Brendan Sarsfield

CEO, Family Mosaic

8 Questions (and some Answers) about The New Affordable Rent Model

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What is Family Mosaic?

• Landlord (rent and leasehold) • Support Provider • Developer • Community Support Agency

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Family Mosaic Own 23 000 homes • 3000 supported homes • 2000 shared ownership homes • 95% in London 5% in Essex Support 2000 residents living in homes we do not own

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Q1.What is the New Model?

• 90% Private finance/10% grant • Rents up to 80% Market rent • Other forms of HA subsidy still needed to make it work • Relets of some existing homes at same new high level rent

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The New Model • Well intended • More complex than first thought And so Family Mosaic organised: • Research into effect on residents • Analysis of effect on accounts • Consultation with Local Authorities

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Q2. Who is the new model for?

Existing Client Groups • Better than Private Rented sector/no housing • Research suggests unaffordable • Welfare Reform likely to make this worse New Client Groups • Helps those caught between social and market • Challenges existing nominations contracts • Use of relets reduces the number of homes available for existing groups

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Q3. What does it mean for our customers?

Family Mosaic commissioned independent research showing: 1. 60 and 80% MR unaffordable in Inner London. 2. HB bill will increase by 150% 3. Increases disincentives to work.

4. Outer London works better as MR’s lower.

5. Welfare reforms will make it even harder

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Q4. How can we respond positively? Family Mosaic want to: • Retain focus on existing tenant groups • Keep relets at low rents • Charge rent at maximum of 60% market rent on new homes • Use sales rather than relets to meet funding gap • Work with local authority partners to deliver common goals

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Q5. What does this mean for Family Mosaic’s finances?

Family Mosaic Loan book £600m Borrowing constrained by covenants • Gearing – Limits how much you can borrow against your assets.

• Interest Cover – net income must be greater than interest Our Limit – 65% Gearing (42% today) - 1.1 Interest cover (1.2)

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Family Mosaic’s Finances Present model (pa): 600 homes for rent 300 shared ownership New model (pa): 250 homes for rent 250 homes for sale

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Q6. Do we want to play?

Family Mosaic will bid because: • Homes still needed, • We don’t know where this is going, but • Only a 250 unit rented programme • No relets • Unsure about larger homes

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Q7. What are other HA’s doing?

• Diverse response • From ‘Is it worth it?’ to ‘All in’ • Overall smaller programmes • Business Plans stretched –capacity issue.

• Majority using relets to make work • Programme likely to be delivered

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Q8. What does it mean for local authorities?

• Less homes for current client groups.

• Problems with Regen schemes • Winners and losers • Need for London wide lettings • How can Councils help make scheme more affordable?

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