London housing associations join private market to fund affordable rents – The Guardian
Housing associations in London are to venture into the private property market on a grand scale for the first time in an attempt to extend their social housing mission to “generation rent” – the growing number of people who can not afford to buy in the capital and are vulnerable to exploitation from unscrupulous landlords.
The 15 biggest social landlords in London are working together to build 13,000 affordable homes by 2015 – but they will also provide an additional 4,000 properties for rent at market prices and at least 1,100 homes for sale at regular London prices. They will use the profits to fund further affordable housing.
Housing associations have traditionally focused solely on affordable housing for low earners and key workers such as teachers and nurses. The new strategy is a widening of their scope to help those in their 20s and 30s who have become known as “generation rent” – those trapped renting at sky-high prices, at the mercy of sometimes exploitative landlords.
The “G15” group of housing associations – which houses one in 10 London residents – is promising to grant more secure tenancies than those available on the private market. The intention is to allow tenants to settle down for longer with a plan to “kitemark” label these better quality homes for those who rent in an attempt to go head to head with the rest of the private market.
A board paper, seen by the Guardian and approved by the group, sets out the problems: “The average home in London costs more than £400,000 and is 15 times the median income for Londoners – the highest in Britain. And while wages are higher too they are not nearly high enough to allow most people to meet their own housing needs … Younger people are increasingly priced out of home ownership and find renting takes a growing portion of their salaries. Those without access to capital may become lifetime renters.”
Housing associations insist moving into the private market to capitalise on the increasing rental and sale prices in London will not undermine the social purpose of its members – to provide affordable housing for those who can not meet their own housing needs.
Keith Exford, chief executive of the Affinity Sutton housing association and chair of the G15, said it was not true private renting would make a vast profit for social landlords.
“The yields in private rent are insufficient to do much more than cover the running costs,” he said. “The only profit to be made is from the sale of stock at a later stage as values rise. A well-managed, reputable private rented sector is an important part of our offer to London.”
Homes built for private rent can also be turned into affordable housing or shared ownership properties by housing associations, or sold for profit according to changing business plans, he said.
The move is being welcomed by some tenants and staff working to tackle rogue landlords in the capital.