mirror, signal, manoeuvre
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February 2011
Mirror, signal, manoeuvre: our drive to provide more social housing
Family Mosaic: an introduction
We’re one of the largest housing associations
in London and Essex. We provide affordable
homes to rent, and buy, as well as services
to people who may need extra support.
We have over 23,000 homes for rent. We serve
over 45,000 residents. And we support over
4,000 people with additional services to help
them live independently.
We’re driven by our customers. We want to
offer them more control and choice. We can
do this because we are financially strong,
and because it’s part of the way we work.
This means we can reinvest our surplus into
our existing housing stock. It means we can
finance the construction of new homes. It
means we can help people get the most out
of their local community.
It means making them feel valued in
everything we do for them.
Contents
Summary 3
1 Why Family Mosaic believes this 4 research is important
2 The impact on rents 5
3 The impact on our tenants 9
4 The impact on the public purse 13
5 The risks for Family Mosaic 15
6 How do we go forward? 17
Appendix one 19
www.familymosaic.co.uk
In October 2010, the Government announced a new approach to the development of social housing: housing associations are to be encouraged to charge all new tenants an Affordable Rent. This was defined as being linked to a percentage of market rents up to a maximum of 80%.
As one of the leading developers in London and
Essex, Family Mosaic wanted to understand how
this new model would impact on our existing client
groups, as well as on our development programme.
Family Mosaic knows it needs to continue building
desperately needed new homes and make them
available to those in greatest need.
As we move into a new way of working, we see
this report as part of a “Mirror, Signal, Manoeuvre”
exercise. The report examines what this new model
will mean to our residents. Its conclusions signal
a possible new direction of travel for us, enabling
us to move forward with our social purpose and
providing good quality, new homes for those in
greatest need.
This research is based on an evaluation of how an
increase in rent to 80% and 60% of market rent
would impact on 50 new tenants. The research
sample included a range of our properties,
including different types, sizes, location and
tenant circumstance. The research was carried
out by Mark Lupton, a leading independent
policy analyst, in December 2010.
The research demonstrates that:
• setting rents at 80% of market rent would increase our clients’ requirement
for housing benefit by 151%;
• even at 60% of market rent, there would
be significant increases in rent levels,
leaving a large proportion of tenants
unable to retain enough income to
pay their rent and live according to
government standards of affordability;
• the impact on our tenants will vary by
location, with those living in inner London the
hardest hit: for most of those in Essex, social
rents are already at 60-80% market rates;
• for those tenants receiving benefits, the proposed new affordable housing model creates, or worsens, the poverty trap, acting as
an additional disincentive to gain employment.
We know there is no new money available. We are
convinced that the future new supply of affordable
housing at reasonable rent levels will depend on
housing associations and local authorities working
even more closely together, maximising our efforts
for the good of local communities.
summary Mirror, signal, manoeuvre
Mirror, signal, manoeuvre: our drive to provide more social housing | 3
When the Government announced in October 2010 that capital grants were going to be cut, it came as no surprise. The cuts were deeper than many anticipated, but we had been expecting fundamental change. The question, for us, is whether the new model is purely a development solution, or one that helps us achieve our social objectives.
After all, that is the core of our work: the provision
of affordable housing for those in greatest need.
We’re proud of being a social landlord. We welcome
the new model, as it provides us with the freedom
to determine our own rents. This new model might
also result in a greater diversification within those
who make up the social housing sector, which
could be a good thing for housing. Our way isn’t
the only way.
Our primary concern with the new model, however,
was with the 80% figure: instinctively, it felt that
this would be too high for the people we want to
house in London. We believed that we might be able
to make the new model work at 60% of market rent.
Over the past five years, we’ve developed over 4,000
new homes. We now serve over 45,000 residents,
and support over 4,000 with additional services to
help them live independently.
