ARM attract interest in the light of higher rents? Region/tenancy ARM London ARM England HA social lettings London HA social lettings England Region/tenancy London ARM England ARM London HA Gen needs England HA Gen needs
Average times property was previously offered (days) 1.22 0.64 0.95 0.75 Number LA referrals 514 2896 12615 81698
All sources of referrals 614 4614 17680 152923
Percentage LA referrals 83.7% 62.8% 71.4% 53.4%
First lets and conversions (re-lets) Emerging Questions • The Affordable Rent Model in London: Affordability, Deliverability • 9 April 2013
• Will RPs achieve the rate of conversions they require and at sufficient uplift? • To what extent are lower than anticipated conversions being subsidised by RCGF or other sources?
• How is the development of ARM progressing?
First lets and conversions (re-lets) Emerging Questions • The Affordable Rent Model in London: Affordability, Deliverability • 9 April 2013
• ARM First lets and conversions 2011-12 (CORE): Region London ARM England ARM
First lets (No) 252 1592
First Lets (%) 41.0%% 34.5%
Conversions (No) 363 3021
Conversions (%) 59.0% 65.5%
Total lets (No) 615 4613
Total lets (%) 100% 100%
• According to the GLA 55 first lets and 2,370 conversions were achieved in 2012-13 (Qs1-3) compared to 131 and 535 in 2011-12 (some discrepancy with CORE) • Why were less ARM homes completed pro-rata in 201213 than in 2011-12?
Affordability Emerging Questions • The Affordable Rent Model in London: Affordability, Deliverability • 9 April 2013
• Welfare reform is key; particularly the cap but also downsizing and direct payment, Percentage of lettings offered via Choice –based letting, Common Housing Register, Common Allocations Policy (Categories are not mutually exclusive) 90 80 70 60 50
Choice-based lettings
40
Common Housing Register
30
Common Allocations Policy
20 10 0 London ARM
Source CORE 2011-12
England ARM London HA Gen Needs
England HA Gen Needs
Affordability Emerging Questions • The Affordable Rent Model in London: Affordability, Deliverability • 9 April 2013
• Will the Treasury necessarily save money with HB reform/ARM combination? Numbers of ARM head of household in London working F/time (1) and P/time (2) eligible for Housing Benefit 100
Numbers of London HA social rent tenants working full or parttime eligible for Housing Benefit 3000
90
2500
80 70
2000
60 50
1500
40
1000
30 20
500
10
0
0
Working full-time
Working part-time Eligible
Working FT
not eligible
working PT Eligible
Source: CORE 2011-12
Ineligible
Emerging questions Emerging Questions • The Affordable Rent Model in London: Affordability, Deliverability • 9 April 2013
• To what extent will lower rent levels mean lower numbers completed? • What about larger homes and the Mayor’s target for family-sized homes (36%)? • Where are these homes being built?
Emerging questions: risk and sustainability Emerging Questions • The Affordable Rent Model in London: Affordability, Deliverability • 9 April 2013
• How much riskier does the higher borrowing and market risk (market-linked rents, LCHO etc.) make ARM? • What about housing benefit risk? • Will RP financial capacity be eroded? • Will HAs continue to undertake ARM rather than LCHO or market renting post 2015?
Emerging questions Emerging Questions • The Affordable Rent Model in London: Affordability, Deliverability • 9 April 2013
• What additional risks are incurred by cross subsidy from LCHO or market renting? • Will London find ARM more or less difficult than elsewhere? • Overall, will ARM meet GLA targets (16,614 ARM homes 2011-15 plus size and space requirements) • What place does ARM have in a post-2015/16 affordable housing strategy?
Research Seminar
The Affordable Rent Model in London: Affordability, Deliverability
MairĂŠad Carroll
Head of Policy and External Affairs, East Thames Group
Research Seminar
The Affordable Rent Model in London: Affordability, Deliverability
Kevin Williamson
Assistant Director for London, South East and East, National Housing Federation
Research Seminar
The Affordable Rent Model in London: Affordability, Deliverability
Ken Jones
Divisional Director of Housing Strategy, London Borough of Barking & Dagenham
Discussion The Affordable Rent Model in London: Affordability, Deliverability • 9 April 2013
Consider: • Can ARM deliver affordable housing in the current financial environment? • Thinking ahead to the next CSR, what should a delivery model for affordable housing in London look like?