William Eichler 20 February 2023

New blueprint to deliver affordable homes to 1.2m households

New blueprint to deliver affordable homes to 1.2m households image
Image: Paul D Smith/Shutterstock.com.

A new blueprint designed to deliver affordable homes to over a million households who are currently stuck on council waiting lists has been published.

Just 6,000 of the 52,000 new homes listed as ‘affordable’ in 2020/21 by local councils were actually affordable for 1.2 million households on waiting lists, according to Housing Finance Institute (HFI) and Localis.

In order to address this problem, the think tanks have called for a ‘new generation’ Public Rental Homes (PRH) model which ‘flips’ the current approach to delivering affordable housing on its head.

Councils currently negotiate with developers to determine the percentage of affordable homes a housing scheme can provide, based on the total private unit sales. ‘Affordable’ rents can vary from 50% of local market rents up to 90%.

The PRH model proposed by Housing Finance Institute (HFI) and Localis instead asks what percentage of private homes are needed to produce sufficient PRH homes that can help reduce the size of council waiting lists.

As the think tanks’ report puts it, ‘Why shouldn’t councils, in cooperation with a developer, work out how many private homes built for sale are needed to viably build homes that can be rented at rates those on the waiting list can afford?’

Published in Public Rental Homes – fresh perspectives, the new PRH model would mean local authorities are responsible for identifying sites that might meet PRH criteria and initiate discussions with developers. For their part, developers would assume 100% of the risk and a 20% margin on both the PRH homes as well as their own private units.

Report author, Peter Bill, said: ‘Families on council waiting lists are squeezed to the bottom of pile by financial pressures on councils and developers trying to agree the percentage of affordable homes. A new perspective is needed to ensure the needs of these families become the top priority on sites where PRH is viable.

‘The PRH approach addresses that need and provides fresh impetus to councils looking to house those on their waiting list and to developers looking for better, simpler, ways to build. Site by site viability is the key. Developers take 100% of the risk and therefore deserve a 20% profit margin.’

Co-author, Jackie Sadek, said: ‘We need to get on and deliver. Stop arguing about the whys and the wherefores. Delivery only happens on the ground, not from Whitehall. Let’s try to crack this massive crisis, not top down, but bottom up. Every council should be supported in drawing up a 10 year Plan to deliver Public Rental Homes.’

Chair of The Housing and Finance Institute Board, Sir Steve Bullock, said: ‘Thousands of families and individuals, both young and old, are caught in the trap of being unable to afford to buy or rent privately but finding no alternative that they can possibly afford either. More people are falling into this trap each month yet the supply of new affordable homes is actually diminishing.

‘The impact of the cost-of-living crisis makes finding a response ever more urgent and the HFI has commissioned this research to offer a way forward that can attract support on a cross party basis.

‘Putting the emphasis on building new social homes has the potential to be a win–win with homeless people having a better chance of moving to decent properties that they can afford and make into homes while the economic impact of the construction will have wider benefits.

‘Doing this at pace will need a different mindset at all levels of government and the HFI will press for that and work with councils, government and developers in the coming weeks to make this happen.’

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