arm in london - future perspectives

Research Seminar

The Affordable Rent Model in London: Future perspectives 30 April 2013

Lisa Taylor Interim Director, Future of London

Research Seminar

The Affordable Rent Model in London: Future Perspectives

Our research project

• Supported by the Oak Foundation

• Research project from January to June 2013

Project focus:

• Who is building ARM in London and why

• How much ARM is being built and where

• The extent to which ARM is viable in the short term

and after 2015/16

• Whether ARM is consistent with housing strategy and

housing need in London

• What part ARM should play after 2015/16


What we are doing:

• Review of existing literature: completed

• Interviews with HAs, LAs, and other stakeholders:

completed

• Analysis of the data on ARM in London: in progress

• Case studies highlighting aspects or effects of ARM

development: in progress

• A final report: June release


Agenda

1.30 Arrivals and refreshments

1.45 Welcome & background – Lisa Taylor

1.55 Emerging findings – Andrew Heywood

2.15 Questions

2.30 Discussion points

3.15 Chair’s summing up

3.30 Close

Andrew Heywood Lead Researcher

Research Seminar


– Currently 58 organisations contracted to the AHP

programme in London (GLA)

– This is roughly the 60 expected by the HCA/GLA. In the

RLHS

– They are contracted for 22,268 homes including affordable

rent and affordable home ownership

– Overall average affordable rent as percentage of market

rent is 64.7% (69.6% for conversions) but average varies

between providers from 36%-81% (GLA)

Who is building ARM in London? Emerging Questions • The Affordable Rent Model in London: Affordability, Deliverability • 9 April 2013

What has been built/converted to December 2012?

Sources: GLA, CORE 2011-12 and 2012-13

2011-12 1st lets/new build

2011-12 Conversions

2012-13 1st lets/new build

2012-13 Conversions

TOTAL ARM to DEC 12

GLA estimate

131 535 55 2370 3091

CORE 252 363 291 2198 3104

ARM: numbers built/converted

0 50 100 150 200 250 300

City of london

Barking & Dagenham

Barnet

Bexley

Brent

Bromley

Camden

Croydon

Ealing

Enfield

Greenwich

Hackney

Hammersmith/Fulham

Haringey

Harrow

Havering

Hillingdon

Hounslow

Islington

Kensington & chelsea

Kingston

Lambeth

Lewisham

Merton

Newham

Redbridge

Richmond

Southwark

Sutton

Tower Hamlets

Waltham Forest

Wandsworth

Westminster

Housing association

Local Authority

ARM: Total new build & re-lets

ARM: Total new build

ARM: Total re-lets

Who is being housed in ARM homes?

Source: CORE 2012-13

240 205 209

289 240 250

0

50

100

150

200

250

300

350

London 1st lets Londonconversions

London allARM

England 1stlets

Englandconversions

England allARM

Average income (£ per week)

Region Average Age (Head of household) ARM London 34.5 ARM England 34.5 HA SR London 38.8 HA SR England 37.4

ARM: income & age

Region Male Female Total ARM London 925 37.5% 1541 62.5% 2466 ARM England 5852 35.4% 10,688 64.6% 16540 HA SR London 3573 35.8% 6402 64.2% 9974 HA SR England 36467 41.9% 50550 58.1% 87016


ARM: gender

Region Working FT Working PT Total ARM London 479 19.1% 318 12.78% 2489 ARM England 3618 21.5% 2196 13.1% 16823 HA SR London 2100 20.5% 1336 13.1% 10228 HA SR England 18079 20.8% 9219 10.6% 87050

ARM: economic status


87.07%

12.93%

82.69%

17.31%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

100.00%

Eligible Ineligible

Overall eligibility for housing benefit: London ARM and HA SR tenants

London ARM London HA SR

ARM: housing benefit

31.42%

92.77%

22.13%

87.88%

68.58%

7.23%

77.87%

12.12%

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

Working FT Working PT Working FT Working PT

London ARM London ARM London HA SR London HA SR

Eligibility for housing benefit: full and part time workers London ARM and SR tenants

