Affordable Rent: has the Government rowed back on flexible tenancies?

The Homes and Communities Agency (HCA) has published its investment model for delivering new affordable housing between now and 2015.

Affordable Rent – which allows providers to bid for HCA cash in return for converting and building new homes, offering them at rent of 80% of the market rate on flexible tenancies – carries a strict bidding criteria.

The Government expects bids to be in by 3 May, with initial contracts signed by July 2011. Providers are expected to work with local authorities at a strategic level to identify local need with bids expected to cover a four-year programme with some contract flexibility rather than fixed commitments.

While registered providers pick over the detail – and consider whether to apply for a slice of the £2bn funding available – former executive director of tenant services at the Tenant Services Authority Phil Morgan, offers a snapshot analysis.

“There is a heady cocktail awaiting those who do apply for funding for new build – throw in affordable rents for all new build (including those being built), a proportion of re-lets, some disposals, donated public land and their own resources.

“However, I spot the first whiff of retreat on flexible tenancies as implementation is not strictly insisted upon. Flexible tenancies remain unattractive for landlords as they will increase voids and management costs. Given the choice of following ideology or trying to meet the centrally imposed target of 150,000 homes the Government has chosen the latter.

“The ability to cross subsidise will favour large national housing associations but some locally based housing associations will say this is all too much hassle and in effect withdraw from development. Tenants may well end up bemused as there will be two types of homes standing next door to each other – one at a social rent with security of tenure and one with higher ‘affordable’ rents with a flexible time limited tenancy.

“But there’s a catch. Affordable rents are “fully eligible” for housing benefit. This doesn’t quite match up with the Government’s intention to reduce sharply housing benefit. The additional new build comes from higher rent streams funded by the same housing benefit that the Government’s trying to reduce. Which will give way first – the 150,000 target or the Housing Benefit bill?”