Our surpluses are growing because of efficiencies
we’re making and we want to invest these in our
homes and communities. Our intention was to
develop over 1,000 new homes, while continuing
to provide all our customers more involvement and
greater choice. And we know that our land
buying, procurement and partnership skills will
have to adjust to the new model and create
even greater value.
The new model announced by the Government,
however, challenges these plans. Would we
continue to be able to provide social housing to
those in most need? Or would we be forced to
let homes to a new client group? Would the new
model, as some suggested, spell the death of social
housing? Whatever, the need for 90% private
finance limits our capacity and our new programme
will be much smaller.
While others within the sector debated the potential
impact of the changes, we commissioned Mark
Lupton, a leading independent housing specialist, to
conduct research. His findings, which form the basis
of this report, are based on a sample set of people
who became Family Mosaic tenants in November
and December 2010. This enables us to determine
the real impact of the new model, and to propose
strategies to enable us to continue developing
affordable housing for those in greatest need. The
research methodology is set out in appendix one.
1 Why Family Mosaic believe this research is important
4 | Family Mosaic
2 The impact on rents
Open market rents
The first task was to consider the difference
moving from the current rent to a rent of 60%
of market rent (60% MR) and 80% of market rent
(80% MR). To achieve this we determined a market
rent for each property using the methodology
outlined in appendix one.
As might be expected the higher open market
rents were mainly for houses. They were also,
however, determined by location:
• the highest open market rents
were for a three bed house in Islington
(£576 per week) and a four bed house in
Lambeth (£532 per week);
• of the twelve properties with weekly rents above £300 per week, just two were flats:
one located in the City of Westminster (£458
per week), the other in Islington (£310
per week);
• all five properties with open market rents
of less than £120 per week were flats in either
Braintree, Basildon or Colchester.
The rise in rents at 80%
At 80% MR the breakdown of properties by rent
increase is:
• £1–50 increase per week
16 properties: 13 in Essex, two in outer London,
one in Inner London;
• £51–100 increase per week
15 properties: 11 of which are flats in less
expensive parts of London, as well as houses in
Waltham Forest, Lewisham and Haringey;
• £101–150 increase per week
10 properties, including five houses and five
flats, in Islington, Barnet, Lambeth, Southwark,
Lewisham and Hackney;
• £151–200 increase per week
one house in Islington;
• over £200 a week increase
seven properties: six houses in London and one
flat in the City of Westminster.
See graph 1 on page 6 for full details
At 80% of market rent, all properties had significant increases of rent. In seven inner London properties, these increases were over £200 a week. Outside London, however, these increases were less than £50 per week. At 60% of market rent, all properties in London would have increases in rent. For five of these in inner London, these increases would be over £150 per week.
Mirror, signal, manoeuvre: our drive to provide more social housing | 5
£50
£100
£150
£200
£250
£300
-£50
£50
£100
£150
£200
£250
£300
The rise in rents at 80%
Essex Outer London Inner London
Essex Outer London Inner London
Graph 1 Rise in weekly rent at 80% market rent
Graph 2 Rise in weekly rent at 60% market rent
The rise, and fall, in rents at 60%
Moving to 60% MR produced a significant
change for the properties outside London
(see graph 2 below). The rents on the
properties in Braintree, Basildon and
Colchester would reduce – although the
reductions are minimal.
For properties in London there would still
be significant increases at 60% MR:
£1–50 increase per week: 17 properties
£51–100 increase per week: 10 properties
£101–150 increase per week: 3 properties
Over £150 increase per week: 5 properties
6 | Family Mosaic
Rent changes by location
When we look at the average weekly rent by
location, we can see how tenants living in inner
London, in particular, will be affected by increases
to both 60% and 80% of market rent. For those
in outer London, the impact of a shift to 80% in
market rent is marked, while for those in Essex,
many will have a slightly lower rent if set at 60%
of market rent.
