As part of its Nurturing Ideas to Change the Housing System programme, the Nationwide Foundation recently launched a new joint project with the Centre for Social Justice to explore alternative affordable housing models that link rents to local incomes instead of market rates.
Introduced in the 2010 Spending Review during a time of tightening public spending, the government’s Affordable Rent Model allows social landlords to charge up to 80% of local market rates. But while the model has advantages, renting at even 80% of local open-market prices is impossible for many households in areas where homes are particularly expensive. And while housing associations do not charge the full 80% for their affordable-rent properties, there is no guarantee that such a state of affairs will persist.
Recent years have seen local authorities – such as the Greater London Authority, Greater Manchester Combined Authority, and West Midlands Combined Authority – pioneer innovative new housing models and policies designed to offer an alternative to the national definition of affordable housing. These models have the potential to serve as the basis for national change, but their efficacy and the evidence generated by the pilots trialling them need to be examined before the government and opposition parties can consider incorporating them into their plans for making rented homes genuinely affordable for those most in need.
For many in the UK, the housing crisis has reached an almost unbearable level of severity. Housing costs have been soaring for decades, but wages have remained stagnant, and the least advantaged in society are experiencing the very worst effects of the crisis. What’s more, the problem shows few signs of letting up.
The Foundation and CSJ believe a living rent approach might be part of the answer. The new joint project will contribute to the current thinking on living rent policies by studying the findings from the most recently implemented income-linked rent models and understanding how they could be used by the government, policymakers, and the social housing sector to develop an updated definition of affordable housing.
The Nationwide Foundation will serve as a partner organisation on the project, whose recommendations will feature in a report set to be released in early 2024. The project will have two main areas of focus. The first involves updating the existing body of evidence by undertaking comparative policy research into the Manchester and West Midlands affordable-rent interventions and the London Living Rent models to learn more about the effects of adopting an alternative definition of affordable housing at the local level.
The second area of focus will be how lessons learnt locally could inform national policy reforms. Each local authority explicitly justifies its new approach based on the inadequacy of national policy, reflecting the need for national change. This strand of the project will develop a practical roadmap for political parties to adopt ahead of the coming election for working towards a reformed definition of affordable housing at the national level.
The aim of the project is to transform the national affordable housing offer – and reform the Affordable Rent product in particular. The final report is due in the spring of 2024 and will serve as a tool for government and policymakers seeking to provide greater access to genuinely affordable homes.
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