Rent policy for new council homes looking to increase affordability

A report reviewing the options for setting rent levels in new council homes is being discussed at next week’s Housing Committee.

The review is looking at how to let more newly available council homes, including those bought back under the Home Purchase Policy, at social or living wage rents.

Making rents affordable

The current rent policy for new homes, agreed in 2017, sets rents at either below 80% of market rates or Local Housing Allowance levels, and take into consideration the high quality, amenities, standards and energy efficiency of the new homes.

It aims to make rents affordable for residents in low paid employment as well as households with full benefit entitlement.

Since the introduction of the policy, it has been applied to new council housing projects on a case-by-case basis, with rent levels agreed by committee to ensure minimal cost to the Housing Revenue Account. 

All proposed new schemes have been modelled financially with rents set at:

  • target social rent levels 
  • 27.5% Living Wage Rent
  • 37.5% Living Wage Rent
  • affordable rents capped at LHA rates

An analysis carried out on rents in newly developed council properties and those bought through the Homes Purchase Policy between 2015 and September 2019, showed 2% of tenants in the homes are charged social rent levels and 9% are charged a 37.5% Living Wage rent, with the remaining 89% charged at Local Housing Allowance (LHA) levels.

Achieving the right balance

Councillor Gill Williams, chair of housing, said: 

“Providing more affordable housing is a clear priority for us and we’re working with our Green Party colleagues to deliver hundreds of low-cost homes in the city, both through development and by buying back properties sold under the Right to Buy.

“The council has been delivering new homes for a number of years. Rents have been set as low as possible to make sure we can help residents struggling to afford housing in our city.

“The national lifting of the borrowing cap rules on Housing Revenue Accounts increases our options around the financial viability of new developments and we want to explore what we can do to set rents lower on more newly available properties.

“It’s a complex area and it’s important to get the balance right between affordability and our ability to deliver hundreds of new high quality, energy-efficient low cost homes.”

Green Councillor David Gibson, opposition spokesperson for housing, said:

“The joint housing programme put forward by Greens and Labour pledges to greatly increase the provision of council homes at 27.5% living wage rents – known as ‘living rents,’ and social rents.

“It is vital that we make rents more truly affordable – since over the last four years, the city lost around 220 council homes, let at social rents under the ‘right to buy.’ 

“Many of the replacement council homes were rented out at levels far less affordable for low income working households.

“This welcome new rent policy takes this on board mostly by prioritising truly affordable rents for more of the properties sold under the ‘right to buy,’ that the council is now buying back.”

The full report is available in the 15 January 2020 Housing Committee papers (agenda item 46).

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