£99.01
£123.65
£92.74
£180.98
£101.57
£135.74
£253.67
£190.25
£106.18Current
60% MR
80% MR
Outer LondonEssex Inner London
Graph 3 Average weekly rent at current rate, 60%MR and 80%MR in Essex, Outer London and Inner London
Mirror, signal, manoeuvre: our drive to provide more social housing | 7
Mark lives in a one-bed flat in Basildon, Essex. He is employed, taking home a weekly wage of
£230.76 per week. His current social rent is £89.36.
A 60% MR would result in a rent of £69, a fall of
£20.36 or 23% less than his current rent.
A 80% MR would result in a rent of £92, a rise of
just £2.64, or 3% more than his current rent.
Diane lives in a one-bed flat in East Ham, London Borough of Newham. She is employed and takes home £191.42 a week.
Her current social rent is £79.06.
A 60% MR would result in a rent of £101, a rise
of £21.94, or 28% more than her current rent.
A 80% MR would result in a rent of £135, a rise
of £55.94, or 70% more than her current rent.
Florence lives in a one-bed flat near Clissold Park, London Borough of Hackney. She is employed, taking home £346.27 a week.
Her current social rent is £103.27 a week.
A 60% MR would result in a rent of £138, a rise
of £34.73, or 34% more than her current rent.
A 80% MR would result in a rent of £184, a rise
of £80.73, or 78% more than her current rent.
£89.36
£69
£92
£79.06
£101
£135
£103.27
£138
£184
case study 1
Three single people, the real costs
Current 60% MR 80% MR
8 | Family Mosaic
3 The impact on our tenants
The affordability issue
To determine the affordability of these rents for the
same tenants we first looked at how many of them
would have to use more than 30% of their income
to pay the new rent level.
This figure was chosen because it is typically
used as an ‘affordable’ proportion of income to be
paid as rent when assessing housing need. While
Communities and Local Government guidance
suggests 25%,1 the last definition of social housing
need based on income in the London Plan states:
Rent and service charges together should not
exceed 30% of net household income for a
household with an income of less than £18,100.2
With most of the properties in this study situated in
London, this confirmed our use of the 30% figure.
We also used an adapted Department for Work and
Pensions Tax Benefit model calculator to estimate
how much each tenant would have left to live on in
different income and rent scenarios. 3
Tenants and affordability
So what happens when we increase weekly rent
to 80% MR? Of the 49 tenants in the sample, just
three – all of whom lived in Basildon and were in
work – could afford the higher rent, and still have
70% or more of their income to live on.
Of the other seven tenants whose income was
above £18,100 per annum (as set out in the
London Plan), none would be able to afford the
higher rent, and still have 70% or more of their
income to live on.
The two graphs on the following page show the
affordability gap – the amount of extra income a
tenant would need to pay the rent – at 80% MR
and 60% MR.
Only three tenants – all living in Essex – would be able to afford to pay rents at 80% MR, and still have 70% of their income to live on. At 80% MR, 57% of tenants would be on full housing benefit. The remaining 43% would have to meet the increased rent at least in part from their own resources. At either 60% or 80% MR, tenants would become more dependant on housing benefit, reducing incentives to work.
1 Strategic Housing Market Assessments Practice Guidance (CLG 2007)
2 London Plan annual monitoring report, 05/02/09
3 http://research.dwp.gov.uk/asd/index.php?page=tbmt: These scenarios were based on information supplied by Family Mosaic from financial assessments conducted at the point of letting. Where necessary, estimates have been used to supplement this information.
Mirror, signal, manoeuvre: our drive to provide more social housing | 9
-£100
£100
£200
£300
£400
-£100
£100
£200
£300
£400
At 80% MR, eight tenants would need to find over
£200 in order to pay the new rent. Over 50% of the
tenants in this sample would need to find an extra
£100 or more per week to pay the rent. One of these
tenants lives in Essex: the others live in London.
At 60% MR, five tenants would be able to pay the
increase in rent, and still have 70% or more of their
income to live on (the affordability test). Just under
a third of the tenants in this sample would still have
to find an extra £100 or more a week to pay the rent.
