Housing Minister Grant Shapps announced further details about the new scheme that will allow housing associations to offer flexible tenancies and deliver more affordable homes.
From 2011, housing associations will have an additional Affordable Rent option to offer households who need support. Affordable Rent properties will give housing associations the flexibility to offer fixed term tenancies to some new tenants at a rent level higher than social rent - with landlords able to set rents at up to 80 per cent of local market rents.
Landlords will be able to offer the new tenancies in return for investment agreements, which will enable them to raise funds to build more affordable housing. The flexible tenancies will be for new tenants only - the lifetime tenancies and succession rights of existing council and housing association tenants will not be affected.
The Affordable Rent model is the first step towards delivering these wider reforms announced last month and included as part of the Localism Bill.
The Government is investing £4.5 billion to deliver up to 150,000 new affordable homes over the next four years, with around £2 billion of this funding to support the delivery of new Affordable Rent homes. Ministers intend to make the payment of grant funding conditional on transparency.
Ministers believe the current centrally-determined system for social housing has led to the number of people on waiting lists over the past 13 years to almost double to five million. Affordable Rent is part of a package of measures that will affect all areas of social housing policy, giving councils and housing associations more flexibility to use their social housing stock to the maximum effect and drive down waiting lists.
Early next year, the Homes and Communities Agency will publish a full framework document that will form the basis for bids from housing associations who are interested in offering Affordable Rent.
Housing associations will have the flexibility to convert vacant social rent properties to the new flexible tenancies at a rent level of up to 80% of market rent - but only after they have reached an investment agreement with the Homes and Communities Agency about how additional rental income will be reinvested in delivering new affordable housing.
Affordable Rent properties will be allocated in the same way that social rent properties are now. Existing lettings arrangements operated by councils and housing associations will continue to apply and properties for Affordable Rent will be made available through choice-based lettings where appropriate.
Where a landlord decides not to reissue an Affordable Rent tenancy at the end of the fixed term, the landlord will need to provide advice and assistance to help the tenant find suitable alternative accommodation. Landlords and tenants will be able to consider a range of end of tenancy options, including selling the property to the tenant via conversion to shared ownership.
