The government should invest £3bn a year in a new income-linked rental model to increase the number of affordable homes delivered by social landlords, a new report concludes.
Under the proposals, the funding would unlock a further £7bn of investment from social landlords by enabling them to borrow against their assets and build 80,000 homes a year for low-cost rent and ownership.
The plans would be underpinned by a commitment by social landlords to let 40,000 of these homes under the new rental model - “living rents” - replacing the current affordable rent regime.
A living rent would be set on the basis of local earnings and is not linked to market rents, unlike the current affordable rent tenure where rents for new and many re-let social homes are set at up to 80 per cent of market rents.
The report predicts that the current model could see the housing benefit bill grow from £24bn at present to £37bn a year by 2040.
Adopting the proposed living rent framework could produce a saving to the housing benefit bill of £5.6bn a year by 2040, the report said.
The research was undertaken by Savills for the National Housing Federation and Joseph Rowntree Foundation.
Savills Housing Consultancy director and co-author of the living rents research Helen Collins, said: "Living rent is an innovative way of increasing the supply of affordable rented homes, helping reduce poverty and improving access to work.
"A stable and affordable rented home is crucial in ensuring people can build a life for them and their families.
NHF chief executive David Orr added: "Housing associations have the experience and ambition to be a vital part of the solution to end the housing crisis by building thousands more homes.
"By investing in living rent now, the government could see associations double their building work to develop 80,000 affordable homes each year by the end of this parliament."
Barratt chief executive and Living Rents steering group member Mark Clare, said: 'To deliver the number of homes we need in the UK we have to step up supply from all parts of the housebuilding sector, including affordable housing from social landlords."
You can hear more from Barratt's Technical Development Director, Oliver Novakovic who will be speaking at Explore Offsite Housing Event. To book your ticket go to www.exploreoffsite.co.uk/book
Source: Construction News Plus