All of these tenants live in London.
Graph 5 The affordability gap: the amount of extra income tenants would have to find to pay weekly rent at 80% MR.
Graph 6 The affordability gap: the amount of extra income tenants would have to find to pay weekly rent at 60% MR.
Essex Outer London Inner London
Essex Outer London Inner London
10 | Family Mosaic
The result of the rise in rent to 80% MR would lead
to over 50% of the tenants in this sample being on
full housing benefit. The remaining 21 would have
to meet the increased rent at least in part from
their own resources.
Consequently, at 80% MR those tenants whose rent
is not fully covered by HB are paying significantly
more rent than they would on social rents.
These 21 tenants would be left with the following
amount of income to live on:
£s per week
Number of tenants
Household size
£100–199 6 5 single,
1 couple
£200–299 9 1 single,
1 couple,
6 households
with children
£299–400 6 6 households
with children
Notably, at 60% MR only six of these 21 tenants
would have significantly more money to live on
every week than if their rent was set at 80% MR.
These six are on higher incomes and medium rents.
For the other 15 tenants there is no change on
what they have to live on despite the decrease
in rent. If you have low income or high rent you are, in effect, stuck.
Increased dependency
The inevitable result of an increase in rent to
these levels would be an increase in applications
for, and payments of, housing benefit. The next
section of this report explains how the increases
to 60% and 80% would increase housing benefit
payments to these tenants.
One result would be that increased dependency on housing benefit would have a negative effect on work incentives. It is outside the scope of this
analysis to quantify this but work conducted by
the Department for Work and Pensions shows how
much extra a particular family would need to earn
to increase their ‘take home’ income by much more
than its current level.
As an example, for gross pay of £300 per week,
their ‘left to live on’ amount would be £311.01,
but for gross pay of £400 per week their ‘left to live
on’ amount would be just £315.51. Earning £100
more per week, then, results in just £4.50 more
to live on.
Moreover, on £300 gross per week, the rent they
pay needs to be below £65 a week for it to make
any difference to their left to live on amount, as
any rent higher than this is covered by housing
benefit. On the other hand, a rent of £200 per
week extends their ‘poverty trap’ up to a gross
income of some £700 plus a week.
Our concern is that raising rents to 80% MR – and
thereby increasing the affordability gap – will
result in greater dependency on housing benefits,
and impact negatively on work incentives. We
know welfare reform will change this position.
This is discussed later in the report.
Mirror, signal, manoeuvre: our drive to provide more social housing | 11
Nadine lives in a four bed house in Lambeth,
with her daughter Win, and three grandchildren,
Marcus, Malcolm and Kai. Nadine lives on an
occupational pension and is not currently in
receipt of housing benefit.
Her income is £580.95 a week, of which £133.31
is currently spent on rent (23% of income). This
leaves her with £447.64 a week.
If her rent was increased to 60% of market rate,
it would rise by £185.84 to £319 per week.
At this level, she would be left with
£261.95 a week to live off.
If her rent was increased to 80% of market rate,
it would rise by £292.69 to £426 per week.
At this level, she would be left with
just £154.95 a week to live off.
At 80% MR, she would have to apply for housing
benefit. This would be paid at a rate of £301 per
week. After other housing costs, she would be left
with £394 per week to live off.
At 60% MR, she would also have to apply for
housing benefit. This would be paid at a rate of
£193.81 a week. After other housing costs, she
would still be left with £394 per week to live off.
Her current annual housing benefit bill is nil.
At 60% MR, the annual cost to the taxpayer of
housing benefit payments would be £10,271.93.
At 80% MR, the annual cost to the taxpayer of
housing benefit payments would be £15,652.
0 £5,000 £10,000 £15,000
Social rent
Rent at 60%MR
Rent at 80%MR
Annual housing benefit cost
case study 2
Granny, daughter and two grandchildren in inner London
Current rent is 23%
of income
At 60% MR, rent is
55% of income
At 80% MR, rent is
73% of income
12 | Family Mosaic
4 The impact on the public purse
Based on this research, at 80% MR the weekly housing benefit bill for these tenants would rise from £3,155 to £7,911, an increase of 151%.
