Providing affordable homes for rent
As part of the programme, we introduced the affordable rent product. This allows registered housing providers to charge no more than 80% of local market rent (including service charges where applicable) for new affordable homes.
Affordable rent gives housing providers more flexibility on rents and use of assets, while providing accommodation for people who need social housing.
On 9 June 2011 we published an affordable rent impact assessment showing the costs and benefits of providing affordable housing under the new model as part of the Affordable Homes Programme.
At the same time, we published a technical revision to annex B of planning policy statement 3 (PPS3). This makes clear that affordable rent falls within the definition of affordable housing for planning purposes.
The proposed changes do not affect existing social tenants’ rights or rents.
New debt guarantees for affordable housing
The Affordable Housing Guarantee scheme was launched to support the building of new additional affordable homes. The scheme will offer housing associations and other private registered affordable housing providers a government guarantee, on debt they raise to deliver additional newly-built affordable homes. This will help to reduce their borrowing costs, increasing the number of new homes they can afford to provide. The guarantee scheme is complemented in England by grant funding, although the guarantees themselves are UK wide.
The guarantee is designed specifically to attract investment into affordable home ownership from fixed-income investors who want a stable, long-term return on investment without exposure to residential property risk. The government will help protect them from this risk by guaranteeing long-term debt (up to 30 years).
The Chancellor announced as part of the 2013 Budget the doubling of available grant funding to £450 million, supporting the delivery of up to 30,000 affordable homes. Details of grant funding and asset management flexibilities can be found in the Homes and Communities Agency’s programme framework and the Mayor of London’s Housing Covenant.
The government has now appointed Affordable Housing Finance (AHF) as the delivery partner for the Affordable Housing Guarantee. They will raise debt with a guarantee and lend it on to borrowers in line with the scheme rules. AHF will set out details of their application process for interested parties.