Eligible Ineligible

ARM: housing benefit

Borough ARM rent HA SR rent Uplift £ Uplift %

City of London 204 134 70 53%

Barking &Dagenham 121 110 11 10%

Barnet 253 142 111 78%

Bexley 125 118 7 6%

Brent 206 114 92 81%

Bromley 145 119 26 22%

Camden 207 130 77 59%

Croydon 141 135 7 5%

Ealing 181 117 64 54%

Enfield 145 123 22 18%

Greenwich 144 128 16 13%

Hackney 178 114 65 57%

H'smith &Fulham 207 166 41 25%

Haringey 150 118 32 27%

Harrow 319 128 191 149%

Havering 135 108 27 25%

Hillingdon 198 118 81 69%

Hounslow 231 123 108 88%

Islington 185 124 61 49%

Kens'ton & Chelsea 214 173 40 23%

Kingston 205 132 73 55%

Lambeth 150 112 38 33%

Lewisham 134 113 21 18%

Merton 126 119 7 6%

Newham 147 108 39 36%

Redbridge 143 107 36 34%

Richmond 185 124 60 48%

Southwark 170 120 49 41%

Sutton 127 110 16 15%

Tower Hamlets 168 120 49 41%

Waltham Forest 141 114 26 23%

Wandsworth 169 132 37 28%

Westminster 198 134 65 48%

London 164 122 43 35%

Inner London 174 123 51 41%

Outer London 157 119 38 32%

ARM: rents

35%

49%

37% 31%

8%

35%

0%

10%

20%

30%

40%

50%

60%

1 Bed 2 Bed 3 Bed 4 Bed 6 Bed All properties

ARM conversions London: % uplift over social rent by number of bedrooms

ARM: rents

26.5%

53.2%

35.3%

52.6%

39.6% 34.7%

20.3%

6.4%

22.0%

0.7% 0.7% 6.7%

0.0% 0.0% 1.3% 0.00% 0.1% 0.0% 0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

1st Lets Conversions HA social rent

Percentage of different bedroom numbers let in London: ARM 1st lets and conversions plus social rent

1 Bed 2 Bed 3 Bed 4 Bed 5 Bed 6 Bed

ARM: size

• Note: 72% of ARM tenancies are commenced as starter tenancies

• Where a tenancy term is specified it is almost always 5 years.

Source: CORE: 2012-13

0.2%

38.3%

11.4%

50.1%

0.9%

79.1%

5.8% 14.1%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

Secure Assured Other Assured shorthold

Tenancy type; London ARM and HA SR lettings 2012-13

London ARM

London HA SR

ARM: tenancies


Region Number previous offers

ARM London 1.42 ARM England 0.74 HA SR London 0.93 HA SR England 0.75

Region Number of days vacant ARM London 25.7 ARM England 22.9 HA SR London 25.0 HA SR England 26.8

ARM: popularity

• Who is being housed in ARM properties; is this sensible in terms of housing need?

• Housing benefit implications of ARM - how might this shape the HM Treasury view?

• Will RPs achieve the rate of conversions they require and at sufficient uplift?

• To what extent are lower than anticipated conversions being subsidised by RCGF or other sources?

• Is the programme back-loaded or off-track?

• Overall, will ARM meet GLA targets (16,614 ARM homes 2011-15 plus size and space requirements

ARM: emerging questions

• Are HAs achieving the levels of rents they require for viability?

How might this effect development numbers?

• Larger homes - the Mayor’s target for family-sized homes (36%)

• Where homes are being built - Should ARM homes be built

where need is greatest or where viability dictates?


Risk and sustainability:

• ARM poses a range of risks for HAs

– Housing market risk/rental risk

– Gearing/funding

– Future financial capacity

– Affordability/housing benefit

• Given higher risks will HAs continue to undertake ARM rather

than LCHO or market renting post 2015?


Questions

Research Seminar


• What place should ARM have in a strategy post 2015?

• Who should ARM be used to house?

• What are the alternative tenures:

– More social renting?

– LCHO/shared ownership?

– Market renting?

– Other?

ARM and post 2015 affordable housing strategy

• Could an alternative generate sufficient numbers of

affordable homes where and for whom they’re needed?

Housing, Mortgage markets, Regulation, Governance, Europe • Housing: finance, policy, low-cost homeownership. • Mortgage markets: trends, opportunities, threats. • Regulation: policy, practice, lenders, housing providers. • Governance: effective decision making, strategy, audit. • Europe: housing and mortgage markets, regulation. Andrew Heywood is an independent consultant specialising in the above areas and an

associate of leading consultants Campbell Tickell. A visiting fellow of the Land Economy Unit of Cambridge University and of the Smith Institute, Andrew has written and spoken extensively on housing and lending issues. He is Editor of the journal Housing Finance International (www.housingfinance.org). Andrew was formerly Deputy Head of Policy at the Council of Mortgage Lenders. He has been at the centre of housing, housing finance and mortgage market developments for many years and has unrivalled contacts amongst policy makers, housing providers and lenders.

Andrew Heywood Consulting: [email protected] 01440 730218/07929512057

Andrew Heywood

http://www.housingfinance.org/

mailto:[email protected]

arm in london - future perspectives

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