Based on this research, at 60% MR the weekly housing benefit bill for these tenants would rise from £3,155 to £5,286, an increase of 68%.
Based on this research, at 80% MR, the yearly housing benefit bill – just from these 50 properties – would increase from £164,060 to £411,372.
Rents at 60% market rate
Rents at 80% market rate
£9,939
Social rents
£5,159
Social rents£164,060
Rents at 80% market rate
£411,372
£7,454
Rents at 60% market rate
£274,872
Graph 7 As the rent on these properties
increases, so the proportion paid by housing benefit rises: at current social rents, housing
benefit covers 61% of total rents; at 60% MR,
this increases to 71%; at 80% MR, housing benefit covers 80% of rent.
Granny, daughter and two grandchildren in inner London
Graph 8 Accordingly, the annual cost to the
taxpayer of housing benefit from these
properties also increases.
Mirror, signal, manoeuvre: our drive to provide more social housing | 13
Gemma and her three children – Maya, Bobby and
Alfie – live in a three-bed house in Holloway, London
Borough of Islington. She is currently out of work,
living on a combination of Income Support, Child
Tax Credit, Child Benefit and Housing Benefit. The
first three amount to £162.56 a week, while the
latter – £120.29 – covers the cost of her rent.
If her rent was increased to 60% MR, it would
almost triple, to £346 per week. As a consequence,
her housing benefit bill would also increase: we
estimate to £346 per week or £17,992 a year.
To cover the cost of her annual rent at 60% MR –
£17,992 – and have at least £200 a week for her
family to live on, she would need to find a job that
paid £28,392 a year. This is above the median annual
pay for full–time employees in the UK (£23,348).
If her new rent represented 30% of her income – the
affordability income – she would need to find a job
that paid just below £60,000 a year (net). Even if
her rent represented 50% of her income, she would
still need to find a job paying £35,984 a year (net).
If her rent was increased to 80% MR, it would
rise by almost 400% to £461 per week. As a
consequence, her housing benefit bill would also
increase: we estimate to £23,972 per year.
To cover the cost of their annual rent at 80% – £23,972
– and have at least £200 a week for her family to live on,
she would need to find a job that paid £34,392 a year.
If her new rent represented 30% of her income – the
affordability income – she would need to find a job
that paid her just under £80,000 a year (net). Even
if her rent represented 50% of her income, she would
still need to find a job paying £47,944 a year.
case study 3
£6,255
£17,992
£23,972
Annual housing benefit bill at current rent
Annual housing benefit bill at 60% MR
Annual housing benefit bill at 80% MR
Mother and her three children
14 | Family Mosaic
5 The risks for Family Mosaic
At 80% of market rent, Family Mosaic would collect an additional £4,780 in rent every week just from these properties. At 60% market rent, the additional income would be £2,295 per week. Increasing rents to 60% or 80% MR will increase our dependency on housing benefit.
Income generated from these 50 properties
for Family Mosaic:
The current rental income: £5,159
Additional income generated
by moving to 60% of MR: £2,295
Additional income generated
by moving to 80% of MR: £4,744
The move to the new rent would
therefore generate 92% extra rental
income for the association at 80% MR
and 44% at 60% MR.
While the organisation would clearly
benefit, the two losers would be those
new tenants and the taxpayer. Housing
benefit would be needed to cover the
majority of this increase if let to our
current client groups (see last section).
£5,159
£9,939
£7,454
Additional weekly rental income
Graph 9 Weekly rental income at current, 60% MR and 80% MR
Mirror, signal, manoeuvre: our drive to provide more social housing | 15
The risks of housing benefit
If rents are raised to 80% MR, Family Mosaic will
become increasingly financially dependent on
housing benefit. Simultaneously, a number of
the changes to the benefit system that are being
introduced will make it more challenging for Family
Mosaic to collect rents from its current profile of
tenants. This raises identifiable risks and numerous
uncertainties to our business and all those we serve.
