Government plans to raise social housing rent could be insufficient to cover reductions in funds for new home builds, Registered Provider’s (RP’s) have warned.
The plans to raise social housing rent to 80 per cent of market value from the current level of 40 to 50 per cent could force housing associations to merge in order to build new homes.
The Coalition Government’s Affordable Rent scheme is aimed at helping to build 150,000 new homes by 2014 by allowing housing associations to borrow funds for new builds using the extra rent income as collateral.
The Government believes this change should cover for the 74 per cent cut in the Department for Communities and Local Government (DCLG) capital budget for housing and regeneration, unveiled in the recent Comprehensive Spending Review.
Registered Providers, not-for-profit housing providers approved and regulated by the Government, have raised fears that the new policy will fail to generate sufficient funds in the parts of England where there is little gap between current social rents and the proposed level at 80 per cent of market value.
However, research by Hometrack, who provide information solutions to the UK housing and mortgage industries, suggests that if housing associations use the new 80 per cent of market value level on just a third of their re-lets up to 7,800 new homes a year could be built.
Registered Providers play a key role in the work of commercial recycler and social welfare charity, Recycling Lives.
Recycling Lives provides opportunities to people facing an uncertain future such as worklessness, homelessness and welfare dependency, to turn their lives around through accommodation, education, training and work experience.
RP’s provide move-on accommodation for many Recycling Lives Residents who have completed the programme, gained full time employment and are ready for independent living.
Recycling Lives Founder and Chairman, Steven Jackson, said: “Registered Providers fulfil a vital service in housing vulnerable people who struggle to afford privately offered homes.
“In light of recent spending cuts, any initiative that raises capital for building new homes could prove an important part of tackling Britain’s housing problems.”