There are four changes the Government is proposing
to housing benefit rules that may make it difficult
for some tenants to continue to recoup the extra
rent costs, and therefore pay their rent to us.
The overall benefit capThe move to limiting total benefits is clearly a
potential difficulty for some tenants given the
high rents in London. The proposed benefit
caps are:
• £250 for a one-bed property;
• £290 for a two-bed property;
• £340 for a three-bed property
• £400 for four-bed and larger properties.
Using an early version of a spreadsheet the
Chartered Institute of Housing is developing,
we calculate that an increase to 80% MR would
result in eight of the cases in this research being
affected by the benefits cap. All are located in
inner London.
If rents were raised to 60% MR, then only two of
the tenants in the sample would be affected.
The 10% reduction in JSAFamily Mosaic has attempted to quantify the
potential consequences to tenants when this is
introduced both in terms of rent loss and the need
to give support and advice. The proposed change
will affect those who have been in receipt of
Job Seekers Allowance (JSA) for over a year.
Family Mosaic visited a proportion of its tenants
on full housing benefit to identify those who were
also receiving JSA. This suggested that about 15%
of people on full housing benefit are also of working
age and on JSA.
Six of the tenants in this survey were claiming JSA.
The increase in non-dependent deductions Family Mosaic estimates that 542 of its tenants may
be affected by this measure. They estimate that this
could lead to a potential rent loss of £478,000 per
year, with a high risk of about £306,000 bad debt.
Two tenants in this study had non dependants.
Limiting housing benefit to property sizeAnother proposed change is that housing benefit
is to be limited for working age claimants so that
it only covers the property size deemed needed for
the household.
The tenants in this study were all new lettings where
the size of property is more likely to meet household
requirements at time of letting. This may, however,
change in the future. We do not therefore have
sufficient information from the sample to take an
informed view on this.
Family Mosaic has, however, estimated that
over 1,000 of its tenants may be effected by this
provision with a potential rent loss of over £1m.
16 | Family Mosaic
Changing the tenant profile
This exercise has focussed on continuing to house
the same client group. The alternative is to move
to a different tenant group who are less dependent
on housing benefit to afford the rents. Whilst
the Government has said it is looking for housing
associations to house the same sort of client group
as at present, there have been suggestions of a
degree of flexibility in relation to this.
In London, the high housing costs mean that in
most boroughs it is hard for people on salaries
of less than £40,000 to find a property they can
afford. This leaves a wider gap of income ranges
unable to gain affordable housing.
There is also an issue about what proportion
of income households can afford to spend on
housing costs. In this research we have used
30% of income. There is, however, the view that
it is not the percentage which is important but
the amount the tenant has left to live on.
That people are spending a higher percentage of
their incomes on housing costs can be seen from
research conducted by Savills. This considers the
4 - research prepared by Savills Residential Research
5 – http://www.resolutionfoundation.org/us/current-work/squeezed-britain-low-middle-earners-audit/
percentage of households in London against
the income bands for particular tenures. The
research indicates that many households,
particularly those in the £15,000–£40,000 income
bands, are paying significantly more income to live
in private rented or owned property. 4
So whilst the poorest are unlikely to be able
to pay more than 30% of their income on rent,
higher income groups may be able to pay more.
Letting to these slightly higher income groups
might lead to less risk of them being affected by
the housing benefit changes. However the effect
of other benefit changes on these groups – in
particular low-income workers – may also hamper
affordability. These can be seen in the Resolution
Foundation finding that “major changes to tax
credits that by 2012 will hit working families hard”
and the concerns expressed in their recent report
Squeezed Britain. 5
6 How do we go forward?
To mitigate this risk we could change the profile of our tenant group, and not let new properties to those most in need: this, however, goes against our core principles. Our preferred option is to work even more closely with local authorities to ensure a continued supply of housing for those in greatest need.
Mirror, signal, manoeuvre: our drive to provide more social housing | 17
Better advice and support
One consequence of higher rents and greater
financial risk is that associations will have to think
about how they can be more active in helping
reduce poverty amongst their tenants at a time of
rising rents and reduced benefit payments.
Family Mosaic is already changing how it targets
its advice and support services more effectively,
regardless of what the final impact of benefit
changes may be particularly in relation to:
• welfare rights advice to help tenants
cope with rent payments;
• employment advice and support to
help them to come off benefits.
Given the need to maintain sustainable tenancies
in this changed environment associations might
need to be more pro-active in helping tenants
keep their costs down. This might include, for
example, spending increased rent income on
retrofitting to help lower tenants’ fuel bills and
thus reduce financial pressures. Or it could mean
supplying micro-loans to tenants to help them
reduce dependence on doorstep lenders.
The new world presents many challenges for those
on low incomes and housing associations trying to
meet those needs.
Working together
So is the new affordability model proposed by the
Government an opportunity or a threat? We want to
continue to develop desperately needed new homes.
Family Mosaic CEO Brendan Sarsfield says,
“We are determined to deliver more homes, but
this look in the mirror tells us that the new model
creates problems for our residents.
Market rents per se are not the problem – we have
used them in temporary housing for many years.
The challenge now is can we make higher rents work
as a long-term solution during welfare reform and
public spending constraints.
This report does not provide all the answers: that,
after all, was not our objective. Looking at the
impact of the new model through the eyes of
our residents, however, will inform how we
manoeuvre towards providing affordable social
housing in the future.”
“The challenge now is can we make higher rents work as a long-term solution during welfare reform and public spending constraints”
18 | Family Mosaic
This research was based on an analysis of the impact of how the rent paid by 50 new Family Mosaic tenants would change as a result of setting the rents at 80% and 60% of market rates. The sample of tenancies was based on a cross section of our properties with different types and location of properties, as well as of tenant circumstance.
Setting market rates was a key element of the
research methodology. Indeed, if landlords are to
adopt a pricing policy based on a percentage of
market rent then they will need to consider how
they gain information. Some associations have
considered setting the percentage against average
market values. Yet if associations are to manage
their assets effectively they should be setting rents
for each property on the basis of its open market
rental value for that particular type of property in
that location.
It is important that associations do not just look
at regional or local authority figures but consider
localised housing submarkets. Associations need to
be able to ensure they know their local markets and
can conduct robust analysis on a localised basis.
Getting robust information on market rents is
not easy. This is principally because most private
landlords are small scale and localised. Housing
associations as major landlords working across
a range of markets and sub-markets need more
detailed information.
It is possible to get local authority wide
information. This does not, however, reflect the
markets which operate within and across local
authority boundaries.
The Housing Minister has announced that the
calculation of market rent will need to be based on
a residential lettings estimate compatible with RICS
recognised methods of valuation. Methods to do this
are currently being developed.
For this report we have used the Find a Property
website, which gives localised private sector asking
rents, using a geography of rental submarkets. It is
based on extensive data, and uses a sophisticated
methodology devised by Calnea Analytics. 6
Asking prices are not necessarily realised, however,
and rent levels may be affected by variations in
the quality of properties coming on to the market.
Markets are also dynamic and therefore subject
to change. Rental prices using an RICS approved
methodology may be different to these free market
asking rents.
appendix one Research methodology
6 – http://www.findaproperty.com/rental-index.aspx
Mirror, signal, manoeuvre: our drive to provide more social housing | 19
Credits
Original research by Mark Lupton and Bob Line
Edited by Matthew Grenier
Designed by Andrew Kingham
For further information contact Joanna Coyle:
T 020 7089 1046
M 07960 821 007
E Joanna.Coyle@familymosaic.co.uk
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